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CAGR Insights – 20 Apr 2024

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index19-Apr-2412-Apr-24Change
Nifty 5022,15022,516-1.63%
Nifty 50020,38620,751-1.76%
Nifty Midcap 50 13,59314,052-3.27%
Nifty Smallcap 10016,26316,509-1.49%

Chart Ki Baat

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Chart courtesy – Goldman Sachs

Gyaan Ki Baat

Gross Domestic Product (GDP) per capita is a widely used measure of a country’s economic performance. It represents the average income generated per person in a nation within a specific time frame, typically a year. Calculated by dividing the total GDP of a country by its population, GDP per capita provides insights into the standard of living and economic well-being of individuals within a country. Higher GDP per capita generally indicates greater economic prosperity, access to goods and services, and overall quality of life. It serves as a key indicator for policymakers, economists, and analysts assessing a country’s economic development and growth trajectory.

Here’s the list of curated readings for you this week:

Personal Finance

  • Household Financial Concerns and Savings Decline in India – Household debt in India has surged to 40% of GDP. Financial stability reports highlight declining savings and increasing liabilities, signaling long-term economic challenges. Read here

  • India’s Growth Story: A Conversation with Mr. Sunil Singhania, CFA – The CFA Society India podcast features an insightful discussion on India’s growth story and parallels with China, emphasizing the nation’s potential as a global investment destination and the role of government policies and reforms in driving economic development and manufacturing growth. Watch

Investing

  • The Indispensability of Risk: Lessons from Chess, Investing, and Life – The memo draws parallels between risk-taking in investing and strategic decision-making in chess, emphasizing the indispensability of risk for potential rewards, but also cautioning against excessive risk without careful consideration. Read here

  • Affordable Housing at All-Time Low as Luxury Home Sales Surge – The article highlights a concerning trend in the Indian real estate market, where the share of affordable housing has hit an all-time low in Q1 2024, while luxury home sales are on the rise, particularly in the Delhi-NCR region particularly in the Delhi-NCR region. Read here

  • GIFT City: Transforming India’s Financial Landscape – The Gujarat International Finance Tec-City (GIFT City) IFSC is emerging as a successful hub for offshore financial transactions, bolstering India’s vision of becoming a global financial and technology hub, with unified regulation and a focus on asset management, offering advantages like cost-effectiveness and a simplified registration process for funds and fund managers. Read here

  • Monetary Policy Review: RBI’s Stance and Market Perspectives – The Monetary Policy Review for April 2024 by the RBI highlighted global risks but emphasized India’s strong macroeconomic fundamentals, reassuring investors and focusing on liquidity provision and financial stability, while cautioning about reinvestment risk in fixed income markets. Read here

Economy                                                                                                              

  • Oil Prices Fluctuate as Iranian Media Downplays Israeli Strikes – Oil prices initially surged above $90 a barrel on concerns over potential conflict in the Middle East following Israeli strikes, but pared gains as Iranian media downplayed the impact, with traders wary of supply risks amid escalating tensions. Read here

  • Morgan Stanley: No Rate Cuts Expected in India Amid Strong Growth Trends – Morgan Stanley predicts no rate cuts in India due to strong domestic growth trends and a change in the U.S. Fed rate path, expecting the key policy rate to remain steady at 6.5%.Read here

  • Fed Rate Hikes: Spurring US Economic Boom? – Some on Wall Street are suggesting that recent interest rate hikes in the US might actually be boosting the economy by providing Americans with increased income from bond investments and savings, contrary to traditional economic beliefs. Read here

  • Exploring the Semiconductor Industry – Insights into the global semiconductor industry, its value chain, market share, and India’s emerging role in semiconductor manufacturing. Read here

  • India Implements Measures to Meet Rising Electricity Demand – India mandates operation of underutilized gas-based power plants and extends operations of imported coal-based plants to meet rising electricity demand during the hot summer months. Read here

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CAGRwealth smallcase portfolios

Both our smallcase portfolios are ranking well in the smallcase universe in terms of 1 year returns.

