CAGRfunds Team, Author at CAGRfunds - Blog

August 5, 2019

Love at first sight!

Rucha Mulay, founder of R Pilates Studio in Pune is also the pioneer of equipment Pilates in the same city. Having flown for British Airways as an international cabin crew for 10 years, Rucha’s love for Pilates was a discovery during one of her trips to London that set her on a journey from where there’s no looking back. She was introduced to Pilates by a friend on that trip and says that it was love at first sight for her. She began frequenting the studio as it was healing her backache and soon she decided to bring Pilates to Pune.

After relinquishing her flying job, she enrolled herself for ACSM CPT (American College of Sports Medicine) then did all her Pilates certifications one by one. In 2013, Rucha started teaching mat Pilates classes at a gym and also started personal training at home. In 2014, she started her own Pilates Studio, R Pilates in Pune with only 1 reformer in a small apartment in her parents’ building. Today, she has a beautiful 1000 square feet studio in the most plush area of Pune with all the Pilates apparatus imported from Sacramento, California and a big family of 6 Pilates teachers, 150 clients and another branch opening soon.

Rucha’s inspiration to become an entrepreneur was her passion for fitness and Pilates. She believes that Pilates changes lives and she wanted her Pune people to have access to that through a dedicated studio in the city. As someone who doesn’t come from a business family, she was apprehensive about a few things while starting out. Return on investment, being a critical factor. Having invested a substantial amount in education and equipment, her fear was whether Pune people would be willing to pay the kind of money Pilates trainers charge in Mumbai.

Taking baby steps in the beginning, Rucha started on a very small scale where the overheads would not leave her restless. Initially, she invested some savings of hers from the British Airways job and her husband helped her too. She specifies that she didn’t take any loans. She gradually started adding equipment to the studio and when she felt the need to scale up, she calculated her figures, did a lot of homework and then made the move. The overheads were going to be 10 times more but the way their work had increased, she was confident that they would do well. “I had a very clear picture of our business in my mind.” states Rucha.

Having landed firmly on her feet with her venture, she shares her approach with us. “If you know exactly what you want to do, start small, watch the response, make your mistakes and learn your lessons in a small set up. Once you have tested the waters then dive in into the big pool. Always count your figures backwards. Give your business a strict teething period and make sure it picks up pace gradually. Set goals and talk to your team regularly.” While starting a business or even while scaling up, we know that finance is the key component. Since personal savings become a big part of investment in it, it is quite natural for one to experience that they are low on that reserve for a while. Rucha experienced the same after moving to a bigger studio where her overheads increased manifold and her personal savings took a back seat. However, she continued with her basic savings like PPF and left them untouched. Now that the new set-up too has been established well, she has been able to focus better on building up that reserve for her personal savings and has defined separate financial goals for herself and R Pilates where she has started two separate SIPs for future capital investment and her own retirement.

Rucha shares some wisdom nuggets generously for budding women entrepreneurs. “Unless you dive in, you are not going to be able to show your swimming skills. But do not dive in if you don’t know how to swim well as just moving your hands and legs in water won’t take you to the shore gracefully. Know your capabilities, know your limitations, work around them, have a plan B ready always and don’t think mediocre. Think big .”

March 16, 2019

PPFAS – CAGRfunds conviction recommendation

Parag Parikh Long Term Equity Fund (PPLTE) is the only equity fund that is managed by the investment team of PPFAS. As a recent entrant in the Mutual Fund Industry (fund was launched in May 2013), it is not the most popular fund in the market. At least we do not see people including them in the “Top 10 Funds to invest in 2019” list (Frankly, we find such lists to be very silly).

There are several reasons why we believe that PPLTE is a good addition to the portfolio for investors who exhibit all of the following traits:

a) Looking to add equity exposure
b) Willing to not withdraw their investments for 7-8 years
c) Keen to add some overseas diversification to their investments
d) Unwilling to risk capital erosion in lieu of high returns
e) Want to prioritize downside protection for times when markets don’t seem to be too ecstatic

If you think you are the one we are referring to, you should contact us to check if this is a worthy addition to your existing portfolio.

Reasons why we like PPLTE

Sector Allocation

Several things stand out when we look at the sector allocation of this fund.

a) 22% of the corpus is kept in liquid resources, waiting to be deployed when opportunities emerge. Some might say that this will drag returns down (since liquid resources at best earn you around 6-7%), but let us tell you that investing in businesses at a price that seems affordable is better than buying something expensive. Also, investing when one finds good businesses to invest in is also an important consideration for long term wealth generation

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price” – Warren Buffet

b) Substantial overseas exposure (~28%) adds to geographical diversification (orange bars are completely overseas). Out of this total overseas exposure, around 9.7% is in Google and 4.3% in Facebook. That adds to some real diversification to your portfolio! (Source: PPFAS Feb – March Factsheet)

Skin in the game

7.07% of the AUM represents own equity of the key persons in the fund management team. When people who are managing our funds have invested their own savings into the same, we know the commitment is for real. It is a good corporate governance practice to have their own financial being is linked with that of the investors. We give them a big thumbs up for this one.

Out-performance with focus on downside protection

As can be seen from the chart below, the fund has outperformed its benchmark (Nifty / BSE 500 TRI) at all times considering point to point returns. In terms of Alpha, the fund ranks #2 within the Multi-Cap category.

