Author: Kshitiz Jain

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

Index	28-Apr-23	21-Apr-23	Change
Nifty 50	18,065	17,624	2.50%
Nifty 500	15,219	14,847	2.51%
Nifty Midcap 50	8,962	8,731	2.65%
Nifty Smallcap 100	9,672	9,369	3.23%

Chart Ki Baat

Gyaan Ki Baat

What is a REIT?

A Real Estate Investment Trust or REIT operates similarly to how a mutual fund works. Here, retail investors give money to a fund manager, in this case, a REIT manager who then does the job of finding and investing in good income-producing properties. The bundle mainly consists of commercial properties although managers can also look at hospitals, malls, and even residential spaces. These properties earn rental income for the REIT which is then transferred to investors in the form of dividends and that’s pretty much how a REIT operates.

A REIT makes investing in commercial real estate a lot more affordable. It simplifies investing and one doesn’t need to maintain the property or pay taxes on it, and they are managed professionally. Most importantly, the Securities & Exchange Board of India, SEBI regulates and monitors REITs in India

Units in REITs can be bought or sold in the secondary market via any trading platform. It works a lot like how a share is bought and with the buying quantity now reduced down to just 1, you can invest in real estate via REITs starting at just around INR 10000 – INR 15000.

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

Personal Finance

• Indian regulator plans to allow mutual funds with performance-based fees – As part of the proposal, the Securities and Exchange Board of India (SEBI) wants to allow additional charges if a fund consistently outperforms a relevant benchmark index and gives higher annualised returns, according to an internal SEBI document. Read here

• Why Branded apartments are making a comeback? – Branded residences are back in the market because the buyer today wants more than just a plain-vanilla apartment. There’s also confidence on account of RERA being in place, unlike in 2017 when a lot of people burnt their fingers. Read here.
  
  
• 5 things about Retirement that we haven’t thought about –. Read here

• The winner’s edge – When the cost of failure is low, too much pessimism prevents you from trying. When the cost of failure is high, too much optimism encourages unwarranted risk.. Read here

Investing

• Points to consider while investing in an AMC business – PPFAS MF CIO Rajeev Thakkar elaborates on what to look for, while investing in an Asset Management Compan. Watch here

• Broking is a winner takes it all business – There is a low income per client and increasing fixed costs for tech and compliance. So only with scale, you can survive. Read here

• A rambling of a frustrated investor, looking through some of the common themes in investor letters/blogs. Read here
  
  
• How to do Business Analysis of Organised Retail Companies – Dr. Vijay Malik helps to understand the factors that impact the business of retailers and the characteristics that differentiate a fundamentally strong retail company from a weak one. Read here

Economy

• Govt not keen to list gilts on global indices now – India is not very keen to list government bonds on global indices now as the disadvantages outweigh benefits, a senior finance ministry official said. Read here

• Chile Stuns Markets And EV Makers By Nationalizing Lithium Industry Overnight – The nationalization poses a fresh challenge to electric vehicle (EV) manufacturers scrambling to secure battery materials, as more countries look to protect their natural resources. Read more here.

• Rural Wage Growth Sustains Its Rebound In Recent Months – Rural wages are trending upward for agricultural and non-agricultural workers. Rural wages rose by over 7% for agricultural workers this year, easing by 6.7% in February.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.

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

Index	13-Apr-23	06-Apr-23	Change
Nifty 50	17,828	17,599	1.30%
Nifty 500	14,954	14,759	1.32%
Nifty Midcap 50	8,677	8,551	1.47%
Nifty Smallcap 100	9,337	9,198	1.51%

Chart Ki Baat

Gyaan Ki Baat

CAGR vs XIRR

CAGR represents the average annual return between two specific dates. It considers the start date and the end date only. Therefore, if you have a lot of transactions between the start date and the end date, the CAGR may not give you a correct representation of returns.  

XIRR on the other hand considers date-wise inflow and outflow and therefore gives a more accurate picture of returns.  

This is relevant for all kinds of investments. For people investing in residential real estate, if you have annual costs that you incur on the property and rental income that you continue to get, an XIRR may give you a much better idea of the returns you make on the investment.  

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

Personal Finance

• The case for  Index funds over active large-cap funds – In 2022, 88% of actively managed large-cap equity funds underperformed the S&P BSE 100, as per the S&P SPIVA India scorecard. Read here.

• SEBI to incorporate all expenses and taxes within TER – Currently, fund houses charge GST of 18% on the fund management component, which is over and above the maximum TER limit. In addition, fund houses pay brokerage to the security companies on MF transactions, which is over and above TER Read here.

Investing

• Buying right but selling wrong – A recent study has documented a striking pattern in the investment world: while investors display clear skill in buying, their selling decisions underperform substantially. Read here

• Optical illusions in Equity Investing – Psychological biases tend to affect an investor’s decision making in subtle ways which are usually detrimental to long term investment returns Read here

• Focus on signals provided by companies but filter out the dishonest ones – A dishonest signal is one that does not reliably communicate the trait it is supposed to. Lend credence to only those signals that are costly to produce. Read here

• Avoiding Landmines: Focus On Free Cash Flows – With rising interest rates and tightening liquidity, the environment is becoming tougher for many dodgy businesses. These are companies that use all sorts of accounting shenanigans to report accounting profits even though the business truly does not make any money. Read here

• Interesting Annual Phenomenon – PSU banks dump gilts after shift from HTM books– “There is the natural build-up of stock in the available-for-sale book after shifting,” a treasury official at a state-owned bank said. “This paper is all in-the-money, and would have to be offloaded eventually; it is an annual ritual. It is just that the rate pause has allowed us to do it quite aggressively.” Read here.

