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CAGR Insights – 13 Oct 2023

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index13-Oct-236-Oct-23Change
Nifty 5019,73419,6510.42%
Nifty 50017,37617,2920.48%
Nifty Midcap 50 11,61011,5430.58%
Nifty Smallcap 10012,89112,8480.33%

Chart Ki Baat

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Gyaan Ki Baat

Tracking error is a critical concept in the world of finance and investment, primarily associated with index funds and their performance relative to the market. Beta, a measure of an asset’s volatility compared to the market, is set at 1 for the market. Index funds, designed to replicate a market index, ideally have a Beta of 1 and should, in theory, earn the same returns as the overall market.

However, the reality is that index funds can deviate from the market’s returns, and this deviation is quantified as the tracking error.

Here’s the list of curated readings for you this week:

Personal Finance

  • The large cap active Mutual funds’ underperformance story continues – As per the recently released SPIVA report by S&P,  in the first half of 2023, majority of Indian Equity Large-Cap  funds failed to beat their benchmark, with 58% of actively managed funds underperforming the S&P BSE 100. Read here

  • SEBI is like the police that make an appearance in the final scene in a Bollywood movie, you are the hero: SEBI whole time member to MF industry-  He also said lauded the MF industry for being “a fantastic ambassador for the securities market” by helping with financial inclusion within the securities market ecosystem. Read here

  • Business Trips have evolved – The Traveller Value Index 2023 report by online travel company Expedia notes that 76% of participants wish to extend their work tripfor leisure purposes, and 28% plan to opt for a flexication. Read here.

  • The Thin Line Between Bold and Reckless –  The hardest thing about studying businesses and investors is that many traits that fueled their success could have just as easily triggered failure. But we rarely think about it that way when learning from specific outcomes. Read here

  • How do I become a stock investor / start investing in stocks / get better at stock picking? – Shruti outlines her perspective – I personally think no course can “teach” stock investing. While courses speed up the learning curve, the real learning happens by getting hands dirty. Read here.

Investing

  • The Big Picture – A Synthesists’ perspective on few Mega Trends – 8 mega themes spanning multiple decades & how it may shape investment ahead.  Read here.

  • We are all wet cement – Loved this conversation with Todd Combs of Berkshire. Read here

  • End of lock-ins may bring a flood of shares to Street- The next four months could see a massive supply of shares, potentially reaching up to $12 billion from about 40 companies, excluding state-owned firms that went public in the last two years. This surge arises as various lock-in periods are set to expire for both promoters and investors who participated in pre-IPO placement. Read here.

  • Premiumization is becoming a theme in every sector – One thing which surprised me was that 42% of the respondents plan to purchase a premium smartphone (INR 30,000 or ~$360 and above). Read here.

Economy

  • India’s festival season spurs online shopping spree – RedSeer, a Bangalore-based consultancy, which monitors over 100 platforms covering 90% of online sales, predicts virtual shoppers will spend a record $11 billion during the month to mid-November – which would be nearly 20% more than last year. Read here.

  • Cricket fans throng hospitals for overnight stay amid Indo-Pak hysteria – Several doctors told local media the rush for check-up ‘packages’ was an ingenious way to find affordable accommodation as hotel costs have soared up to 20 fold ahead of the match. Read more.

  • India’s retail inflation eases to three-month low in September – Annual retail inflation rose 5.02% in September, down from 6.83% the previous month. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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CAGR Insights – 6 Oct 2023

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index6-Oct-2329-Sep-23Change
Nifty 5019,65119,6380.07%
Nifty 50017,29217,2930.00%
Nifty Midcap 50 11,54311,612-0.59%
Nifty Smallcap 10012,84812,7490.78%

Chart Ki Baat Cricket World Cup may add $2.4 billion to Indian economy says Bank of Baroda report.

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Bazaar Ki Baat

Factor investing strategies and their performance across diff. Macro conditions

In the 12th edition of “Bazaar ki baat”, we discuss two special topics (i) Factor Strategies and their performance in diff. Macro conditions and (ii) Drawdowns in Investing and its implications in investing decisions. Watch here.

Gyaan Ki Baat

Sukanya Samriddhi Yojana (SSY)

Sukanya Samriddhi Yojana was launched by Prime Minister Narendra Modi on 22 Jan 2015 under the Beti Bachao Beti Padhao campaign. This is a government-backed savings scheme designed with the purpose of creating funds for girl child education and marriage expenses. The account can be opened anytime between the birth of the girl child and the age of 10 years.

The parents can contribute a minimum deposit amount of INR 250 and a maximum of INR 1.5L in each financial year upto 15 years from the opening of the account. The rate of interest is currently 8% and the accrued interest is exempt from tax. Investments made in the SSY scheme are eligible for deductions under Section 80C upto INR 1.5L.

The scheme has a maturity period of 21 years from the date of opening or at the time of marriage after she has completed 18 years of age. Also, it is mandatory that the girl child operates the account on attaining 18 years of age.

