Defaults & Recovery, Fooled by Complexity & More!

In the fourth chapter of our serialized book, Zen And The Art Of Investing, we look at “complexity” and why the lure of complexity is the most difficult to resist. As investors, we have to be aware of the false promise of complexity when taking the simplest of financial decisions like deciding between Lumpsum and STP, choosing the SIP date, SIP frequency (monthly or weekly) etc. If you have ever bought into a complex investment plan because it backtested well, then do read and let us know your comments.

 

Overtime we learn to identify “greed” and “fear”. We learn from the past.

It is complexity that always gets us. 

With investing and investment advice the promise of false complexity is what the investor has to be most aware of and will find the hardest to avoid. 

 

Some easy rules which can help in keeping your investing simple are –

1/ SIP – keep it going through rain and shine

2/ Increase SIP amount to match the increase in your annual salary

3/ Always talk to 3 close aides before taking a transaction decision

4/ Check your portfolio once a quarter

 

 

Mutual Fund industry AUM increased to R 25.47 lakh crore in August from Rs 24.53 lakh crore in July. The industry witnessed inflows of Rs 102,538 crore in August as against Rs 87,087 crore in the previous month. Equity-oriented schemes saw inflows of Rs 9,090 crore in August, up 12.3% month-on-month.

 

The Mutual Fund industry added 5.3 lakh new investor folios in August, taking the overall folio count to 8.53 crore. In comparison, 10.29 lakh folios were created in July 2019. The number of folios under equity and equity-linked saving schemes rose by 4.11 lakh to 6.16 crore in the same period. Folio count of Debt funds has increased to 66.75 lakh, a jump of 1.5 lakh folios over the last month. Liquid funds and Low duration funds have contributed most to this growth with folio count in these categories standing at 16.42 lakh and 9.15 lakh respectively.

 

DSP Mutual Fund has recovered dues worth Rs 150 crores from DHFL. In June 2019, DHFL had made half payment for money borrowed through commercial paper route. In a statement, DSP Mutual Fund stated – “Over the past two months we have been engaged with the issuer for the pending recoveries, the remaining amount of 75 crores was paid on 7 September 2019 resulting in a complete recovery”.

 

Altico Capital India Ltd has defaulted on interest payment of Rs 19.9 crore on an overseas loan taken from Mashreq Bank of Dubai. The NBFC has Rs 4,000 crore+ in outstanding debt, of which mutual fund schemes have exposure of ~ Rs 500 crore. The default in interest payment comes along with a series of rating downgrades. CARE Ratings downgraded it from AA- to B, while India Ratings had downgraded the company’s long and short term debt by one notch to “IND A+” and “IND A1″ respectively earlier this month.

 

 

Index Returns

Index 1W 1Y 3Y
NIFTY 50 1.2% -2.6% 8.3%
NIFTY NEXT 50 1.6% -10.3% 16.7%
S&P BSE SENSEX 1.1% -0.9% 9.7%
S&P BSE SmallCap 3.3% -20.7% 1.2%
S&P BSE MidCap 2.3% -15.0% 1.8%
NASDAQ 100 0.5% 4.4% 18.7%
S&P 500 1.0% 3.5% 12.2%

Source: BSE / NSE

 

Top 5 best performing funds

Name 1W 1Y 3Y
Franklin India Feeder Franklin Europe… 4.7% -10.8% 2.9%
Reliance Power & Infra 4.1% -5.4% 6.4%
HDFC Infrastructure 4.1% -11.7% -2.7%
Reliance Small Cap 3.9% -15.0% 9.0%
Invesco India Feeder Invesco Pan Euro… 3.4% -9.3% 7.0%

Source: Kuvera.in

 

Top 5 worst performing funds

Name 1W 1Y 3Y
Kotak World Gold -6.9% 32.0% -4.3%
UTI Credit Risk -5.6% -2.8% 4.1%
DSP World Gold -4.9% 46.5% -3.9%
Reliance Ultra Short Duration -3.8% 2.6% 5.6%
Franklin India Feeder Franklin US Opp… -2.8% 4.2% 18.2%

Source: Kuvera.in

 

What Investors Bought

We saw the most inflows in these 5 Funds –

Name 1W 1Y 3Y
Mirae Asset Emerging Bluechip 1.6% 3.5% 13.3%
Mirae Asset Large Cap 1.3% 1.2% 11.6%
UTI Nifty Index 1.2% -1.4% 9.4%
Axis Bluechip 1.3% 6.6% 13.8%
Kotak Standard Multicap 1.7% 0.7% 10.3%

Source: Kuvera.in

 

What Investors Sold

We saw the most outflows in these 5 Funds –

Name 1W 1Y 3Y
Edelweiss Arbitrage 0.1% 7.4% 6.9%
ICICI Prudential Regular Gold Saving -1.3% 20.4% 5.2%
Quantum Gold Saving -1.3% 21.0% 5.2%
ICICI Prudential Regular Saving 0.5% 8.2% 8.8%
DSP World Gold -4.9% 46.5% -3.9%

Source: Kuvera.in

 

Movers & Shakers

1/ Tata Mutual Fund has announced that Murthy Nagarajan is replacing Naresh Kumar as Fund Manager of Tata gilt securities fund with effect from 14 September 2019.

2/  Franklin Templeton Mutual Fund has appointed Sandra Martyres as an independent director on the Board of Franklin Templeton Trustee Services.

 

Quote of the week:

 

That’s been one of my mantras – focus and simplicity.

Simple can be harder than complex: you have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.

: Steve Jobs

 

 

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