Economy

• Indian banks well placed to manage the risks in volatile global environment- Structurally, Indian banks deploy their assets mainly in advances, resulting in a higher Credit to Deposit (C/D) ratio in the range of 65% to 90%, while investments constitute around 25% of their total assets. As of March 31, 2022, Indian banks had a C/D ratio of around 72%. In contrast, their US counterparts have nearly one-third of their assets in investments and a credit-to-deposit ratio that is in the range of 45% to 70%.  Read here

• Rising milk prices becoming a headache – The average retail price of milk in India has increased by 12% from a year ago. India accounts for almost a quarter of the world’s milk supplies.   Read here

• Apple Triples India iPhone Output to $7 Billion in China Shift – Apple Inc. assembled more than $7 billion of iPhones in India last fiscal year, tripling production in the world’s fastest-growing smartphone arena after accelerating a move beyond China 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.

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

Index	6-Apr-23	31-Mar-23	Change
Nifty 50	17,599	17,360	1.38%
Nifty 500	14,759	14,558	1.38%
Nifty Midcap 50	8,551	8,467	0.99%
Nifty Smallcap 100	9,198	8,995	2.26%

Chart Ki Baat

Bazaar Ki Baat

In this month’s edition of Bazaar ki Baat we discuss about Market Performance, the Sectoral change in NIFTY 50 over the years and its implications on valuation parameters and the much-discussed tax rule change on debt funds.

Over the years, the sectoral representation in Nifty-50 has undergone a sea change, largely in line with the changes in the underlying economy. This has significant implications for the comparison of valuation parameters with their historical averages.

Nifty and Sensex have been flat in March and for FY23 overall. We believe that the recent corrections have made India market valuations attractive.

Further, the changes in debt tax rules may have taken some sheen out of the debt funds but we believe still a place for them in the investors’ portfolio.

Do watch and let us know your opinion.

Gyaan Ki Baat

Pradhan Mantri Jan Arogya Yojana (PM-JAY) is the biggest heathcare scheme sponsored by the government. This scheme is designed keeping in mind universal health coverage. This is a family floater scheme. This scheme is specifically designed for people belonging to lower income category.

• Eligibility – The Ayushman Bharat Yojana Eligibility is designed with pre-conditions so that only the underprivileged people of the society benefit from the initiative. The scheme does not cover government employees, owners of 2,3 or 4 wheelers , holder of Kisan cards, monthly earning of more than Rs. 10,000, individuals living in decently built houses etc.

• Coverage – This is a family floater scheme with a sum assured of INR 5 lakhs per family. The scheme provides coverage for medical examination, treatment and consultation fee. It covers up to 3 days of pre-hospitalization and 15 days post-hospitalization expenses such as diagnostics and medicines All pre–existing conditions are covered from day one

This can be a useful government policy for low-income individuals around us. Do spread the word.

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

Personal Finance

• IRDAI introduces direct plans in insurance – Direct plan in insurance will have reduced premium amount as it will deduct agents’ commission from the gross premium amount. Read here.

• How can short term capital loss from Debt MF be used for reducing tax outgo – You can set off your short term capital loss from equity mutual funds with your short term capital gains from debt mutual funds. Read here.

• GPT-4 Is a Reasoning Engine – GPT models are constrained by the knowledge databases it uses, its a reasoning engine but it is cannot invent new things. Read here.

Investing

• Maxims of Analytical Thinking – Talk at CFA Society based on the wonderful book on Richard Zeckhauser by Prof Sanjay Bakshi. Watch here

• India’s Premium Over EMs Washed Off – India was trading at a 90% premium to its emerging market peers six months ago. A 10% correction in Indian stocks, a sharp rally in EM peers, and a catch up in earnings have reduced this premium. Read here

• Invesco has slashed Swiggy’s valuation from $10.7 billion to $8 billion – Invesco devalued its stake in Swiggy in October last year, just 10 months after it invested in the company at a $10.7 billion valuation, filings accessed by TechCrunch showed. Read here.

Economy

• India pauses rate hikes in surprise decision, but door open for more – While the central bank has taken the decision to pause rate hikes in light of global macroeconomic and financial conditions, “our job is not yet finished and the war against inflation has to continue”, Das said. Read here

• India’s surging services exports may shield economy from external risks – The recent growth in services exports has been largely powered by global capability centres, which have started to offer global clients a range of high-end and critical solutions such as accounting and legal support. Read here

• Reverting to Old Pension Scheme: A move at the expense of the poor – Reversing to the OPS, would therefore, result in a reallocation of resources away from the state’s development expenditure which benefits the poor, and towards a much smaller group of people who have benefitted from a secured and privileged job throughout their working life. 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.