However, out-performance is not what excites us. Active funds, after all, are supposed to out-perform their respective benchmarks.

What seems interesting and commendable to us is the ability of the fund to protect the downside during times of correction. Let us look at the 3 year rolling returns of the fund. The highest rolling return is 25% and the lowest that the fund has given over a 3 year period is 10%.

This means a lot of things for you as an investor if you would have held your investment for a 3 year period at any point in time:

a) You would have generated a CAGR of at least 10% even if you would have exited at the very low point of the market which was some time in the second half of the last year

b) You would not have seen a negative return for a 3 year period on your portfolio EVER

c) You would not have lost your peace of mind over losing your money

For investors who are uncomfortable with too much volatility, the above means a lot. We believe that the reason the fund has been able to demonstrate this performance is because of its patient and down to earth fund managers – Rajeev Thakkar and Raunak Onkar. Although this is not a guarantee for the future, the above track record during testing times gives additional comfort to investors.

Mr. Thakkar is quite active on twitter and we suggest you follow him to understand his ideology if you are an existing investor or are likely to become one.

In case you have any further query, do reach out to us on contact@cagrfunds.com

November 30, 2018

Do health insurance plans cover maternity expenses?

“Maternity Plans” are not really separate plans. It is a feature which may be covered under normal health plans. However, only a few health plans offer maternity cover as part of their normal health plans.

Key features of maternity cover are as follows:

There is usually a separate waiting period for maternity coverage – This means that any claims with respect to maternity will be catered to only after the maternity specific waiting period is over
Almost all plans have an upper cap on the amount of expenses that will be covered – Usually the coverage ranges from INR 25000 – 50000 per delivery. The reason most policies have an upper cap is because the number of claims for maternity is likely to be very high. The purpose of Health Insurance is to protect you from any sudden outflow of funds due to a medical emergency. The occurrence of maternity is almost certain and hence a limit on the same is warranted
Pre – maternity costs are generally not covered – Most plans which offer maternity coverage generally do not cover any expenses that are incurred towards consultancies and tests
New born coverage – Generally, the new born baby is covered till the end of policy year

Should you buy a health plan only because it provides maternity coverage?

Maternity should ideally be treated as a bonus option. The overall decision behind buying a health plan should ideally be the key features which are relevant for any kind of hospitalization. Imagine a plan providing good maternity coverage but having a claim settlement ratio of 70%. Therefore, choosing a plan just because it provides maternity coverage may not be the best decision to take.

However, in case you have a choice between two equally good plans with one of them providing maternity coverage with or without some extra premium, then it might make sense to take the plan with the maternity clause. Especially, if you are planning a kid in next few years.

Want to discuss more on maternity plans? Write to us on contact@cagrfunds.com.

Have you read about our Cancer Plans?

November 30, 2018

Cancer Health Plans may be useful to consider!

A slew of niche healthcare plans have been launched recently. These plans cater to specific diseases only. Cancer Plans are one such category.

Key features which are common across various Cancer Plans are as follows:

Objective is to cover the expenses that arise out of diagnosis of any type of Cancer
Benefits are generally payable in parts basis the different stages of Cancer

Why should you buy these plans?

Well, there is no good answer to this. As we know, occurrence of Cancer is random and anyone could be a victim of the same. Some of the facts are worth being aware of:

India is the world’s largest contributor to Cancer deaths
22 lakh Cancer deaths are reported every year
71% of the Cancer deaths occur in the age group of 30 – 69 years
15% of Cancer patients are children and young adults (as compared to the global average of 0.5%)

The geographic spread of Cancer in India is largely driven by the environmental practices prevailing in respective regions:

States	Common types of Cancer	Reasons
UP, Bihar, WB	Gall Bladder, Neck and Head	Polluted water, diet rich in animal protein or fish
MP, Bihar, Gujarat, Rajasthan	Oral	High Tobacco and Pan Masala consumption
Punjab, Haryana, Delhi	All Cancers are higher than average, especially, kidney, lungs, urinary, breast	Pollution, pesticide, toxins in food
Goa	Colon Cancer	Red Meat, Alcohol, Tobacco
WB	Lung, Urinary Bladder	Air and Water Pollution
North East	Highest Cancer Rate, especially of Oesophagus	Tobacco, Household burning of Firewood
South & Coastal India	Stomach	Diet rich in spice, salt

Is Cancer not covered in regular Health Insurance Plans?

Regular health plans do cover hospitalization for Cancer. However, Cancer treatment costs often cost anywhere between 10 – 25 lacs and only go upwards for advanced treatments. Health Plans with such high sum insured can turn out to be very expensive.

Moreover, Cancer treatments tend to continue for years and the costs have only been rising.

What about Critical Illness covers?

Cancer is also covered under Critical Illness Plans, but only at advanced stages where a lump sum is payable. Generally, most Cancer specific plans tend to pay lumpsum at multiple stages of diagnosis, thereby protecting the continuous flow of expenses.

What is the alternative?

A decent size of Base Insured Plan + A large Top Up Plan + Critical Illness may be a good alternative. However, for those who have had a first – hand experience of Cancer treatments among friends and family, might want to insure themselves against the deadly possibility. The decision depends on affordability of every individual.