Tweet Buster: Are passive funds your best bet? Also, Kalpen Parekh’s asset allocation rule
In this edition of Tweet Buster, we sift through the social media platform to find asset allocation strategies, common mistakes to avoid in equity market, mutual fund gyaan and other investing gems from market mavens.
Decoding passive funds
Amid the growing clamour in favour of index funds, Radhika Gupta, Edelweiss Asset Management, ran a thread on how to evaluate passive funds.
Why I am writing this: A new narrative is emerging that all passive funds are good and all active is bad, because… https://t.co/1QBqo1aRPL
— Radhika Gupta (@iRadhikaGupta) 1618850093000
1. The index The whole and soul of passive investing is the index the fund tracks. There are good and bad indic… https://t.co/r7GASs7CDX
— Radhika Gupta (@iRadhikaGupta) 1618850094000
1a. The theme Sounds obvious but what’s the theme. Some themes solve no investment purpose. Just because they… https://t.co/rWfQCxeFy9
— Radhika Gupta (@iRadhikaGupta) 1618850094000
1b. Number of stocks I don’t like heavily concentrated funds. 10 stock themes scare me, active or passive becau… https://t.co/VJV3YoxHyU
— Radhika Gupta (@iRadhikaGupta) 1618850095000
1c. Rebalancing Good indices rebalance at a regular frequency, so check this. Indices that don’t rebalance don’… https://t.co/XgkNqPxL3j
— Radhika Gupta (@iRadhikaGupta) 1618850095000
1d. Smart beta and quant Market cap indices like large and small are easy to check. Smart beta indices like val… https://t.co/ZJbFX7KMm3
— Radhika Gupta (@iRadhikaGupta) 1618850096000
2. Tracking the index Ok you like the index. Does your fund track it? How well. More than tracking error I li… https://t.co/HidwBAXUEg
— Radhika Gupta (@iRadhikaGupta) 1618850097000
3. Liquidity Matters a huge deal. One is the liquidity of the underlying which we discussed above in context to… https://t.co/075PEXE43Z
— Radhika Gupta (@iRadhikaGupta) 1618850099000
4. Transparency Passive funds are meant to be easy simple and transparent. Make sure your rules are clearly kno… https://t.co/Yj1OfU2FAT
— Radhika Gupta (@iRadhikaGupta) 1618850100000
5. Fees Of course you want low fees in a passive fund but do take into account total cost of ownership.Index f… https://t.co/z0KzLD971U
— Radhika Gupta (@iRadhikaGupta) 1618850101000
In another tweet, Gupta, while replying to a question by market veteran Deepak Shenoy, listed out five pointers on which she selects equity mutual funds to buy.
1. It fits into my goals 2. I trust the AMC and team 3. Fund says what it does and does what it says4. 5-7 y… https://t.co/bCJn8fybEc
— Radhika Gupta (@iRadhikaGupta) 1618925307000
Asset allocation strategy
For those confused about asset allocation strategies in a directionless market, Kalpen Parekh of DSP Mutual Fund has a piece of advise: Think about what will you regret more – not trimming exposure before a market crash or reducing risk in your portfolio before a market rally.
What will you regret more 1. Not trimming exposure and markets crashing?2. Reducing risk in your portfolio & ma… https://t.co/Z0QYimgLKX
— Kalpen Parekh (@KalpenParekh) 1619018761000
Value investor and smallcap hunter Arun Mukherjee listed out a few learnings from personal mistakes in equity investing.
Learnings from our personal mistakes in equity investing. What are the common threads which lead to mistakes in equ… https://t.co/xbk1ScC3Di
— Arun Mukherjee (@Arunstockguru) 1619092710000
In this tweet, Mukherjee gave out a list of 12 smallcaps which are either undergoing massive capex or recently got done with it.
Smallcaps which are either undergoing massive capex or recently got done with it:-1) Sirca paints2) Dynemic pro3… https://t.co/PjjVqffBJE
— Arun Mukherjee (@Arunstockguru) 1619082524000
Slo-mo
iThought founder Shyam Sekhar said while 2020’s heroes are falling in slow motion from the peak, the villains of 2020 are rising in slow motion on helium balloons. “This is a market being reset in slow motion. Everybody’s patience will get tested. No vaccine can cure this slow death and slow resurrection. Game on”
2020’s heroes are falling in slow motion from the peak.The villains of 2020 are rising in slow motion on helium b… https://t.co/InPbKrNyYl
— Shyam Sekhar (@shyamsek) 1619108782000
Investing Gems
Here’s a collection of investing gems from microcap hunter Ian Cassel and behavioural finance expert Morgan Housel.
Cassel says a big part of successful investing is not letting the direction of your portfolio dictate your mood, attitude, effort, how you treat people, etc.
A big part of successful investing is not letting the direction of your portfolio dictate your mood, attitude, effo… https://t.co/cVwmM0SCKV
— Ian Cassel (@iancassel) 1619101542000
In another tweet, he reminds investors a bunch of companies that will 10x over the next 5 years are waiting to be found.
There are a bunch of companies that will 10x over the next 5 years that are waiting to be found. All great companie… https://t.co/ooi0pmP6vi
— Ian Cassel (@iancassel) 1618779249000
You can win big earning average returns for an above average amount of time.
— Morgan Housel (@morganhousel) 1618938285000
