There are some interesting company names that would be nice to see know more about - as they have weathered the storms quite well apparently....just sharing..

Divi's Laboratories

VST Tillers Tractors

GAIL (India)

Syngene International

Hawkins Cookers

Godrej Consumer Products

Eicher Motors

Maruti Suzuki India

HDFC

Power Grid Corporation of India

PI Industries

Larsen & Toubro

ITC 

Please speak to your advisor before actually investing. 

And some of these companies have probably outlived its time! have they?....

Jamna Auto

Orient Refractories

Pearls...natural or cultured !

 #thejoyofInvestmemts

#blueskypremiere

#thejoyofinvesting

21 Pearls of financial wisdom

1) Bonds are for storing wealth and equities are for creation of wealth.

 2) In my opinion, the biggest asset one can have is zero debt. 

3) The greatest discipline in personal finance is living below your means.

 4) As Ben Carlson says, emotions cannot be back tested. That’s why past bear market always looks like opportunities and future ones scary. 

5) Early financial independence and early retirement are completely different. To me, the former is a blessing and the latter is a curse.

6) Don’t think how it would have been if you’ve started 10 years ago. Start today and visualise how you would feel 10 years from now. 

7) The neighbourhood we live determines our life style & spending. Need to be careful in choosing one which matches our goals and personality.

8) Paying minimum balance regularly on credit card is the maximum sign that you’re getting into debt trap.

9) Many are long term investors till next bear market. 

 10) Don’t take aggressive bets. Take measured risk. Remember one blunder can push you back by a decade or more in terms of wealth. 

 11) Big money can be made through high savings, wise investing and lots of patience. 

12) Trying to get rich fast is a foolproof way to lose what we have.

 13) Losing opportunities is far better than losing money. Don’t invest in fads. 

14) “Making as much money as quickly as possible” is not an investment strategy. Unfortunately for most of us that is the strategy.

 15) Aggressive strategy cannot be a substitute for high savings. Save high and take moderate risk than saving less and taking high risk. 

 16) The day we realise not losing is as important as winning; we would stop blindly chasing returns. 

 17) Good periods are more than bad periods. By not timing, though we go through bad periods, do not miss even a single good period. 

 18) We’ll stop looking for quick money the moment we consider stocks as businesses and realise that our wealth grows in line with business growth.

19) There are periods of high returns, low returns, no returns and negative returns. We need to go through all these to get long term returns.

20) Listening to market forecasts is not only useless but can be very harmful too; if you start acting on them.

21) The hard truth is only around 3% of our population are in a position to aspire for financial independence. Don’t waste this rare privilege.

ETF or Index Funds?

Courtesy : Advisorkhoj

Passive Investing: Should you invest in ETFs or Index Funds

Courtesy: Advisor Khoj

Dwaipayan Bose  |  |

Passive investing i.e. investing through ETFs or index funds is very popular in the developed economies. Passive mutual fundswere launched in the 1970s, but their popularity soared globally after the Global Financial Crisis of 2008. As on March 2020, global assets under management (AUM) in passive mutual funds crossed $5 trillion (source: S&P Dow Jones Indices). In the US, which accounts for 68% of global passive funds AUM (as on March 2020), passive AUM topped actively managed AUM in August 2019 (source: Bloomberg).

Passive investing in India

In India actively managed mutual funds still rule the roost, but there seems to be growing interest in passive investing in recent years. 10 years total passive AUM in India was less than $1 billon. 5 years back it was $2 billion and now it is $24 billion (as on December 2019) – growing at CAGR of nearly 65% over the past 5 years (source: etfgi.com). Though AUM of passive funds (ETFs, index funds) have clocked dramatic growth rates in recent years, in terms of share of overall assets, passive funds account for only 7.5% of the mutual fund industry AUM as on December 2019 (source: etfgi.com), which is substantially lower compared to developed markets.

In our view, there seems to be a lack of awareness and clarity about passive funds in India. In this article, we will discuss about passive funds and how to invest in these funds.

What are passive funds?

Passive mutual fundsto invest in a basket of stocks which replicate a market index e.g. Sensex, Nifty, etc. Weights of stocks in a passive fund mirror the weights of the constituents in a market index. Unlike actively managed mutual funds, the fund manager of a passive mutual fund does not aim to beat the market. The fund manager simply aims to give index returns to investors and reduce tracking error. Tracking error is deviation of fund returns from the index returns.

Benefits of passive funds

Low cost: Expense ratios (TER) of passive funds are much lower than actively managed funds. For the similar underlying fund portfolio performance, passive mutual fundswill provide higher returns to investors compared to active funds. Let us try to understand the impact of cost on returns with the help of an example. Let us assume that TER of an active fund is 2.25%, while that of a passive fund with the same benchmark index is 1.1%. This means the manager of the active fund has to beat the benchmark index by 1.15% (alpha) just to match the performance of the passive funds.

