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View Poll Results: Stocks as a percentage of my net assets are -
0 - 25% -- I'm like the most conservative Indians. I love FDs. 396 32.27%
26 - 50% -- I have a few stocks. 549 44.74%
51 - 75% -- I'm an active trader. 201 16.38%
76 - 100% -- Hey, I'm an i-banker!!! 81 6.60%
Voters: 1227. You may not vote on this poll

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Old 9th July 2019, 10:33   #4006
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Re: Do you play the stock market

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Originally Posted by carboy View Post
If anyone in planning to invest in RBI's Sovereign Gold Bonds - check out buying from the secondary market rather than buying directly from RBI. The older bonds usually trade at a discount to whatever rate the current RBI bonds are offering.
I just looked it up on ICICIDirect. There is zero liquidity. Unlikely your trade will get executed even if you put a limit order.

Do you play the stock market-icicidirect.jpg
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Old 9th July 2019, 10:43   #4007
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Re: Do you play the stock market

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I just looked it up on ICICIDirect
ICICIDirect actually doesn't allow you to buy SGB in the secondary market. They only allow you sell SGBs in the secondary market. (try placing a buy order - it will error out & not allow you). Other brokers allow you to both buy & sell.
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There is zero liquidity. Unlikely your trade will get executed even if you put a limit order.
Market depth is low for SGBs in the secondary market. However, at any time there is usually 2 or 3 series which are available to buy. I have purchased lots of SGBs from the secondary market.

Last edited by carboy : 9th July 2019 at 10:44.
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Old 9th July 2019, 21:55   #4008
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Re: Do you play the stock market

Thanks for your reply @smartcat.
My current investment is all in equity, mostly mutual funds. 60% of my money is invested in small and midcaps and rest in large caps.
Is it a good time to move some money to Gilt funds? I dont have much experience in debt investments. However, it seems Gilt funds have given huge returns in last year. So, I am not sure if they are a good investment bet now.

I strongly feel Indian equities will underperform in the foreseeable future and I don't have any hopes on this govt to turn around the economy. This govt seems to have turned into one of the worst socialistic one who just takes the easy way of taxing the rich to run the country.
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Old 9th July 2019, 22:21   #4009
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Re: Do you play the stock market

Look what I found - www.vested.co.in.





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Originally Posted by adimicra View Post
Is it a good time to move some money to Gilt funds? I dont have much experience in debt investments. However, it seems Gilt funds have given huge returns in last year. So, I am not sure if they are a good investment bet now.
Anytime is a good time to invest in gilt funds. It is always a good idea to keep a certain medium to high percentage of your portfolio in gilt funds. However, do note that gilt fund NAVs can go down if RBI increases interest rates. But hold it like you hold equity mutual funds for 3+ years, and you will make money. Also, it is the fund manager's job to gauge RBI's policy and he will make adjustments to your gilt portfolio (short term bonds or long term bonds)
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Old 9th July 2019, 22:46   #4010
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Re: Do you play the stock market

Thanks. Never liked Gold in any format. As for the govt bond ( via gilt fund), one should be careful. The recent return looks very good since bond yield fell to 6.59 from 8.23. As you know, if yield were to go up, then it will fall. Sometimes you will make -ve returns also. I understand that it should be fine if one has a longer horizon. But nobody wants to see paper loss in debt investments. It would be better to stick to liquid funds.

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I have not tried Interactive Brokers India. I'm not too keen on investing in US stocks. That's because Indian and US markets are highly correlated. If there is a global financial or geopolitical crisis, both the markets will go down.

For diversification, it is better to invest in either gold or government bonds.
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Old 11th July 2019, 10:50   #4011
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Re: Do you play the stock market

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As you know, if yield were to go up, then it will fall. Sometimes you will make -ve returns also. I understand that it should be fine if one has a longer horizon. But nobody wants to see paper loss in debt investments. It would be better to stick to liquid funds.
Correct me if I am wrong, but even when we look at past 3 year or 5 year returns, I think Gilt funds' performance isn't bad at all. For example, please review https://www.valueresearchonline.com/...hemecode=17166. While liquid funds might work okay for short term investments, I believe gilt funds seems to be a good alternate to equity on a long term basis.
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Old 11th July 2019, 11:01   #4012
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Re: Do you play the stock market

