Category: CAGR Insights – weekly newsletter curated by Kshitiz

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

Index	13-Oct-23	6-Oct-23	Change
Nifty 50	19,734	19,651	0.42%
Nifty 500	17,376	17,292	0.48%
Nifty Midcap 50	11,610	11,543	0.58%
Nifty Smallcap 100	12,891	12,848	0.33%

Chart Ki Baat

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.

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

Index	6-Oct-23	29-Sep-23	Change
Nifty 50	19,651	19,638	0.07%
Nifty 500	17,292	17,293	0.00%
Nifty Midcap 50	11,543	11,612	-0.59%
Nifty Smallcap 100	12,848	12,749	0.78%

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

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.

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

Index	15-Sep-23	8-Sep-23	Change
Nifty 50	20,192	19,820	1.88%
Nifty 500	17,666	17,487	1.02%
Nifty Midcap 50	11,636	11,647	-0.10%
Nifty Smallcap 100	12,794	12,812	-0.14%

Chart Ki Baat

Cost of veg and non-veg thalis up 24% and 13%, respectively, yoy in August.
Courtesy: CRISIL

Gyaan Ki Baat

What exactly are LiquidBees? LiquidBees represent an Exchange Traded Fund (ETF) exclusively dedicated to investments in the overnight money market. This offers a remarkably high level of safety but also ensures exceptional liquidity.

Each day, the LiquidBees ETF disburses a dividend based on the interest income it generates, with the specific goal of maintaining its Net Asset Value (NAV) at Rs. 1000. It’s essential to be aware that this dividend distribution is subject to the Dividend Distribution Tax and is automatically reinvested in the form of additional “units.”

This approach offers a convenient means to securely park your funds with your brokerage while also earning interest. Additionally, LiquidBees can be effectively used to support trading margins and is widely recognized as an equivalent to holding cash.

However, it’s worth noting that if your applicable taxable rate falls below 30%, you may find Liquid Mutual Funds to be a more favorable option compared to LiquidBees.

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

Personal Finance

• Mistakes that compound in market – It’s generally wise investment behavior to ignore short-term performance since long-term returns are the only ones that matter. But at some point you have to benchmark your performance in some way. Read here
  
  
• Investors need to understand the difference in risk avoidance and risk control – In fact, not having any losers isn’t a useful goal. The only sure way to achieve that is by not taking any risk. But, as I said earlier, risk avoidance is likely to result in return avoidance. There’s such a thing as the risk of taking too little risk. Most people understand this intellectually, but human nature makes it hard for many to accept the idea that the willingness to live with some losses is an essential ingredient in investment success. Read here.
  
  
• Citadel’s three-decade run reflects the founder’s convictions about when to take risk – and how to manage it – We’d made a strategic decision that we would rather shrink the firm to a smaller base of longer-term capital – more stable capital – than be at risk of hot money flying out when markets really have a moment of turmoil. Opportunities arise in such moments Read here.

Investing

• The valuations of most major sectors are trading higher than their long-term average. – So, in the near term, investors should expect the equity returns to be subdued. But, the medium-term and long-term scenario for Indian equities remains positive, boosted by several factors i.e. strong macro fundamentals, strong corporate balance sheets, and peaking of the interest rate cycle.  Read here
  
  
• We are at a dangerous point in the Behavioural Cycle for Small and Micro Caps – Small and Micro Caps have more pronounced cycles due to poor liquidity. Thin trading volumes result in stock prices highly influenced by demand supply mismatches on the way up, and even more brutally on the way down. Hence, Small Caps require very long-term horizons and a huge tolerance for volatility. Read here.
  
  
• The Explosive Ascent of Southern India – Per capita income for seven ‘southern’ states (Tamil Nadu, Telangana, Andhra, Kerala, Karnataka, Goa, and Maharashtra) has grown at an average 10% CAGR between FY14-22. These states, which account for 30% of India’s population and 45% of India’s GDP, now have an average per capita income of ~Rs 2.7 lakhs ($3,300), 50% higher than that of the Rest of India. This will have investment implications. Read here.

