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Old 30th April 2016, 16:12   #1126
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Default Re: The Mutual Funds Thread

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Originally Posted by nowwhat? View Post
For instance, IDFC Premier Equity made some wrong bets in the run-up to the last general elections and its performance suddenly dipped. It took them some time to change direction and they were one of the first to invest heavily into SKS Microfinance, a move I thought was risky considering SKS had just come out of financial fraud. The fact is that all this is reflected in the statistics somewhere, for instance in the turnover ratio, but unless one knows causation the data on its own might make no sense.
I think the departure of Kenneth Andrade also had a lot to do with decline. For many SME investors Kenneth was God, so there were large disinvestments.

Take HDFC funds, the stars have been the Prashant Jain funds. He took some big calls into PSU banks which did not pan out, and the performances dipped.
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Old 1st May 2016, 16:29   #1127
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Default Re: The Mutual Funds Thread

Folks into numbers, see if you can decipher this...

Case in point - ICICI Prudential Focused Bluechip Equity Fund

For example sake I picked up the last 1 year numbers

Morning star says this about the Upside / Downside Ratio (last 1 year)

Name:  morningstarratio.PNG
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Formula for Downside Ratio

Name:  dmcratio.PNG
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Excel Calculation based on the above formula yields (last 1 year)

Name:  excel calc.PNG
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Does anybody have any clue how morningstar is arriving at those numbers. I have the daily NAV & BSE 100 numbers if someone would want to play around with it.

I mean its clear that the Index did beat the Fund (Downside Ratio) but morningstar says otherwise.
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Old 2nd May 2016, 11:45   #1128
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Default Re: The Mutual Funds Thread

Hi,

I have a question for the experts here.

When I look at the sector allocation of my funds, I see that many of my funds have more than 15% in the financial sector. For example, Franklin India High Growth Companies has 36.19% sector allocation in financial. My portfolio seems to be leaning towards financial at this point of time.

Is there any particular reason why most funds have a financial sector bias? Considering NPAs and the fact that some of the banks like ICICI had the worst 4th quarter results, what do you think is the strategy here?

Thanks,

Pradeep

Last edited by pradkumar : 2nd May 2016 at 11:47.
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Old 2nd May 2016, 14:17   #1129
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I started my first sip today. Since my kyc was not available anywhere, I was not able to do anything online. So walked into a franklin templeton office and told them that I need to start a tax shield and that my kyc needs to be done. They have started the process. They are saying that it will take at least 2 months for my kyc to go to the registered process in camskra. Started tax shield direct growth plan. Does it really take 2 months?

Parallely have requested to fundsindia to start an account and they have promised kyc to be registered within a week. I am thinking the process will become redundant once franklin templeton is through.

Also, once I hit my 80c ceiling, what are the best funds to look for? The franklin guy was the opinion to look at diversified small and mid caps. I was thinking large caps was the way to go. Confused.?
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Old 2nd May 2016, 14:20   #1130
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Default Re: The Mutual Funds Thread

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Hi. I am completely new to Mutual Funds and currently going through online portals and discussing with few friends to understand how it works. Having said that, I have registered with FundsIndia and working out the KYC process with them.

I would like to understand what would be the best option to invest and maintain Mutual Funds. Is it buying them directly from the Fund House Website or is it safe doing it via channels like FundsIndia?
You could get your KYC done via Funds India and then directly start investing in the respective MF house. Go for the direct plans.
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Old 2nd May 2016, 16:14   #1131
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You could get your KYC done via Funds India and then directly start investing in the respective MF house. Go for the direct plans.
Is it possible to get KYC done first without investing in any MF through these websites?
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Old 2nd May 2016, 17:08   #1132
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Default Re: The Mutual Funds Thread

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When I look at the sector allocation of my funds, I see that many of my funds have more than 15% in the financial sector. For example, Franklin India High Growth Companies has 36.19% sector allocation in financial. My portfolio seems to be leaning towards financial at this point of time.

Is there any particular reason why most funds have a financial sector bias? Considering NPAs and the fact that some of the banks like ICICI had the worst 4th quarter results, what do you think is the strategy here?
Underlying indexes are biased towards the financial sector. Thus it follows that MFs also follow similar weightages.

Nifty 50 usually has weightage of 20-25% in banking/finance and around 15% in IT and Energy. Any MF which follows Nifty 50 will usually track this weightage to be roughly in sync with the underlying index.

Some private banks like ICICI are tagging NPAs aggressively and making provisions, but most analysts agree that asset quality of private banks is not as bad as PSU banks. The first green shoots of an economic turnaround will usually come in the banking sector.

PS: On a second glance, Franklin India High Growth Companies having 36.19% in banking/finance looks a little too much. Perhaps you could try and fathom why.

Last edited by nowwhat? : 2nd May 2016 at 17:23.
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Old 3rd May 2016, 11:04   #1133
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Default Re: The Mutual Funds Thread

nowwhat? -- Thank you for your comments.

With reference to Franklin India High Growth, Nifty 500 is the benchmark for this fund, and it has a 26.12% financial sector allocation. I am not unduly worried about financial sector allocation of this fund because it has 7.99% of its assets are in HDFC Bank and this is one bank that is doing extremely well. (My other funds have less than 2% asset allocation towards HDFC Bank.)