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Originally Posted by ece2k2 View Post
Correct me if I am wrong, but even when we look at past 3 year or 5 year returns, I think Gilt funds' performance isn't bad at all. For example, please review https://www.valueresearchonline.com/...hemecode=17166. While liquid funds might work okay for short term investments, I believe gilt funds seems to be a good alternate to equity on a long term basis.
Their performance looks good because interest rates have been on a downward trajectory over this period. Once interest rates start moving up you won't see that kind of performance. These are typically long term bonds and best time to buy them is when you feel interest rates have peaked.
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Old 11th July 2019, 11:02   #4013
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Re: Do you play the stock market

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Originally Posted by adithya.kp View Post
As for the govt bond ( via gilt fund), one should be careful. The recent return looks very good since bond yield fell to 6.59 from 8.23. As you know, if yield were to go up, then it will fall. Sometimes you will make -ve returns also. I understand that it should be fine if one has a longer horizon. But nobody wants to see paper loss in debt investments. It would be better to stick to liquid funds.
If you can handle the volatility of equity funds, handling the volatility of govt securities funds should be easy. Perhaps 50% equities, 40% govt securities funds and 10% liquid funds is a good idea.

If interest rates rise too much, remember that your equity funds will take a big hit too.

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Correct me if I am wrong, but even when we look at past 3 year or 5 year returns, I think Gilt funds' performance isn't bad at all. While liquid funds might work okay for short term investments, I believe gilt funds seems to be a good alternate to equity on a long term basis.
Before jumping into govt securities funds, do a quick study on the relationship between bonds and interest rates.
https://www.investopedia.com/ask/ans...p-bond-prices/

Once you understand how g-sec mutual funds work, you can go ahead and invest. Top gilt funds have managed to match the returns of an average large cap equity mutual fund over the long term. But g-sec funds are not an "alternative" to equity funds. You need to have a mix of both.

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Their performance looks good because interest rates have been on a downward trajectory over this period. Once interest rates start moving up you won't see that kind of performance. These are typically long term bonds and best time to buy them is when you feel interest rates have peaked.
No need to time the markets. It is the fund manager's job. If he feels that interest rates will rise, he will sell long term govt bond and buy short term treasury bond (3 months to 12 months duration). Your gilt fund will "behave" like a liquid fund if he moves 100% of assets to short term bonds. But g-sec fund managers usually maintain 75/25 or 25/75 ratio between short term g-secs and long term g-secs.

Valueresearchonline gives this data - this particular fund has 58% in long term g-secs and 42% in short term g-secs/money markets. This changes based on fund manager's understanding of interest rate scenario.

Do you play the stock market-gilt.jpg

Last edited by SmartCat : 11th July 2019 at 11:20.
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Old 11th July 2019, 11:33   #4014
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Re: Do you play the stock market

IMO, volatility and risk is acceptable in equity. But certainly not in debt instruments. ( Even if you have a longer horizon) .Its good only if one is sure that interest has peaked and will come down.

I dont think the fund managers are competent enough to switch between t bills and g sec based on the cycle. Also, gilt funds are mainly in g-sec. In the past , there have been instances where they returned huge -ve returns.

Btw thanks a lot for the reference to vested.co.in. Looks interesting. Anyone here uses it?

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If you can handle the volatility of equity funds, handling the volatility of govt securities funds should be easy. Perhaps 50% equities, 40% govt securities funds and 10% liquid funds is a good idea.

No need to time the markets. It is the fund manager's job. If he feels that interest rates will rise, he will sell long term govt bond and buy short term treasury bond (3 months to 12 months duration). Your gilt fund will "behave" like a liquid fund if he moves 100% of assets to short term bonds. But g-sec fund managers usually maintain 75/25 or 25/75 ratio between short term g-secs and long term g-secs.
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Old 11th July 2019, 11:41   #4015
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Re: Do you play the stock market

Santhosh has already answered it. As for your comment on liquid fund working well only for short term, its a wrong way to look at it. Its the underlying papers that are short term. ( <91 days). But you as an investor can treat it as your long term debt investment. Like other debt categories, you will get indexation benefit on gains , if held for > 3 years.