No unsystematic risk: In order to beat the index (create alpha), the fund manager will have to be overweight or underweight on certain stocks in the index. This will result in unsystematic i.e. stock or sector specific risks in addition to market risk. Sometimes the fund manager’s strategy may pay off and the fund will beat the benchmark, but sometimes, it may not pay off and the fund will underperform the benchmark.There is no unsystematic risk in passive mutual funds. Passive mutual fundsonly have market risks and you will get market returns subject to tracking error.

Underperformers have lower weights: Market benchmark index constituents are usually weighted based on their market cap. Higher the market cap of a stock, higher will be its weight in the index. This method of index construction automatically gives higher weights to outperformers and lower weights to underperformers. By extension, passive funds which track the index will also have weights for outperformers and lower weights for underperformers.

Simpler investment: In passive funds you do not have to check the performance track record of the fund manager across different market conditions, how long has he / she been managing the fund, understand his / her stock selection strategyetc. You simply have to decide which market index you want to invest in and then select a fund which has low cost and tracking error. Often higher cost is the source of higher tracking error. So if the cost of a passive fund is low, then the tracking error is likely to be low.

Types of passive funds

There are two types of passive funds – Exchange Traded Funds (ETFs) and Index Funds. In terms of investment objectives ETFs and index funds are exactly the same. Both aim to track / replicate a specific market index. Often investors and financial advisors use the terms ETFs and index funds interchangeably. However, there are important differences between the two which investors must understand.

Difference between ETFs and Index Funds

How to decide between ETFs and Index Funds?

We have discussed key differences between ETFs and Index Funds in the previous section. Many online blogs on this topic suggest that if you have a demat account or are willing to open a demat account then you should invest in ETFs. Otherwise, go for Index Funds. In our view, the differences run deeper than simply having dematted accounts. Here are some factors you should consider when deciding between the two.

Cost: Cost of ETFs including the transaction costs like brokerage, STT, GST, stamp duty etc. are lower than Index Funds. Purely from a cost viewpoint, ETFs have an advantage over Index Funds.

Liquidity: This is a very important consideration because unless you are redeeming in lot sizes, you can sell ETF units only in the stock exchange. In other words, you need to find a buyer, if you want to sell your ETFs. Some ETFs are quite liquid, while others may not be liquid. You have to look at average daily trading volumes of your ETF to get a sense of its liquidity. Liquidity also depends on market conditions. This may require some investment experience. Liquidity is not an issue with index funds because you can redeem with the AMC.

Experience: If you have investment experience in the stock market buying and selling stocks, then investing in ETFs will be easier for you because ETFs are very similar to stocks. You should know what price to buy, sell, look at trading volumes and know what to do with dividends. Index funds, on the other hand, are mutual funds. As such, they have all the advantages that are associated with mutual funds e.g. convenience, flexibility, investing through SIP / STP etc.

Conclusion

Passive investments are becoming popular all over the world, including India. In the coming years, you will hear more and more about passive investments. In this blog post, we discussed about passive funds, their benefits and different types of passive funds. We also discussed about key differences between ETFs and Index Funds, and how you can go about deciding between the two. While cost is always an important factor, you should also give some thought to liquidity and your own investment experience when deciding what to select between ETFs and Index Funds. As always, if required, you should consult with your financial advisor and make informed investment decisions.

Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.

#patiencepays
#thejoyofassetallocation
#thejoyofinvesting

A farmer had a calf and he took good care of the calf. As the calf grew so did the farmer’s expenses. He didn’t want to wait for the calf to become an Ox, instead sold it and bought several sheep.
 He realised breeding sheep is not easy and they take long to give birth. He sold the sheep and bought hens that would lay eggs daily.
After a few months he realised the hens started laying less eggs until one day the hens couldn’t produce anymore .
The farmer was devastated. And then he remembered the calf he had started off with. After changing from one breed to another and all the hard work nothing had changed in his life

www.blueskygroup.in

With the markets carrying on their tizzy circus, what should I do now?

*What should investors do now?*

Despite the carnage that has overtaken the global markets and including India, I feel that these are opportune times to review and re look at fundamentally good companies that have corrected ~20-30% from their peaks.

While, I would not advise to add 100pc of the total available funds in one go, I would definitely suggest and encourage not to shy away from the markets at such opportune times.

Admittedly, volatility is high. But many all weather stocks like HDFC Bank, ICICI Bank, Bharti Airtel, Bajaj Finance, Maruti, L&T, ITC etc, are now trading at relatively better valuations.

For those in the MF space, and wanting to shy away from equity markets, it would be prudent to look at the Banking PSU Debt Funds or Low Duration Funds with a decent paper quality only.

For the long term investors, parking into Low Duration Funds and STPs over a 18 month period into equity funds would be a good starting point now.