Here’s the list of curated readings for you this week:

Personal Finance

  • SEBI makes it easier for legal heirs to claim shares, mutual funds after investor’s death- SEBI just made the life of surviving family members much easier to claim their rightful inheritance through a centralised death reporting mechanism. This will reduce the number of institutions to which the nominees have to reach out to in order to claim their inheritance. Read here

  • Should you opt for HDFC Sanchay plan? – To me, this product mathematically looks like a decent product, but practically a very silly one. Yet this is a very popular product. Read here.

  • 95% of investment advisers penalised by SEBI provide trading calls: Study  –  A study of SEBI orders passed against registered investment advisers over the years found that most offer only equity derivative and speculative trading calls and tips; 51 percent of the orders were passed against entities from Indore, which is infamous for spam equity phone calls. Read here

  • Madhabi Puri Buch cuts a deal with “good guys” of advisory industry – At the conference held on October 4, Buch shook hands on a deal that said that the regulator would ease the norms to hire talent at an advisory if the advisories were willing to be held responsible for the bad actions of their employees Read here.

  • An inside view on the collapse of LTCM – 25 years ago this month, catastrophic losses at the hedge fund Long-Term Capital Management, or LTCM, almost brought the entire financial system to its knees. The story has been told many times, but always by outsiders. On the latest episode of The Investing Show, one of LTCM’s founding partners, VICTOR HAGHANI, recalls events from an insider’s point of view.  Read here.

Investing

  • Investing against the Grain: Spotting Quality in Downturn – They zero in on small-cap blue-chip companies (QID or Quality in Downturn) navigating temporary business downturns. These are firms whose stock prices have been unjustly impacted, presenting ripe investment opportunities.  Read here.

  • Estimating long-term equity returns – Data says India’s “long-term” returns range from 7% to 20%, depending on when you invested. The way we set expectations needs to factor in this variability. This post explores two ways to set expectations for long-term equity returns. Read here

  • The rating upgrades continue to be higher than decadal average – The upgrades were driven by an expected expansion in cash flows this fiscal for sectors linked to domestic demand and for those benefiting from high government spending. These sectors, such as infrastructure, services and consumables, kept the overall upgrade rate elevated. Read here.

Economy

  • Cricket World Cup may add $2.4 billion to Indian economy – Based on a report by BOB, it is estimated to give a boost of Rs. 18,000-Rs. 22,000 crores on gross output. Most of this will be concentrated in the services sector, with hospitality sector benefitting the most. Read here.

  • India’s Remarkable 5G Advancement Elevates its Global Mobile Ranking – India is now ranked 47th globally, ahead of even the UK (62nd) and Japan (58th). Read more.

  • India cbank keeps interest rates steady for 4th straight meet – The Reserve Bank of India kept its key lending rate steady for a fourth consecutive policy meeting on Friday, as widely expected, but signalled it would keep liquidity tight using bond sales to bring inflation closer to its 4% target. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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CAGR Insights – 29 Sep 2023

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index29-Sep-2322-Sep-23Change
Nifty 5019,63819,674-0.18%
Nifty 50017,29317,2610.18%
Nifty Midcap 50 11,61211,4951.02%
Nifty Smallcap 10012,74912,4762.18%

Gyaan Ki Baat

Volatility Index (VIX) – This is a real-time market index that represents the market’s expectations as to volatility over the next 30 days. When markets rise or fall dramatically, the VIX rises during this period and falls when the market is less volatile. A rising VIX does not indicate where the market will go. Investors often get confused about the VIX and the market index, the market index provides the direction of the market while the VIX measures volatility in the market.

For example, if the Indian VIX is in the 20s, the Nifty could move up or down 20% from its current level over the next 12 months. This means that if the Nifty is currently at 17,500 and the Indian VIX is at 20, the Nifty could fall as low as 14,000 or as high as 21,000 in the next 12 months.

Chart Ki Baat

Courtesy: PPFAS financial Opportunities forum presentation by Rukun Tarachandani

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Here’s the list of curated readings for you this week:

Personal Finance

  • 24 Things I Believe About Investing –  Here are some things I believe about investing. Read here
  • Zerodha turns 13 – The Bengaluru-based company said it gets a bulk of its revenue from futures and options traders. Talking about the trading activity in F&O, Kamath said the total number of people trading F&O is still not that large in India. Read here.
  • Why does international investing make sense for you? – A domestic-only portfolio hinges on the expectation that the domestic market will do better than global markets, which may be a risky bet. A geographically diversified portfolio enables an investor to participate in regional rallies but, more importantly, helps reduce volatility in the long term. Read here.