This fund has 8.54% of its assets in ICICI Bank, 7.8% in Axis Bank, 7.48% in SBI, and less than 2% in BoB, Federal Bank, and PNB.

https://www.valueresearchonline.com/...chemecode=5141

PS: Did the Thank you button disappear?

Quote:
Originally Posted by nowwhat? View Post
Underlying indexes are biased towards the financial sector. Thus it follows that MFs also follow similar weightages.

Nifty 50 usually has weightage of 20-25% in banking/finance and around 15% in IT and Energy. Any MF which follows Nifty 50 will usually track this weightage to be roughly in sync with the underlying index.

Some private banks like ICICI are tagging NPAs aggressively and making provisions, but most analysts agree that asset quality of private banks is not as bad as PSU banks. The first green shoots of an economic turnaround will usually come in the banking sector.

PS: On a second glance, Franklin India High Growth Companies having 36.19% in banking/finance looks a little too much. Perhaps you could try and fathom why.

Last edited by pradkumar : 3rd May 2016 at 11:14.
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Old 5th May 2016, 13:59   #1134
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Is it possible to get KYC done first without investing in any MF through these websites?
In the old times, it was possible.

Currently most of the MF agents/banks will do it for you, if and only if you invest!

Try FundsIndia, they are very helpful.

Last edited by mithun : 5th May 2016 at 14:00.
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Old 5th May 2016, 14:47   #1135
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Does anybody have any clue how morningstar is arriving at those numbers. I have the daily NAV & BSE 100 numbers if someone would want to play around with it.

I mean its clear that the Index did beat the Fund (Downside Ratio) but morningstar says otherwise.
I did a little exercise myself today and while I have no clue how Morningstar or Value Research crunch their numbers, I could not get your numbers either.

Firstly the formula you posted is from another website and is not Morningstar's formula. As per Morningstar,

Quote:
Downside capture ratios are calculated by taking the fund's monthly return during the periods of negative benchmark performance and dividing it by the benchmark return.
However the formula you posted seems to make more sense than the simplistic one that Morningstar uses.

That said, here is what I found.
  • Downside Capture ratio is calculated only for those months for which the index gives negative returns. In December 2015, Nifty 50 (the underlying index) gave positive returns (0.14%) whereas the fund gave negative returns (-0.63%). This underperformance would not be captured by the Downside Capture ratio.
  • In the previous month, the fund beat the index giving 0% returns whereas the index gave negative returns (-1.62%). Makes one wonder what is going on.
  • For the monthly returns I used Value Research, but then I realized I have no clue how VR calculates the returns itself. For June 2015, VR shows the fund's monthly return as -1.33%, the price on June 1st was 29.32 whereas on June 30th it was 28.99. Try as I might, I cannot get -1.33%.
  • Using your formula, I got a Downside Capture ratio of 98% whereas using a simplistic formula, I got 97.32%, still nowhere close to Morningstar.
  • If you look at the cumulative returns, the fund did beat the index on the downside, but not by much.

All of this is giving me a headache. I hope someone else here can answer your queries better.

Last edited by nowwhat? : 5th May 2016 at 14:52.
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Old 5th May 2016, 14:54   #1136
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Default Re: The Mutual Funds Thread

OT:

My 2.5 year old son have few Thousand Rupees pocket money with him. I would like to invest the same in his name (part of his future pocket money too - few thousands/year) :-). What the options available? (MF/PPF/FD or any other)

Last edited by Latheesh : 5th May 2016 at 14:57.
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Old 5th May 2016, 15:05   #1137
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OT:

My 2.5 year old son have few Thousand Rupees pocket money with him. I would like to invest the same in his name (part of his future pocket money too - few thousands/year) :-). What the options available? (MF/PPF/FD or any other)
Without a doubt, Mutual Funds

By the time he gets to college, he will be glad you did. The long period is really good for mutual funds to put your money to work. And you can invest for as low as Rs. 500. The paperwork sure is going to be a hassle, but I would still insist on Direct Plans.

I would invest in something like ICICI Dynamic which is conservative and tries to save your capital from erosion.
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Old 5th May 2016, 15:21   #1138
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Default Re: The Mutual Funds Thread

Quote:
Originally Posted by Latheesh View Post
OT:

My 2.5 year old son have few Thousand Rupees pocket money with him. I would like to invest the same in his name (part of his future pocket money too - few thousands/year) :-). What the options available? (MF/PPF/FD or any other)
Pocket money for a 2.5 year old
That aside, pocket money is for the kid to spend, not invest.
That doesn't mean that you shouldn't invest in his name. You should, but from your own pocket.
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Old 5th May 2016, 16:02   #1139
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@nowwhat? - Thanks

@Jaguar - :-) Sorry, not pocket money, it is part of gifts he receives. He keeps all money he receive in one box now.
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Old 25th May 2016, 18:10   #1140
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Hi,

I have understood to some extent what is standard deviation, sharpe and sortino ratio, and beta. However, I have no clue about alpha.

Can somebody provide an example of alpha? I am taking a wild guess here. Does it indicate by how much it has outperformed the benchmark index, that is, S&P BSE 200 in this case?

In the screen shot, I have taken two funds from the same category for the comparison.

Note: Axis Long Term Equity Fund is a tax planning fund, though the name is a misnomer.

Thank you,

Pradeep
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Last edited by pradkumar : 25th May 2016 at 18:13.
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