Category: CAGR Insights – weekly newsletter curated by Kshitiz

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

Index	12-May-23	5-May-23	Change
Nifty 50	18,314	18,067	1.37%
Nifty 500	15,477	15,277	1.31%
Nifty Midcap 50	9,149	9,035	1.26%
Nifty Smallcap 100	9,807	9,733	0.76%

Chart Ki Baat

Bazaar Ki Baat

A striking pattern – Buying right, but selling wrong.

In the 7th edition of the “Bazaar Ki Baat” series, we discuss a recent study that captures a striking pattern in the investment world – while Investors display clear skill in buying, their selling decisions underperform substantially.

We also talk about what led to the sharp rally in the Indian equity market in April.

Further, we show that even after the changes in debt tax rules, how debt funds score over FDs due to the deferment of taxes.

Do watch and follow our channel

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

Personal Finance

• How an obscure PPFAS morphed into India’s Berkshire Hathaway– ‘The way of the tortoise’ has seen the fund house grow 200 times its size and deliver a stunning 19% CAGR. Read here.

• Finance is like fashion – Wait long enough and the same arguments come back in style. Read here.

• Shruti shares her experience of interactions with millennials regarding their investment journey. Read here.

• A vicious trap – Dig into any successful business and you’ll likely find two people: One who comes up with crazy ideas, and another who kills most of those ideas while giving the sensible ones a shot. Read here.

Investing

• How investible is the Electrification theme?  – Close to 50% of the power being used by Industries across India is being served by captive power. Watch here

• An investor’s edge – There are three competitive advantages as an investor: informational, analytical, and psychological. Of the three, only analytical and psychological are sustainable. Read here

• Culture eats everything for breakfast – HDFC Bank CEO – The crux of our story is that we had a strategy which can be copied by anyone. We have a great set of people, which anyone can poach. We have technology, which people can buy, okay? But there is a certain culture which is unique to HDFC Bank. Culture which no one can replicate. That’s our execution capability. And that is what differentiates us from everyone else. Read here

Economy

• Electric 2 wheelers leading the growth of EV in India, but infrastructure gap remains. – E2W sales grew by 188% in FY23 as compared to the previous year FY22.As of January 2023, India had 5,254 public electric vehicle (EV) charging stations, to cater to a total of 20.65 lakh EVs Read here.

• Source says Credit Suisse India FX ops shut – Credit Suisse has shut foreign exchange operations in India, but other proprietary trading and client services have remained unaffected in the wake of its sale to UBS, an official familiar with the situation said. Read here.

• Rs. 25 for a veg thali and Rs. 58 for a nonveg thali in India – An interesting indicator from CRISIL on the cost of Thali in India. 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	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.