Investing

  • Navigating the smallcap landscape – PPFAS – In recent years, the Smallcap sector has garnered significant attention. This presentation employs a data-driven perspective to delve into the Indian smallcap equity market. The presentation aims to determine if there’s a genuine opportunity within this segment and, if so, explore the challenges in capitalizing on that opportunity. Watch here
  • Why Selling is so Hard to Do – What is it that keeps us from selling a stock? Whether it’s gone up or down, many times, what we’re worried about is regret. We’ll feel stupid if the stock goes up afterward. Even worse, the stock we bought instead might go down while the one we sold goes up. Read here.
  • The rise of crazy rich Indians – Marcellus – A new generation of around 200,000 super rich families (or 1 million individuals) are making their spending muscle felt. It behooves us, therefore, to tilt our portfolios away from ‘mass’ and towards ‘class-based consumption. Read here
  • Is it different this time? – Solidarity – It is not different this time, just the behavioural cycle at play in Small caps and select sectors. However, some nuance is required on ascertaining fair value. One should be willing to pay a “small” premium for “certain” companies at present. But for most companies in the market, one should not break valuation discipline and wait out the euphoria. Read here.

Economy

  • India’s inclusion in J.P. Morgan GBI-EM Global index to lead to inflows of at least $18 -22 billion in FY2025, auguring well for G-sec yields and INR. Read more.
  • India is not only growing but it is doing so efficiently – It’s crucial to assess whether the capital injections into the economy are yielding proportionate outcomes. Over the past decade, India has made significant strides in this regard, with the ICOR decreasing from 7.5. In the fiscal year 2022-23, the ICOR reached an impressive low of 2.1, marking a decade-long record. Read here.
  • India has a demographic advantage, but, demographics alone may not become destiny –To live up to its aspirations, India needs a healthy and well-educated workforce. Only then demography become destiny.  Read here.
  • India falls short of FTSE Russell government bond index inclusion – Areas for improvement in the Indian government bond market structure highlighted by international investors remain largely unchanged from the previous March 2023 review,” FTSE said in its annual country classification review. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

Posted on

CAGR Insights – 22 Sep 2023

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index22-Sep-2315-Sep-23Change
Nifty 5019,67420,192-2.56%
Nifty 50017,26117,666-2.29%
Nifty Midcap 50 11,49511,636-1.21%
Nifty Smallcap 10012,47612,794-2.48%

Chart Ki Baat

For the first time ever, the number of folios in small-cap schemes overtook those in similarly managed large- and flexi-cap funds in August

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Gyaan Ki Baat

When evaluating performance track record of funds, it is useful to look at rolling returns and not just trailing returns.
Rolling returns are returns for a particular period calculated on a continuous basis. It is similar to calculating trailing returns every day for a period of time. Taking the average of such returns helps to get a realistic view of fund performance.

Here’s the list of curated readings for you this week:

Personal Finance

  • Small Caps Surpass Large Caps on Folios as Investors Flock to Mutual Funds – For the first time ever, the number of folios in small-cap schemes overtook those in similarly managed large- and flexi-cap funds in August, according to AMFI data. Read here.

  • Why do sports stars go broke? – A common thread connecting tales of millionaire sportspeople going broke is either a lack of financial advice or, worse still, bad advice. Read here

  • What does one need to be a value investor? It is the mindset that Klarman stresses when he speaks to business school students about investing.Read here

  • JPMorgan Sees India Share Sale Boom Reaching $30 Billion in 2024 – India will see at least $30 billion raised annually through primary and secondary share sales in 2024 and in the years to come, as companies and their shareholders are more willing to tap the market for funding, according to JPMorgan Chase & Co.  Read here.

  • Money can bring happiness but it also brings complexity – It is easier to spot other people’s mistakes than your own because we judge others based solely on their actions, but when judging ourselves we have an internal dialogue that justifies our mistakes and bad decisions. Read here.

Investing

  • The Problem of Plenty – Cash flow from operations of listed India Inc have almost gone up by 80% from pre-covid run-rates. Now that companies are generating excess cash flows, will the promoters or management be able to utilize the same judiciously or we will end up squandering this advantage. Read here.

  • Finding which factor strategy suits a particular macro environment or stages of business cycle – Factor strategies have consistently demonstrated long-term outperformance, but in the short term, individual factors tend to exhibit cyclical patterns. Read here.

  • Investors seem to be still underweight EM by any measure based on the size of their economies or markets or earnings or efficient risk allocation methodologies. Read here

  • Sankaran Naren: 11 brilliant lessons learnt over 3 decades – Sankaran Naren is the Executive Director and Chief Investment Officer at ICICI Prudential Mutual Fund, where he oversees assets of around Rs 6 lakh crore. Read here.

  • Almost 30% of BSE 500 companies are reporting year-on-year sales contraction. While the margins have experienced a significant improvement in the past quarter, it is majorly owed to deflation in wholesale price. Read here.

Economy

  • IBC mechanism effective but challenges remain – The overall recovery rate of IBC is stuck at 31.62% till Q1FY24, implying a haircut of approximately 68% for creditors.  Read here.

  • There is no distress, clarifies Finance Ministry on drop in household savings – They added financial assets by a lesser magnitude than in the previous years because they have now started taking loans to buy real assets such as homes. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.

The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.