Raghunadh Dasari’s Post

Q. “Are Index funds better than active mutual funds ??? ” A. In index funds, the money gets invested based on an index. Example: a Nifty 50 index fund will invest its money in Nifty 50 stocks. A fund manager does not choose the stocks to buy, hold, or sell. In the case of actively managed mutual funds, there is a fund manager who decides which stocks to buy, hold, and sell. Index vs active mutual funds: this is an old debate. In the US, index funds have performed better — even in the long term. In India, this is not clear. Over the long term, many active mutual funds have done better than index funds. But there are also times when index funds have done better than active mutual funds. It’s hard to comment on which will perform better in the future.

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🔎 Finding the Best Stock Broker in India? 📈 Ready to choose the right stock broker for your investment needs? Our latest blog post offers a detailed guide on the best stock brokers in India for 2024. ✨ Highlights Include: - Top brokers ranked for their services and fees - Detailed comparisons of brokerage charges, account features, and customer support - Tips to help you select a broker that suits your trading style and financial goals - Whether you’re an experienced trader or a beginner, this guide will provide valuable insights to make an informed decision. 👉 Explore the full list and find your perfect stock broker: https://lnkd.in/gQwCYYUc #StockMarket #Investing #Finance #StockBrokers #InvestmentAdvice #Trading

A fund that has given a total return of over 70% in the past 1 year. How did the Nifty Alpha50 achieve this? As this fund is a collection of top 50 stocks selected solely based on the performance and Alpha score of a stock present in it, these returns are possible. Based on this theory, stocks from the Alpha50 index are regularly removed or added based on their performance and alpha score. As of August 30th, 2024, this fund has consistently delivered impressive total returns over the past few years. Notably, it achieved a remarkable return of 73.58% in the last year alone, looking beyond that, the performance since inception and last 5 years were also quite impressive with total returns of 21.93% and 38.54% respectively. But let's not ignore the risk factor, this is a fund that is characterized to be risky as per the standard deviation value. So, before considering this fund it is better to check your risk profile and investment goals. If you are confused and need help with understanding this fund more in detail. Download IndexFundsSahiHai App and get Risk-Profile Recommendations to choose the right index fund for yourself. PS: Link in the Pinned Comment / Profile Bio #knowyourindexfunds #lowcostinvesting #indexfunds #mutualfund #investing #indexfundssahihai #niftyalpha50 Data Source: https://lnkd.in/dW_3UZej Disclaimer: Index funds are subject to market risk. Please read all the scheme-related documents carefully before investing. The term “Sahi Hai” does not intend to suggest that any investment is universally suitable or correct for anyone. Investors are advised to consult their distributors or advisors before investing.

Q. “How is it that index funds have tracking error, just keeping a track of the index (that too which changes quarterly or semi annually) is the least thing to do. But then why do so many (specially Active large Cap Funds) fail to beat the index ?” Yes, in case of index funds, tracking error is one of the most important factors to be careful about. It sounds simple — invest in the stocks present in the index. But this can actually be challenging for index funds. Since index funds are buying stocks worth tens and even hundreds of crores at the same time, they can cause the price of those stocks to go up. In such cases, some stocks may be bought at higher prices — leading to lower returns. This is more common in the case of stocks that have low liquidity. In addition to that, index funds also have to pay brokerages, marketing fees, admin costs, and other running costs. They also need to manage cash coming into the index fund (new investments) and going out of it (withdrawals). All of these cause the return of the index fund and the return of the actual index to be different — also called tracking errors. Good index funds are able to manage their expenses and cash more effectively. Such index funds have very low tracking errors. Why are active mutual funds not able to beat index returns? Explaining this is a bit more complicated. In short, the markets are becoming more “efficient”. What this means is that stock opportunities to invest and generate very high returns are lower. Because of this, fewer mutual funds are able to give better returns. Only the best fund managers and their teams are able to find the stock opportunities.

Q. “Why is it so that returns in Index funds are less as compared to Equity funds?” A. First, let’s address this — your statement is not always true. Many times index funds give higher returns than comparable equity mutual funds. In mutual funds, a fund manager decides which stocks to invest in, which to sell, and which to continue holding. In index funds, the stocks are bought based on the index. Example: Nifty 50 is a list of 50 biggest companies in India’s stock markets. A Nifty 50 index fund simply invests in these 50 stocks. Nobody chooses which stocks to buy and which to sell. The index fund simply copies the index. It has been seen in the past that many equity mutual funds give higher returns than index funds. This means the fund manager was able to avoid bad stocks and invest in good stocks — and therefore gave higher returns. But many times, this can be difficult. It can result in the fund manager performing poorly. In such a case, index funds’ returns can be higher than the equity mutual funds’ returns. It varies from case to case. Example: in the USA, it is quite common to see a large-cap mutual fund give lower returns than index funds.

The recent market corrections have opened an opportunity to search for Value businesses. In volatile times as currently seen, value investing tends to shine, and Nifty200 Value 30 ETF presents an ideal opportunity to capitalize on undervalued stocks. Through the article in Deccan Herald, Mr. Chintan Haria, Principal – Investment Strategy, ICICI Prudential AMC has explained how this new smart beta ETF provides exposure to top value stocks in a hassle-free manner. It makes a great option for those looking to enter or rebalance their portfolios amidst market fluctuations. Please read the complete here: https://lnkd.in/diQYxvyz @mitu | @adil | @roshni | @srushti | @Darshini #passiveinvesting #smartbetaETFs #Valueinvesting

𝗪𝗵𝗮𝘁 𝗶𝘀 𝗮𝗻 𝗘𝗧𝗙? Exchange-Traded Funds (ETFs) are a type of investment fund that are traded on stock exchanges, much like individual stocks. They offer a way to invest in a diverse portfolio of assets without having to buy each one individually. Let's look at few of the characteristics of an ETF: [1] 𝗗𝗶𝘃𝗲𝗿𝘀𝗲 𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼: An ETF holds a collection of assets, such as stocks, bonds, or commodities. This means when you buy shares of an ETF, you are essentially buying a small portion of all the assets it holds. [2] 𝗧𝗿𝗮𝗱𝗶𝗻𝗴 𝗼𝗻 𝗘𝘅𝗰𝗵𝗮𝗻𝗴𝗲𝘀: ETFs are traded on stock exchanges. You can buy and sell ETF shares throughout the trading day, just like you would with individual stocks. [3] 𝗟𝗼𝘄𝗲𝗿 𝗖𝗼𝘀𝘁𝘀: ETFs often have lower fees compared to mutual funds because they are passively managed. This means they aim to replicate the performance of a specific index (like the S&P 500) rather than actively selecting individual investments. 𝗘𝗧𝗙 𝘃𝘀. 𝗠𝘂𝘁𝘂𝗮𝗹 𝗙𝘂𝗻𝗱: [1] ETFs can be bought and sold throughout the trading day at market prices, similar to stocks. Mutual funds, however, are traded only once per day after the market closes, at the net asset value (NAV). [2] Most ETFs are passively managed, meaning they track an index and have lower management fees. Mutual funds are often actively managed, which can result in higher fees. [3] ETFs generally have lower expense ratios than mutual funds, making them a more cost-effective choice for many investors. [4] ETFs usually do not have minimum investment requirements, whereas mutual funds often require a minimum amount to invest. Share your thoughts in the comments below. #Markets #Finance #Investing #India #Lesson: 49

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