  • CFF (launched in June 2022) – Ranked among Top 20 smallcase with medium volatility.
  • CVM (launched in May 2022)  – Ranked among Top 40 across the smallcase universe.

Do check it out here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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CAGR Insights – 12 Apr 2024

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index12-Apr-2405-Apr-24Change
Nifty 5022,51622,526-0.04%
Nifty 50020,75120,7200.15%
Nifty Midcap 50 14,05213,9790.52%
Nifty Smallcap 10016,50916,3540.95%

Chart Ki Baat

Image

Chart credits: @QCompounding

Gyaan Ki Baat

Crowdfunding is a method of raising funds for a project, venture, or cause by pooling small amounts of money from a large number of people, typically via the internet. It bypasses traditional financing avenues like banks or venture capitalists, allowing individuals or organizations to solicit contributions or investments from a wide audience. Crowdfunding platforms facilitate this process, offering a space for creators to showcase their projects and for potential backers to pledge their support. Depending on the platform and the type of crowdfunding model used (such as donation-based, reward-based, equity-based, or debt-based), backers may receive perks, products, equity, or interest in return for their contributions. Crowdfunding has become increasingly popular for startups, creative projects, charitable causes, and even personal expenses.

Here’s the list of curated readings for you this week:

Personal Finance

  • Understanding the 4% Rule in Retirement Planning – The 4% rule in retirement planning suggests withdrawing 4% of one’s savings annually, adjusted for inflation, but its efficacy varies due to market unpredictability and individual circumstances. Read here.

  • The Myth of Luck – Understanding the distinction between luck and what isn’t repeatable is crucial in learning from successful individuals and applying their strategies effectively in business and investing. Read here.

  • A Roadmap to Money Management Success – Establishing financial safety with an emergency fund and paying off high-interest debt precedes saving for retirement and fulfilling life goals, while aspirational goals like maxing out retirement accounts come in the endgame of financial planning. Read here.

Investing

  • AI Revolution Takes Flight at Microsoft AI Tour – The rise of AI, from statistical to cognitive engines, is transforming industries globally, driving productivity gains and innovation, with Microsoft’s Copilot as a notable example. Read here.

  • Exploring the Intersection of Longevity, Financial Wellbeing, and Life Stages – Insights from Dr. Thomas Mathar on Standard Deviations with Dr. Daniel Crosby. Listen here.

  • Embracing the Uncomfortable Truth – Navigating financial markets requires confronting uncomfortable truths, from the dominance of large corporates to the inevitability of changing interest rates, challenging investors’ established beliefs and strategies. Read here.

Economy

  • Delayed Rate Cut Forecasts Amidst RBI’s Steady Policy Stance – Indian overnight indexed swap (OIS) rates have risen post-RBI meeting, indicating expectations of a rate cut in early 2025 instead of late 2024, with market sentiment influenced by robust growth and inflation concerns. Read here.

  • India’s AI Evolution – Enterprise and government sectors in India are increasingly leveraging AI and technology, with focus on applications such as customer service enhancement, digital infrastructure development, and fostering innovation, poised to drive significant economic growth. Read here.

  • Geopolitical Tensions Drive Bullion Surge – Gold prices soar to record highs amidst global tensions, central bank purchases, and speculation on monetary policy changes. Read here.

  • The Yuan-Rupee Linkage – The Indian rupee’s recent movement appears to be more closely linked to the Chinese yuan than to the US dollar, potentially affecting India’s export competitiveness. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

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CAGR Insights – 05 Apr 2024

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index05-Apr-2428-Mar-24Change
Nifty 5022,52622,3270.89%
Nifty 50020,72020,2552.29%
Nifty Midcap 50 13,97913,5273.34%
Nifty Smallcap 10016,35415,2707.09%

Chart Ki Baat

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Gyaan Ki Baat

A turnover ratio is the percentage of stocks and other assets in a mutual fund that have been replaced over the course of a year. This number can vary depending on the type of mutual fund, its investment goals, and the portfolio manager’s investing approach. Assessing mutual funds through this metric is valuable in determining which ones are suitable for inclusion in your investment portfolio.

