If Franklin dint write off #Vodafone, it could have lead to a run on the fund because of #AGR. #Franklin is probably expecting a downgrade and hence a preemptive move. It seems to have learned from the JSPL example. (1/2)
Franklin can side pocket only if the rating falls below BBB- as per SEBI guidelines, the current action is a write off and not segregation. (2/2)
Because it's not segregated and new investors can potentially benefit with an upgrade in the future, they have limited new investment to 2 lakh per pan.
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Continuing our Mutual Fund Education Series, here’s the 3rd thread; this will demystify the Hybrid Mutual Fund categories for you.
Do ‘re-tweet’ & help us educate more investors to make the right investing decisions (1/9)
(Q1) What are Hybrid Funds?
Hybrid funds are funds, which invest in multiple asset classes like
- Equity
- Debt
- Gold
- Preference Shares
- REITs & InvITs
With an objective to reduce volatility (vs pure equity funds) & try an generate better risk adjusted returns (2/9)
(Q2) Types of Hybrid Funds?
- Conservative Hybrid Fund
- Balanced Hybrid Fund
- Aggressive Hybrid Fund
- Dynamic Asset Allocation (DAAF) or Balanced Advantage Fund (BAF)
- Multi Asset Allocation Fund
- Arbitrage Fund
- Equity Savings Fund (3/9)
Continuing our Mutual Fund series, this thread will focus on ‘Demystifying the Debt Mutual Fund Categories’
Do ‘re-tweet’ & help us educate more investors (1/10)
Debt Mutual Funds have 16 different categories & these categories are differentiated on 3 major parameters,
(1) Average Maturity (2) Mac Duration (3) Credit Risk (2/10)
What’s Average Maturity?
Average maturity is similar to your tenure in FD. If your FD has a 3-year tenure, you expect the FD to mature in 3 years. Similarly, if the average maturity of a debt fund is 3 years, it means that all the bonds in which the scheme has invested, their weighted average maturity is 3 years. Open ended mutual funds do not mature as such but Average Maturity gives you an idea that 3 years is atleast what you should have as a time horizon if you want to invest in this scheme with a 3 years of average maturity. (3/10)
"Should we invest or wait now that the markets are at an all time high?" - an investor asked.
I dint want to sound technical & hence told him about India's liquidity story. Do 're-tweet' this quick small 🧵, retail will benefit I think (1/8)
- I remember in the early days of my career, I was told markets fell ~60% during Lehman crises because FII's withdrew $2B
- Go back 10-15 years & FII's were a major reason markets moved in India
- Not any more
- Today FII's have only 16.5% holding in India, a decadal low (2/8)
The biggest reason market falls in India are shallow is the domestic money now,
- $2B is the monthly SIP book of the MF industry (remember Lehman?)
- Plus lumpsum investments in MF
- Plus Insurance & pension money
There are 1500+ schemes in mutual funds spread across multiple categories. To build the right portfolio, you need to understand the categories well. It’s less about the scheme & more about the category you choose in Mutual Funds.
This 🧵 is all about the Equity Category. Do ‘re-tweet’ & help us educate more investors (1/11)
As per SEBI guidelines, mutual fund schemes are classified as,
(1) Equity Schemes - Investing in Large, Mid & Small Cap Equities (2) Debt Schemes - Investing in Bonds (3) Hybrid Schemes - Investing in a mixture of Equity & Debt (4) Solution oriented Schemes - For retirement & Children planning (5) Other Schemes - Index Funds, ETF’s & Fund of Fund (2/11)
In this post, we will focus on Equity Schemes. In Mutual Funds there is a clear definition of what is called a large cap, mid cap & small cap.
- Large Cap Stocks are the top 100 stocks by market capitalization
- Mid Cap Stocks are stocks from 101 to 250 by market capitalization
- Small Cap Stocks are 251 & below in market capitalization (3/11)
RBI's new guidelines on Default Loss Guarantee (DLG) explained below in this 🧵
Do 're-tweet' :) (1/7)
If I want to take a loan, the cheapest always is the Bank & if I dont get it at the bank, I will approach an NBFCs.
Banks & NBFC's are good with Home Loans, Car Loans etc but the penetration of personal loans is not that large & is growing in demand (2/7)
Banks with all their network are still not able to create the reach that FinTech has been able too & hence if Banks / NBFC's partner with FinTech lenders, this is solvable.
- Banks will get the required reach
- FinTech will be able to lend at lower rates (14-17% vs 22-24%) (3/7)