Can Historical Returns Repeat Again?

We had seen extraordinary returns in equity mutual funds in past. But do you think past returns can be seen again in future?
We have seen exponential growth after 2014 elections and now markets are by all means over valued. After demonetization household money, bank FD, unaccounted money came into the market and that to via mutual fund route increasing the total AUM of the mutual fund industry. As number of SIP's are getting increased and money keeps coming into mutual funds they have no option but to buy stocks at premium or stop taking investment which handful of outperforming schemes did.

Looking at the data it is clear that DII's are buying and FII's are selling. Of course, why FII's will hold their positions when they have earned handsome returns by investing early.

Everyone know market is trading at premium. For healthy growth some correction should happen in the market.

Corona is not yet gone. We had a big nose dive n splendid recovery from last year's March and April.

Lets see how it pans out.

Rush to launch Flexicap and US Equity Mutual Funds

In last one month we saw many AMC's have launched Flexicap, Multicap and US/NASDAQ Mutual funds.

Why such rush? 

AMC has seen that people are not thinking of diversification of there allocation and US with its storng growth has given good returns in the past. So people are rushing to US equity. Thus every AMC wants to take a bite.

Muticap or Flexicap provides good diversification in Indian Market.

Some of the Flexicap has given 22% + CAGR in last 5 years. 

Looking at this, fund houses are launching and people are subscribing to it.

CRISIL / Money Control / Morning Star also does not rate mutual fund till it  completes certain time period after NFO. I saw one NFO garner lot of money which I think was not expected even by fund house.

I will prefer to wait for 3 years atleast to suggest or invest in a NFO fund.

Diversification is good.

However keep in mind that over diversification will lower the returns.

After all Diversification should not become DI(e) versification.

Will Nifty touch Nifty 17000?

Have you thought that Nifty will touch 16600 in August Expiry?

Is this the rise before the BIG fall? Or will this rally continue? Question is how high it will go? 

In last few months FII's sold and DII's were buyers of Mutual funds.

For common people who are investing in mutual funds via SIP or Lump sum this rally will give them breather.

Some of you might have invested in ELSS in the month of March. Every year this happens with (my clients as well). Most of them have SIP in ELSS but if there is some shortfall in 80C then they prefer to invest in ELSS as that is the only product which has lowest locking period and relatively higher returns.
And every year one or two new clients joins the party in the month of February or March for TAX saving purpose.

In anyway this rally is making us feel better and giving confidence to invest in market.

But valuation states otherwise.

Election Result And Market Sentiments

Today we witness 400 points swing in Nifty during election result time. It was a traders day. Some must have lost and some must have gained which is always the case.

Nifty 10400 Option opened around 70 and hit low 23 and bounced to 105...
What a swing...one lot...around 4000 profit ( I am not calculating point to point as it is difficult to exactly buy on low and sell on high)buy 10 lot, 40K in an hour...it was indeed traders day.

Yes, it needs lot of patience, study and nerves of steel to see your option going from 70 to 23 and still wait and watch... and finally reap the fruits at 100+

This election result showed us lot of unexpected things...
Result was not one sided as claimed...
Majority was not given to single party y people.
This will now set the course for 2019 elections which all are eyeing for.

Why Investment In Mutual Fund Is Relatively Safe Than Investing in Direct Equity

If you are an EXPERT in picking stocks then you will get more returns than mutual funds. But if you are not then this is for you.

A mutual fund is both an investment and an actual company. This may seem strange, but it is actually no different than how a share of Infy is a representation of Infosys. When an investor buys Infosys stock, he is buying part ownership of the company and its assets. Similarly, a mutual fund investor is buying part ownership of the mutual fund company and its assets. The difference is Infosys is in the business of making software and taking projecs, while a mutual fund company is in the business of making investments.

Mutual funds pool money from the investing public and use that money to buy other securities, usually stocks and bonds. The value of the mutual fund company depends on the performance of the securities it decides to buy. So when you buy a share of a mutual fund, you are actually buying the performance of its portfolio.

The average mutual fund holds hundreds of different securities, which means mutual fund shareholders gain important diversification at a very low price. Consider an investor who just buys TCS stock before the company has a bad quarter. He stands to lose a great deal of value because all his rupees are tied to one company. On the other hand, a different investor may buy shares of a mutual fund that happens to own some TCS stock. When TCS has a bad quarter, it only loses a fraction as much because may be TCS is just a small part of the fund's portfolio.

Start of Mutual Funds in INDIA

Do you know how mutual fund got started?
Let dive into the history of mutual funds.

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India (UTI) at the initiative of the Reserve Bank of India (RBI) and the Government of India. The objective then was to attract small investors and introduce them to market investments. Since then, the history of mutual funds in India can be broadly divided into six distinct phases.

Reference : Moneycontrol

What is Mutual Fund

A mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested in capital market instruments such as shares, debentures, and other securities. The income earned through these investments is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

Investments in securities are spread across a wide cross section of industries and sectors and thereby reduce the risk. Asset Management Companies (AMCs) normally come out with a number of schemes with different investment objectives from time to time. A mutual fund is required to be registered with the Securities and Exchange Board of India (SEBI), which regulates securities markets before it can collect funds from the public.

Reference : Moneycontrol