Multi-asset allocation funds are a talk of the town these days. And I am gonna tell you things about this category that no one would have told you until now.

Also briefly talk about Edelweiss Multi-Asset allocation Fund and why it is different.

1/n First let’s understand what are the regulations around multi-asset funds.

As per regulation a multi-asset fund is required to invest minimum 10% each in 3 asset classes minimum.

They can be commodities, fixed income, equities, international equities, etc..

2/n

A lot has be talked about SIPs and its benefits.

Here’s a different take on
How to win the SIP MATCH? Run your SIP like a MARATHON.

It is persistency that matters.

Subscriptions in @EdelweissMF international FOFs opens from tomorrow 21st June 2022. FAQs on re-opening of inflows in international funds.

1. What kind of subscriptions are allowed?

Any lumpsum, systematic and switch transactions will be allowed into international funds/FOFs.

It can be done by existing or new investor.

Soccer, embarrassment and wrong moves in market. A 🧵

During a penalty shoot in soccer, the ball takes less than 0.3 sec to travel to the goal. 

There isn't enough time for the goalkeeper to watch the ball’s direction, and he must take a decision before the ball is kicked.

1/n On the other hand, the players who take the penalty, shoots one third of the time at the middle of the goal, one third of the time on the left and one third of the time on the right. 

Goalkeepers, of course, have spotted this behaviour, but what do they do? 

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Know your MF - A series explaining various important MF regulations that make them really sahi🙂

2nd in this series, here are 5 things that makes Indian mutual funds very different from others financial products in India or its peers in developed world.

1/n 1. Skin in the game - alignment of interest of key employees with unit holders.

This regulation ensures that key employees of the fund house have meaningful stake in funds they manager/oversee

See regulation here

sebi.gov.in/legal/circular…

2/n

Some good developmental changes by @SEBI_India on Passive Funds

1. IAP expense reduced from 2bps to 1 bps. FOF inevsting primarily in such passive funds will not have to charge 2bps. So no double charge of IAP now. 2. New norms for debt ETFs/Index funds

- Graded single issuer limit based on credit rating
- Group level exposure limit for debt index
- Separate replication norms for index funds/etfs based on corporate bonds, corporate plus Gsec/SDL and pure Gsec/Sdls.

Why are equities so resilient despite decade high inflation, massive FII selling, worst ever geo-political environment and reversal in rate cycle world over?

Some quick thoughts in this thread..

1/n Possibly investors are relying on certain assumptions or some other counter force is working in tandem.

Let's see each of these factors:

1. High inflation

The assumption could be that inflation might soon start cooling off and rate hikes may not be that sharp.

2/n

Know your MF - A series explaining various important MF regulations that make them really sahi🙂

1st in this series let's understand one very recent regulation for debt mutual funds that classify their Potential Risk Class based on thier credit and interest rate risk.🚫

1/n Lets start with Debt MF 101📝

Debt funds have mainly 2 risks - Interest rate risk and credit risk🚫

Credit risk comes from downgrade or default in a bond amd impacts NAV📉

Interest rate risk arises from changing yields explained in more depth👇

2/n

https://twitter.com/avasthiniranjan/status/1365980928036642816?t=G5d7kkZISnv4vrucn9Wuvg&s=1

What is yield curve and why it is important to track for investors.

A thread...

Do share if you find it useful.

1/n What is a yield curve?

It is a curve that shows the interest rates (yield) of similar nature debt instruments (Gsec or AAA PSU Bonds) having different maturities.

It shows the difference between short term and long term yields in the economy.

2/n

🧵 on Bond laddering - A technique to reduce interest rate risk in your fixed income portfolio and create a predictable stream of income.

Do RT and share with more people to spread the awareness. This can be the future of fixed income investing in India.

1/n Investor seeking stable income from their portfolio usually prefer investing in bonds or bond funds.

One popular way in developed market to invest in bonds or Target maturity bond funds is by creating a ladder of bonds with various maturities.

2/n

Nifty LargeMidcap 250 Index. An index worth your attention.

🧵

About this index:
This is a unique index which combines 2 core and prominent market segments of Indian equities - largecaps and midcaps.

It allocates 50% to top 100 companies and 50% to next 150 companies

1/n It provides equal allocation to largecaps and midcaps at any given point. The allocation is reset to 50% every quarter.

