Two major incidents in Debt Markets & learnings from that:

1. @FTIIndia saga of #Winding up 6 #DebtSchemes

2. Delay in @KotakMF #FMPs repayments to Investors & giving time to Borrowers to repay

Disclaimer: Not justifying their actions/inactions/investments etc.
Hugely negative reactions by Media/Investors/MFDs - vociferously blaming respective AMCs, filing Court cases, knocking on doors of the regulator and beyond

Did not make an effort to understand actions of the #AMCs which were done to protect #InvestorInterests
What were choices with AMCs:

1. Winding up by FT/ Delay by Kotak or,

2. Sell underlying collateral at huge discounts, pay what is recovered to #Investors & raise their hands as this is part of #CreditRisk
Or, Wind up/delay in repayments to protect Investor interests?

This only harmed their image, spoiled their reputations, loss of AUMs and huge commercial losses to the AMCs, rap on their knuckles by the Regulator thru penalties, etc.
AMC actions were purely to protect interests of the Investors, recover full amounts or to the maximum extent - at the cost of some liquidity delays.

Both AMCs were looked at with suspicious eyes with the misguided thoughts that it was to dupe investors to pocket their coffers
With kind of back lash these AMCs got for doing what was right for the benefit of Investors, in future any AMC will think 10 times before protecting Investor interests.

They will only raise their hands, pay what they can and pass on #CreditRisk & #LiquidityRisks to Investors
Only stating that they did some mistakes due to omissions & commissions (post IL&FS fiasco), but post that tried to do what was in the best interests of investors
But to state and brand them as villains, accuse them of filling their own coffers was where we have failed in collective thinking

Great outcomes in the interests of investors is evident for all to see. Some delays in liquidity but so far full recovery
1. FT has already repaid 95% of o/s amounts with amazing returns to investors as well against misguided narratives that Investors will lose 50-80% of their investments &

2. Withing six months of delay, Kotak had repaid all due amounts with interest in 2019 itself in all FMPs
These are best known brands locally & internationally. Trust them to do what will be in best interests of the Investors

In future be patient post such events,do not jump to wrong conclusions,give them time to resolve issues,cooperate during this process,they will not let us down
Finally, remember that India has a great Regulator keeping a very keen eye on Investor protection.

There may be some stray incidents like these. Keep faith in our Regulator as well all the MF houses to do what is in best interests of Investors
These situations happened with these two AMCs this time. There were other AMCs earlier in similar situations. In future it can happen with some different AMCs as well.

Please remember this Tweet thread before having a knee jerk reaction.

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More from @IamMisterBond

8 Sep
My thoughts on NFO of @KotakMF Multi Cap Scheme:

Post recategorizations of schemes, most erstwhile Multi Cap Schemes were converted to Flexi Cap schemes where Fund Managers can decide what Allocation to which Market cap bias.

Thanks to that, there are very few Multi Caps available now which allocates min 25% each to Large, Mid and Small Caps and balance 25% that can be at the discretion of the Fund Manager.
What is the benefit of Multi Caps?

1. It takes away Fund Manager bias of going overweight or underweight in any market Cap bias

2. Most Flexi Caps are overweight on Large Caps
Read 7 tweets
6 Sep
10 Reasons why Investment Returns are not Investor Returns.

Do not miss this session. It may give you many answers in how to behave in current market valuations.

Get your own invite after registering on:
Bull market horror stories:

1. Did an investor whose portfolio value go up from 10,000 to 1,75,000 finally end up making huge money?

Register here to know outcome for above investor:
2. Did a Genius investor who booked profits worth 200 months of his salary ended up enjoying it?

To know answer to above question, get your own invite after registering on:
Read 4 tweets
4 Aug
My interview with @MubinaKapasi on the Money Show on @ETNOWlive : what is #AssetAllocation and how does #DAAF fit into AA:

Currently it makes sense to do SIP/STP into DAAF and then switch to Equity on corrections

Don't worry it is my interview only😀😉
At this juncture if you have FOMO, you may regret in future. As Harry Markowitz said in his Thesis on Risk-Reward Tradeoff:

Our Value STP follows 1X, 3X, 100X formula:

Lumpsum in Liquid/Equity Saving and switch into:

1X - in DAAF in Red Zone (current)
3X - in Equity in Yellow Zone
100X - Equity in Green Zone
Read 7 tweets
18 Jul
Many have asked me about spate of IPOs and NFOs launches and my thoughts. Should they invest or not?

Another question: why are AMCs launching NFOs at expensive valuations?

My thoughts on this subject:
If you had bought 5kg of sugar from a grocer & you order another 2kgs next day, will the grocer not sell you more? They are in the business of selling you day to day groceries.

What and how much you need is your choice as a customer. You cannot blame the grocer for selling
Put differently:
Which medicine(scheme) needed for which patient(Investor) is job of a Doctor(MFD) or patient(DIY Investor). It is not job of Pharma Companies(AMCs).

Just because Pharma Cos repackage the medicines, does not mean patients should increase their dose
Read 8 tweets
5 Jun
#FTSaga Update:

One more tranche of 3205 crs repaid on Jun 4'21

I had written an article on 24th April 20, day after @FTIIndia winding up schemes

In the end, I had mentioned a few points on what to expect going forward. Let me take each point and see where we stand today.
Link of my April 2020 article for ready reference:

Point No 1:
This is not delay or default and no haircuts so far

FM was asking time for reversal of Risk Aversion & markets to stabilise & normalise

Proven correct
Point No: 2

This is to give better value to Investors at cost of delayed liquidity

Again proven correct from almost 71% collections so far at far better values than on the date of winding up
Read 10 tweets
3 Jun
Investors have short memories and wish to dissect market phases based on what suits their sensibilities.

Current hot topic of discussions on Social Media:
How Mid and Small Caps have delivered stupendous returns since March 2020
What they have conveniently forgotten is their recent past experience of investing in Mid & Small Caps from Jan 18 to Dec 19 and till Mar 20

Above table shows entire journey of same Indices over different time periods vs 2 popular DAAF schemes and vs Smart Solution of MisterBond
Many have questioned our exit from Equity in July 2020(after entries in March 2020):
As @morganhousel has mentioned in his book:
It is not being conservative but creating Margin of Safety. This raises odds of success at a given level of risk by raising your chance of survival
Read 7 tweets

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