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Correct me if I am wrong, but even when we look at past 3 year or 5 year returns, I think Gilt funds' performance isn't bad at all. For example, please review https://www.valueresearchonline.com/...hemecode=17166. While liquid funds might work okay for short term investments, I believe gilt funds seems to be a good alternate to equity on a long term basis.
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Old 11th July 2019, 13:29   #4016
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Re: Do you play the stock market

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Correct me if I am wrong, but even when we look at past 3 year or 5 year returns, I think Gilt funds' performance isn't bad at all. For example, please review https://www.valueresearchonline.com/...hemecode=17166. While liquid funds might work okay for short term investments, I believe gilt funds seems to be a good alternate to equity on a long term basis.
Quoting from personal experience. I have lost money in Gilt mutual funds. Post demonetization, I expected interest rates to fall. Interest rates actually went reverse way and I lost money. Have written (The Mutual Funds Thread) about it earlier in MF thread.
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Old 11th July 2019, 17:19   #4017
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Re: Do you play the stock market

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Quoting from personal experience. I have lost money in Gilt mutual funds. Post demonetization, I expected interest rates to fall. Interest rates actually went reverse way and I lost money. Have written (The Mutual Funds Thread) about it earlier in MF thread.
Thank you for the heads up. Since the interest rates are kind of cyclical, one could make money if we are prepared to wait it out - correct?

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Santhosh has already answered it. As for your comment on liquid fund working well only for short term, its a wrong way to look at it. Its the underlying papers that are short term. ( <91 days). But you as an investor can treat it as your long term debt investment. Like other debt categories, you will get indexation benefit on gains , if held for > 3 years.
My real concern with the liquid funds is their returns. When I am trying to build a retirement corpus, liquid fund returns seem to be pretty modest. Ironically, I have more than 20% of my portfolio in liquid funds, but I am still not sure if it is sensible on a long run.

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Once you understand how g-sec mutual funds work, you can go ahead and invest. Top gilt funds have managed to match the returns of an average large cap equity mutual fund over the long term. But g-sec funds are not an "alternative" to equity funds. You need to have a mix of both.
In spite of investment managers advising me to put my money in equity for a long term horizon (10 to 20 years), I am still not very confident to make the move. I have around 15% of my portfolio in equity. I am planning to purchase more equity oriented funds if there is a big correction in the market, but not otherwise.

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Their performance looks good because interest rates have been on a downward trajectory over this period. Once interest rates start moving up you won't see that kind of performance. These are typically long term bonds and best time to buy them is when you feel interest rates have peaked.
Understood, but if I look at the SBI gilt fund regular plan it has offered more than 8% returns since inception (2000). I am sure the direct plan could potentially give 0.5% more return. If we are prepared to stay invested for 10-20 years period, isn't the gilt fund more safer than the rest as they are backed by the government?
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Old 11th July 2019, 18:51   #4018
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Re: Do you play the stock market

Trailing 12 month return is 7.5%. Historical return is also around the same. Thats pretty decent for debt category. As for your retirement corpus, you cant build it with debt funds alone. You need equity exposure. The allocation ratio depends on the individual.

Btw I noticed that gilt fund market is not very big in India. Only four funds have AUM size > 1000 crore. And the biggest is SBM magum gilt with 1,524 cr. Not sure why its so low.

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My real concern with the liquid funds is their returns. When I am trying to build a retirement corpus, liquid fund returns seem to be pretty modest. Ironically, I have more than 20% of my portfolio in liquid funds, but I am still not sure if it is sensible on a long run.

Last edited by adithya.kp : 11th July 2019 at 18:56.
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Old 11th July 2019, 19:13   #4019
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Re: Do you play the stock market

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I would like to have more comments on the poor selection. Out of the listed stocks in my portfolio, would you rate HUDCO, RCF, Maruti, Aditya Birla Capital, ITC, etc as poor selections?
Aditya Birla Capital was one of the most favourite stocks of Analysts during 2017. I am holding currently and adding in SIP mode. My current average price per share is around 89 rupees.

Last edited by airbus : 11th July 2019 at 19:17.
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Old 11th July 2019, 21:55   #4020
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Re: Do you play the stock market

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Trailing 12 month return is 7.5%. Historical return is also around the same. Thats pretty decent for debt category. As for your retirement corpus, you cant build it with debt funds alone. You need equity exposure. The allocation ratio depends on the individual.

Btw I noticed that gilt fund market is not very big in India. Only four funds have AUM size > 1000 crore. And the biggest is SBM magum gilt with 1,524 cr. Not sure why its so low.
Agreed, liquid funds seems to be a genuine alternative to FDs and their returns aren't too bad either. I hope some sort of a correction happens soon in our stock market so that I can bump up my equity exposure to a decent level
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