The mutual fund turnover ratio can affect how much you spend on owning the fund. When the turnover ratio is high, you might end up paying more for things like brokerage fees and bid-ask spreads. You can locate the turnover ratio in the mutual fund company’s most recent financial statement. It usually falls somewhere between 0% and 100%, though for actively managed funds, it can be even higher. A turnover rate of 0% means that the fund’s investments haven’t changed at all over the past year.

Here’s the list of curated readings for you this week:

Personal Finance

  • Embracing Conviction – Navigating the challenges of investment emotions, a reminder of long-term investor principles amidst short-term pressures and behavioral tendencies. Read here.

  • The Art of Reconnaissance in Investing – The importance of thorough due diligence in investing, emphasizing the necessity of on-the-ground research and personal interaction for uncovering deeper insights beyond surface-level analysis. Read here.

  • Selling the Story – The article explores how individuals often shape their narratives to emphasize struggles, particularly in the financial space, to sell stories and advice, highlighting the importance of scrutinizing advice based on its merit rather than the storyteller’s background. Read here.

Investing

  • Reality Check of Retail Investing in India – Retail investors from smaller towns are flocking to the Indian stock market, fueled by speculative trading and influenced by finfluencers, amid warnings of overvaluation and risks from regulators and seasoned investors. Read here.

  • Transition in Banking Investment Portfolios – RBI’s new guidelines on investment classification and valuation aim to align Indian banking standards with IFRS, allowing for greater flexibility but requiring prudent management of securities portfolios. Read here.

  • Decoding the Small Cap Cycle – The article evaluates whether small caps are in a bubble using a comprehensive six-lens framework, indicating caution due to red signals in long cycle, valuations, flows, past performance, despite strong fundamentals. Read here.

  • New KYC Rules on Hold for existing investors – Mutual fund investors relieved as accounts won’t be blocked despite missing the KYC deadline, however the new KYC rules still apply for new investors. Read here.

Economy

  • The Evolution and Future of Securitisation in India – Securitisation in India has evolved from mortgage-backed securities to asset-backed securities, but further growth hinges on addressing gaps in regulation, expanding into new asset classes, and enhancing market transparency and participation. Read here.

  • RBI Keeps Interest Rates Steady Amid Robust Growth and Inflation Concerns – The Indian central bank kept its key interest rate unchanged at 6.5% for a seventh consecutive meeting, citing robust economic growth and persistent inflation above the 4% target. Read here.

  • India’s Fixed Income Market at an Inflexion Point – India’s fixed income market poised for growth amidst favorable demand-supply dynamics and global rate expectations, prompting strategic portfolio adjustments. Read here.

  • Unlocking India’s Potential – Professor Aswath Damodaran outlines India as a significant investment opportunity while addressing the obstacles it must overcome and the necessary reforms for realizing its economic strength. Watch here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.

Posted on

CAGR Insights – 28 Mar 2024

CAGR Insights is a weekly newsletter full of insights from around the world of web.

Index28-Mar-2422-Mar-24Change
Nifty 5022,32722,0971.04%
Nifty 50020,25519,9951.30%
Nifty Midcap 50 13,52713,3301.47%
Nifty Smallcap 10015,27015,0571.42%

Chart Ki Baat

Israeli-born psychologist Prof. Daniel Kahneman passed away yesterday. He was honoured with the Nobel Prize for Economics in 2002, was recognized for his groundbreaking research integrating psychology into economic science. His work focused on understanding human judgment and decision-making in uncertain conditions.
RIP🌹

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Gyaan Ki Baat

The small and mid cap mutual funds recently were asked to publish their stress test results every 15 days.