Stock weights within 50% allocation to each basket is based on FF marketcap.

2/n

Reason to invest in Passive funds... A 🧵

Passive investing is the most simplest form of investing. It may also he called rule based investing where there is no human intervention.

1/n Most passive funds in India are based on broad market indices which simply puts together a bunch of companies based on their marketcap size and then weight them using Free float marketcap.

2/n

Price tag...
🧵
One Sunday morning in pheonix mall at mumbai something unusual happened.

Customers noticed shirts with price tag of Rs. 20k+, pair of trousers for Rs.15k+.

A leather wallet for Rs. 13k and a jacket for mind-blowing Rs. 40k.

1/11 One curious customer went to a sales staff and found that she was showing a man Rs. 225/- 24 carat 7gm gold chain. When he looked inside the counter he saw a real diamond ring for Rs.95/-

2/11

Long term yields are attractive than short term yields.. how to benefit from this without getting caught wrong footed.. A 🧵

Thanks to a steep yield curve, (situation where long-term yields are higher than short term) many investors today are left confused. 1 year maturing bonds are yielding around 4% to 4.5%, while longer maturity bonds are yielding around 6.5% -7%. The term-spread (1 yr. over 10 yrs. maturity bond yield) of over 2.5% is at decadal high levels.

A 🧵 on how negative real rates impact economy, savings and markets.

What should investors do during periods of negative real interest rates like now?

1/n Real interest rate is
(Nominal interest rate - inflation)

If RBI policy rate is 4% and inflation is 2%, then the real interest rate in the economy is 2%

On the other hand, if inflation is 6%, then the real interest rate is -2% (negative real rate)

2/n

A 🧵 on Hybrid Mutual Funds.

Understanding different strategies in this category and what to expect and what not to expect from them. And for whom these funds are a right fit?

1/n What are different strategies within hybrid category?

1. Aggressive Hybrid Equity Funds
2. Balanced Advantage Fund/ Dynamic Asset Allocation Funds
3. Equity Savings Funds

Aggressive Hybrid Equity Funds invest 65% to 80% in equities and remaining portion is invested in debt.
2/n

A thread on 7 simple personal finance rules.

1. Don’t bother to track every penny you spend. You'll lose focus on the big picture.
Instead, focus saving big on those big ticket items. Cut down on large, recurring purchases and then later, if necessary, focus on penny items.
1/n Spend money on things that you really enjoy and not on those you don’t. As Ramit Sethi said best “live a rich life by spending EXTRAVAGANTLY on the things you love, and cut costs mercilessly on the things you don’t”.

2/n

A thread explaining difference between ETFs and Index Funds.

What are ETFs and Index Funds?

Both are from the same family called passive funds, which mirror the index that they follow.

They both aim to track the performance of the underlying index as close as possible.

1/n What is the difference between Index Funds and ETFs?

The key difference is unlike index funds, ETFs are listed on exchange and one can invest at real time NAV.
2/n

A short thread on making sense from rising US bond yields.

There are broadly 2 occasions when US Bond yields have risen post stimulus.

1. Policy tightening or signals of policy tightening by the US Fed.

2. Strong reversal in growth and rise in inflation expectations.

1/n Let's see what are the implications on equity markets and other economic factors under each of the above scenario.

1. Rise in US Bond yields due to policy tightening.

US Bond yields rise sharply if there's premature withdrawal of stimulus that was announced during crisis.

2/n

A thread to understand all about State Development Loans (SDLs).
Why you should invest now and how?

1. What is an SDL?
They are market borrowing by various States of India in form of bonds. These bonds are auctioned by the RBI on regular basis in the same manner as G-Sec.

1/n They share similar characteristics such as:

-The coupon rate for each state is decided by the auction process
-The RBI conducts the auction process on behalf of States
-The interest is paid on semi-annual basis with bullet payment on maturity
2/n

A thread to understand this new category of debt funds - Target Maturity Index Funds.

How it is different from other debt funds, what are the benefits and risks one need to know while investing in such funds.

RT and share if you find it useful.

1/n What is meant by Target Maturity debt fund?

As the name goes, target maturity debt fund has a specific maturity date on which it matures.

A fund having target maturity as 30th April 2026 will end on that day and proceeds will be given back to the investor.

2/n