And for the long term equity investors, an initial allocation of 10 to20 % of fresh lcash slowly and steadily using bottom-up approach might just be the right antidote.

#thejoyofinvesting #patiencepays
#blueskypremiere

Water and sewage cleaners .... in India

Water and the treatment of sewage cleaners; how we become participants in a cultural adharma – courtesy DevDutt Pattanaik

Water plays a very important role in Hindu mythology. Every form of water seems to be linked to a god, and to a caste. The sea is called Varuna, the father of Lakshmi. He is the source of all water. The sea also gives salt and fish, without asking anything in return, which also makes him the symbol of generosity. From the sea come clouds, from the clouds come rain. The rain, in turn, is released by Indra. Indra becomes the god of fresh water who brings rain from the sky. So, the sea god is the father of Lakshmi, goddess of wealth, while Indra is the husband of Lakshmi, who rides white clouds and hurls thunderbolts on dark, rain-bearing clouds.
Rivers and ponds are considered feminine. All the rivers are considered goddesses, associated with apsara or damsels, who flow onto earth (earth is also visualised as a female, Bhoodevi) before returning to their father’s house. Thus, the circle of water is seen as a movement from the sea god, through the rain god, via river goddesses, moving back to the sea. Ponds are also associated with nymphs and creatures known as yakshas, who take the form of birds and fishes to protect these water bodies.
Across India, a tirtha yatra is basically from one water body to another, from one river, to a river confluence, to a bathing ghat, to a pond. Every temple is attached to a pond, also known as Pokhari, in the eastern part of India, Kunda, in the southern part of India and Talav, in the northern part of India. You see this practice even in Sikhism, where the holiest shrine, the Harmandir Sahib, also known as the Golden Temple, has a pond. Muslims also value water: one cannot start the reading of Namaz, without washing one’s hands and feet.
In ancient India, you will see that the water management system is strongly linked to caste. The Brahmin was supposed to perform rituals to get the rain. Therefore, temples are built across India, especially in the southern part of India, where a water pot is kept on top of the temple, almost beseeching the gods to bring in rain. The water flows down the pyramid-shaped roof and reaches the base, where you find, again, images of pots, overflowing with plants, grain, and flowers, indicative of prosperity following the arrival of rain.
The Kshatriya, or the king, who controlled the land, was responsible for building water bodies, like ponds and step wells, to retain the water which came from the heavens. Rainwater harvesting, thus, came under the Kshatriya’s domain. The Vanik, or the Vaishya, utilised this rain. He built canals for the farms and ponds for cattle and buffaloes. He made sure there was enough water for human consumption, as well as for plant and animal consumption in the village. So, he was a water utilizer.
The Shudra, or rather Ati-Shudra, the lowest rung of the service-cadre, was supposed to clean the village, and the toilets, and the garbage. He formed the waste management community. But he was never given respect, despite his role in the cycle of water. He was seen as dirty, unhygienic, polluted. No god was associated with sewage water. We hope this water will be purified on its own when mixed with rivers, and sea, but this does not happen as keeping these atishudras out of the village, the cycle of life is broken, a rupture is willy nilly created that has destroyed social order.
Shudras were denied access to common village resources, like food from the farm, water from the village well, clothes and pots from the craftsmen, despite playing a critical role. He who dealt with efflux of wastewater was seen as inferior to those associated with inflow of freshwater, though part of a life-giving cycle.
Even today, those who clean sewage systems are treated like sewage. They are kept at a distance, not given protective gear, not given cleaning materials to wash before they go home. They often fall prey to toxic gases. Constant contact with dirty smell has a negative impact of mental health. We have festivals for inviting water into our homes, no festivals for dirty water that leaves our homes. Surely a national day is needed for those who clean our sewers, a day to ensure we do not continue to strip them of dignity and deprive them of fair wages.
How many of us have met the men and women who clean our gutters and our cess pits? Do we know their names? Do we offer them gifts once a year, check if they regularly receive fair wages, or least make sure they have good protective gear, or material to clean before they return home? Have we outsourced this to a callous government. If not we are participants in a cultural adharma.

Also read:  http://ris.org.in/pdf/aiib/31May2018/Background_Note.pdf

The Dal - Roti approach to investing ...a primer

"I know my risk appetite and I know it changes based on earnings. Be open to change"

• Spend wisely. Don't be wasteful with your money
• Avoid Debt, except for buying a house
•  If there is an existing high-interest loan going, repay it first rather than investing
• Be patient with your investments. Patience is a virtue
• Increase your investments, with every increase in income
• In the field of finance, you learn every day....it is never complete!

There are several theories on investing. The dal- chapati approach is always, always better. Try the greens and pickles as garnishing, and top it off with some ras malai, once in a while!
But sticking to the basics, always...always matters!

#thejoyofinvesting