The results indicate how much time will respective funds take to liquidate 25% and 50% of their portfolio respectively. The longer the time taken, the more liquidity risk the investor bears.

The idea behind requiring stress test was to evaluate the real risk of redemption pressure that might emerge in case of price correction. In an event of heavy redemption, mutual funds have to sell their holdings and if liquidity is low, selling becomes difficult, thereby resulting in money getting stuck.

A simple way to read this is that funds with lower “days to liquidate” are better. But that is not all. Some key observations we have had are as follows –

  • Funds with smaller AUMs are bound to have lower days to liquidate the portfolio. That does not necessarily make them better funds.
  • Normally, unless it is a black swan event, we do not see the need to liquidate 50% of the portfolio. This is an extreme case and the readings should be only indicative, not decisive.
  • As an investor, do not panic sell the funds which have come out with higher numbers. Evaluate them closely to see if these numbers improve. One can choose to divert additional flows to another fund.

Here’s the list of curated readings for you this week:

Personal Finance

  • Renting vs. Buying a House – The article delves into the complex decision of renting versus buying a house, simplifying it to key factors such as rent, mortgage payments, and future inflation. It emphasizes the importance of considering both monetary and non-monetary aspects. Read here.

  • Sharpen Your Perspective – From optimistic outlooks on life to the pitfalls of uncontrolled passion, these quotes explore the complexities of life, work, and success, reminding us that self-awareness and adaptability are key. Read here.

  • Strategies for Mitigating Sequence of Returns Risk (SORR) – Dr. Jim Dahle presents four strategies to mitigate SORR in retirement, encompassing conservative spending, flexible withdrawal approaches, volatility reduction, and the use of buffer assets. Read here.

  • MF Investors’ Rush to Re-Do KYC – Mutual fund investors in India face a March 31 deadline to re-do their KYC, with implications for transaction abilities and document validity. Read here.

  • Disrupting India’s Streaming Landscape – Reliance-Disney merger in India’s streaming market threatens Netflix’s dominance with extensive content and potential pricing undercutting. Read here.

  • The Burger Singh Story – Burger Singh, India’s largest domestic Burger chain, led by founder Kabir J Singh, implements innovative strategies to dominate the QSR industry despite its brutal nature. Watch here.

Investing

  • Uncovering Deceptive Practices – JM Financial’s involvement in a debt offering revealed deceptive practices, including buying bonds at inflated prices and selling them at a loss through its NBFC arm, undermining investor trust. Despite the lack of clear losers, the incident highlights the intricate dynamics and risks within the financial sector. Read here.

  • Potential Reversal in India’s Government Bond Yields – Expectations of RBI rate cuts and increased demand from domestic and foreign investors may lead to a reversal in the upward trend of IGB. Read here.

  • Tale of Microcap Mastery – Peter Lynch’s 1994 article ‘Charlie Silk’s 150-Bagger’ illustrates the principles of successful stock investing through the story of finding and holding onto a remarkable microcap stock. Read here.

  • Exploring the investment potential of CMS Info Systems Ltd – A market leader in India’s cash management industry, highlighting its market dominance, industry structure, growth prospects, and strategic initiatives. Read here.

Economy

  • Assessing the Impact on Shareholder Value – Regulatory reforms in Japan have led to improved governance practices, but fundamental improvements in capital efficiency have lagged, posing concerns for investors. Read here.

  • South Korea and India Inclusion in Key Global Indexes Delayed – FTSE delays inclusion of both countries in key global bond and emerging-market indexes for at least another six months due to criteria unmet by both countries. Read here.

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Check out CAGRwealth smallcase portfolios here.

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That’s it from our side. Have a great weekend ahead!

If you have any feedback that you would like to share, simply reply to this email.The content of this newsletter is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information outlined in this newsletter unless mentioned explicitly. The writer may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated in this newsletter.