At this time last year, stock markets were on a tear. Everything seemed happy, and the new year seemed to carry that right on. But that euphoria was short-lived as stocks nosedived steadily from there and show no signs of letting up. Don’t let the Nifty and Sensex numbers fool you! Especially if you were a mid-cap investor last year. This year has been a trying time for you! And let’s not start on debt markets and the jolts it received.
Well, we’re not giving you any lengthy discourse on asset allocation, category allocation, credit risk or anything else. At least, not in so many words. Instead, we’ll let our articles this year do the talking. Over the course of this year, we have repeatedly extolled SIPs as many of you began losing faith in the trusted investment method. We’ve tried to assuage your fears about your equity funds going back on all the gains they made the year before. We’ve pitched into the fixed deposit versus debt fund battle. All this, and more.
So here are ten articles we think will address all your concerns and leave you with a hopeful view of 2019.
Let’s start with the biggest question this year – “why is my equity fund underperforming?”. This article was written halfway through 2018, but the points it makes are still relevant today. 2018 was a completely skewed year in stock returns and that’s reflecting in equity funds. Keep faith, and keep patience, and remember that equity is long-term.
Active? No, passive! No, active!
A consequence of equity fund underperformance is that the question of active-versus-passive funds reared its head again. Going by the 1-year returns, the passive champions seem to have the upper hand. But as our analysis points out, actively managed equity funds tend to lag towards the end of a long market rally. This article looks at various aspects of active fund performance, category-wise and where active funds still hold strong. And it shows that SIPs truly are the king.
While we’re on the subject of SIPs, the equity market slide caused many to pause or stop their SIPs. We think that the SIP is the best route to investment for any investor. We’ve written several articles on SIPs over this year, showing multiple angles of the benefits of this method of investing. Here’s one such example. Yes, we know this makes 11 posts. But its for a good cause!
If there’s one thing we repeatedly say, it is that you cannot time markets. That highs and lows are known only in hindsight. That SIPs ensure you buy on dips and highs. But you want to get more than just SIPs out of market falls. How? We’ve got an easy method that doesn’t require any number crunching or any knowledge of PE ratios or earnings or anything of the sort. Interested? This article explains it.
Caught your eye, didn’t it? No, we don’t mean guaranteed returns. We mean a method by which you can ensure that you’re able to maintain a steady cashflow from your investments in a tax-efficient manner. This is the systematic withdrawal plan. SWPs (from debt funds, usually) are more reliable as a cashflow source than dividends and more tax-efficient than fixed deposits. There’s a second part to this article, if you’re interested.
Talking of debt funds, the interest rate hikes this year have translated into banks raising their deposit rates. Coupled with seemingly low debt fund returns, many of you demanded answers. Here’s our argument on why debt funds score over FDs and how you should be looking at debt fund returns when comparing them with FD interest rates.
Pick liquid funds the right way
Another factor stirring up tensions was rating downgrades. 2018 has been a year for debt fund and interest rate lessons. Several investors were shaken after a liquid fund and other very short-duration debt funds delivered steep losses. So if you want to invest liquid funds, we have pointers that can help you make a better and less risky choice.
Talking of choosing funds, we always tell you to pick based on your goals. But what is goal-based investing? How do you draw up a goal and work out how to invest? We’ve got an easy guide that can help you get started.
This isn’t about aggressive hybrid funds. It is about how to bring your asset allocation back in line or rebalancing your portfolio. Surely, you didn’t think we’d forget about asset allocation this year with all the turmoil that went on? Rebalancing aligns your investments with your goals and risk. It also helps you book profits in what went up and invest more in what went down. This article explains the whys and hows of rebalancing.
Adapting ratings to the new norms
Last October, SEBI issued rules on what defined each mutual fund category, what defined large/mid/small cap, and what defined high and low credit risk. These rules, and that fund houses could have only one fund per category, saw a shuffle in fund mandates and portfolios. It also changed the nature of each category in terms of risk and return profile. In response to this and the changing nature of debt and equity markets itself, we tweaked and refined our fund rating methodology. We have explained the changes we made and how we addressed the challenges thrown up by the new definitions.
- Merger of Navi Overnight Fund into Navi Liquid Fund and Navi Conservative Hybrid Fund into Navi Aggressive Hybrid Fund
- Intimation of suspension of subscription in Bandhan US Equity Fund of Fund
Winning Funds, Losing Streaks: Decoding the Mystery of Short-Term Underperformance
Wealth Conversations – November 2024- Notice of Change in Fundamental Attributes of DSP Equity & Bond Fund and DSP Quant Fund