Economy

• Unfair to judge private capex because it’s still at very early stages of recovery: Morgan Stanley – If you see the private sector balance sheets of the corporate sector, corporate debt-to-GDP is at a 16-year low, so balance sheets are in pristine position. Similarly, for the financial sector, banks’ impaired loans are tracking at 11-to-12-year lows. Again, their ability to fund and willingness to lend, is high and those are very important cyclical factors which will help improve this capex trend. Read here.
  
  
• India’s industrial output grew by 5.7 per cent in July from 3.8 percent in June. – IIP exceeded pre-Covid levels by ~8% in July 2023 even as the consumer durables segment lagged Read here.
  
  
• Russia’s exclusion to give India more play in bond index – Odds are shortening that Indian sovereign debt will be included in JP Morgan’s emerging market bond index after this month’s scheduled rebalancing of the gauge seeks to fill the vacuum created by Russia’s exclusion, potentially lowering borrowing costs in the world’s fastest-expanding major economy. 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	25-Aug-23	18-Aug-23	Change
Nifty 50	19,266	19,310	-0.23%
Nifty 500	16,821	16,758	0.38%
Nifty Midcap 50	11,022	10,824	1.82%
Nifty Smallcap 100	11,869	11,683	1.59%

Chart Ki Baat
An Indian spacecraft became the first to land on the rugged, unexplored south pole of the moon

Gyaan Ki Baat

When an investor sells units of an equity fund in the stock exchange or offers them for repurchase to the fund, he will have to incur Securities Transaction Tax (STT) i.e., STT is applicable only on redemption/switch to other schemes/sale of units of equity oriented mutual funds whether sold on stock exchange or otherwise. STT is not applicable on purchase of units of an equity scheme. It is also not applicable to transactions in debt securities or debt mutual fund schemes. The applicable rate of STT is 0.001%.

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

Personal Finance

• Intelligent vs Smart – If you’re merely intelligent, you might focus all of your effort on finding precise truth. If you’re smart, you’ll focus just as much effort on delivering an effective message around that truth, realizing that the most powerful truth does no good if you can’t get people to pay attention to it. Read here
  
  
• India’s Rising Prosperity – Prime Minister writes on LinkedIn analysing the ITR data.  Read here
  
  
• Mutual Funds investor might have to pay extra for direct plans after SEBI’s this decision- Direct plan expenses should be defined by actual expenses incurred, and not by how much brokerage is paid in regular plans. Read here.
  
  
• Small Savings Collection Boost Could Reduce Government Borrowings This Fiscal – Top contributors to government’s savings have been the Senior Citizen Savings Scheme and the newly launched Mahila Samman Patra. Read here.

Investing

• What is momentum and why does it persists? – For a momentum factor practitioner like us, Mr Wesley Gray of Alpha Architect is one of the must-reads for understanding the academic roots of factor investing from a practitioner standpoint and even more importantly in debunking the myths which surround momentum investing. Read here.
  
  
• Q1 Results Review: Earnings growth continues even as revenue slows; margins rescue – The performance of India Inc. in the June quarter was highlighted by strong net profit growth with tepid rise in topline. Easing input costs supported margin expansion for most sectors during Q1FY24. Read here
  
  
• SEBI Unravels How Brightcom Group Cooked Its Books – The Securities and Exchange Board of India’s interim order barred Chief Executive Officer Suresh Kumar Reddy and Chief Financial Officer Narayana Raju from company boards. The regulator also restrained 22 other entities, including investor Shankar Sharma, from disposing of the company’s shares. Read here

Economy

• India inflation to return to comfort band once veg price shock ebbs – MPC’s Goyal- The spike in prices of items like tomatoes has been “unprecedented” but normally there is a seasonal softening in vegetables after a shock (price spike), said Ashima Goyal, an external member of the Reserve Bank of India (RBI) committee, in an interview with Reuters late on Thursday. Read here.
  
  
• Startups Riding Digital Infrastructure Could Transform Indian Economy- India emerged as the fourth-most popular destination for startups in the world in 2022, attracting 4.2% of global venture capital, behind the US (41%), mainland China (18%) and the UK (6%), according to S&P Global Market Intelligence. Read here.
  
  
• The rise of Municipal bonds in India – 4 cities in UP are getting ready to launch something called municipal bonds. Kanpur, Prayagraj, Agra, and Varanasi want around ₹500 crores from the public. They want to improve their water supply facilities.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.