PPF (Practical Personal Finance) Series

  DISCLAIMER: I am just a mutual fund enthusiast and not a SEBI CERTIFIED FINANCIAL EXPERT. This article is solely for educational purposes only and you should not invest in it, based on the opinions expressed in this article. You must consult a SEBI APPROVED FINANCIAL ADIVSOR before deciding to invest in this fund.  ========================================================================= [A] Background: Recently, someone, a colleague, asked me about how ICICI Prudential Innovation Fund is. In other words, is it worth investing in? I thought, rather than giving an answer to him personally, let me write a blog post on the same topic. As I have not written something for a long time now, this is a good chance to convert a question into a blog post. So, let's start! [B] Objective of the Scheme: Let us make it very clear. I will not do the review, purely based on what the brochure of the NFO claimed. I will present its "translation" or "meaning", as understood by me

  How is SIP better than Lum Sump? [A] Introduction: SIP stands for Systematic Investment Plan. If you decipher the full form, you will realize that SIP is basically a way of investing, rather, a systematic way. The whole idea of SIP is not new. The same thing is called “Recurring Deposit” (RD) if you prefer to invest in term or fixed deposits in a staggered manner. But yes, there is a difference between SIP and RD. Please note that here we have assumed that one is interested in doing a mutual fund SIP in an equity fund. An SIP is a way to invest money in the equity at regular intervals - generally that interval is monthly. That way, you keep investing a fixed sum of money at a regular interval that allows you to stagger your invested across the time lines (months, years) and also at the different levels of market. So, you keep investing when market is high, low or flat. That allows you to average your NPV. One advantage of this method is that you do not have to time the market. You ca

 [A] Introduction: There has always been a debate whether active style of investment is better or passive. In other words, should one invest in a typically actively managed mutual funds, or should one go for ETFs? Both the sides have their arguments and the arguments of both the sides are quite valid. Let us explore the issue further and conclude, which one is better - active or passive! [B] What is an actively managed mutual fund?: In simple terms, when a mutual fund's portfolio is designed by a fund manager, assisted by a team of researchers, it is called an actively managed fund. Such mutual funds' main aim is to beat their benchmark index (like Sensex of Nifty50) and generate so called "alpha". The proponents of this style of investment argue that investment is all about stock picking. And one can generate alpha by picking up the right shares. That, the market does offer "opportunities" for discovering under valued share (i.e. value investing) or a share

Hello all, We all know that diversification is a way to manage certain types of risks (not all types of risks can be diversified, but we will address that issue separately in future).  As an investor, we tend to invest in our home countries. And this is not limited to the investors from India. Indian markets (in terms of market capitalization) represent roughly 2% of the world (share) markets’ total capitalization. But still, on an average, all of us tend to limit our investment within India. While India is a great market to invest in (Even Investopedia agrees), it also means that by only investing in India, we are effectively ignoring 98% of the rest of the investable universe! This phenomenon is called Home Country Bias. It is understandable that people prefer to invest in their home countries as they are “aware of” or are “conversant with” the affairs of the home country and the companies of the same. One way to overcome this bias is to start investing outside India. When we look ou

  A lot of people debate about investing in IPOs. As a man, who is married to the school of behavioral finance, here are some reasons, why one can consider not investing in IPOs at all: 1. The company, that is looking to gather money from the market, has not got any track record to show, in terms of annual reports. All the information, that is available to the public, is only the disclosure by the company in the red herring prospectus. So, taking a call on its strategic business model is not going to be easy. Compared to that, there are hundreds of listed companies to choose from, with large amount of information available in the public domain. So, generally, it is a good idea to invest in a company by making an "informed choice", rather than trusting the self disclosures under red herring prospectus and the premium rate of the grey market. It is too risky to invest your hard earned money in that type of firm. 2. Some people argue that it is about making quick bucks by bookin

 Well, I am always looking for some good theme to write on. Have not written much off late on Personal Finance and Mutual Funds. Of course, I am only, at the most, a mutual fund enthusiast, who knows a bit more than many ill-informed or semi-informed people out there. One school of thought believes that NFOs (New Fund Offers) are useless bets. When you have so many existing schemes, why to go for a new scheme. While you have some historical data points and qualitative information (for example, the profile of the fund manager) to judge an existing scheme, not much is available on NFOs. The only thing you have is A BEAUTIFUL SALES PITCH. I also happen to belong to this school of thought (a thorough loyalist, even the same applies to IPOs, but we will talk about it later sometime). Let us start with the data of one recent NFO of HDFC Multicap Fund, derived from moneycontrol on 27 Dec, 2022. While the figures are not much legible, the graph clearly shows that the fund has beaten its benchm