Prime Wealth Finserv Pvt Ltd

Financial planning review, Retiremt, investment, children education investments, Mutual funds, Portfolio Management Servieces, Alternate Investment Funds, Life , Health, General, Insurance..Wealth Management

Executive Director

Reliance Capital | Reliance Group

Senior Branch Manager

ING Vysya Life Insurance

Group Manager-Sales

As the Executive Director of Prime Wealth Finserv and a Qualified Personal Finance Professional® (QPFP®), I have been helping high-net-worth individuals (HNIs) with their financial goals for over 12 years. I hold certifications from FPSB India in Investment Planning, Retirement and Tax Planning, and Risk and Estate Planning, which demonstrate my expertise and professionalism in the field of personal finance.

My core competencies include financial goal planning review, retirement planning, investment planning, children's education planning, mutual funds, portfolio management services, alternative investment funds, and insurance. I follow a thorough and transparent process that involves educating the clients on the fundamentals of financial goal planning and providing them with customized and comprehensive solutions that suit their risk profile and investment needs. I also conduct regular workshops and seminars to promote financial literacy and awareness among various segments of society, including professionals, doctors, NRIs, and corporates.

My mission is to help HNIs make informed and smart financial decisions by understanding how money works. I believe that financial education is the key to empowering people to take charge of their financial future and achieve their desired lifestyle. By delivering value-added services and exceeding client expectations, I strive to build long-term relationships based on trust and mutual benefit. Follow me for more insights on #personalfinance, #wealthmanagement, and #investing.

Passive Paradox - Sell a little to buy more? 

The other day, Helios CEO and Fund Manager Samir Arora tweeted these cryptic lines, "Adapting the dialogue from the movie Speed: 

There's a bomb on a bus. Once the bus goes 50 miles an hour, the bomb is armed. If it drops below 50, it blows up. 

What do you do? What do you do?

" Market to FIIs: "If you sell more HDFC Banks shares, the FII ownership falls, MSCI doubles the weight of the bank in the indices, forcing many FIIs/ETFs/Index funds and funds following the benchmark to buy. 

If you don't sell, MSCI does nothing, and there is no additional buying...

Can you understand what is happening here? 

MSCI is a company from the US that manages several important stock market indexes, which a lot of global investors follow. 

They regularly update how much each stock matters in these indexes, based on various factors like the free float. 

Here’s what happens: 

If foreign investors sell just a small amount of HDFC Bank shares, it could lead to a lot more buying. Why? 

Because selling a little reduces the free float. According to MSCI's rules, they would then increase the importance of HDFC Bank in their list. 

This forces funds that follow the list, like index funds and ETFs, to buy more of these shares to keep up with the list. 

Even active funds that compare themselves to the list might feel the need to buy more.

If foreign investors don't sell, MSCI would keep HDFC Bank's importance in the list the same, and there wouldn’t be extra buying by these funds. 

Just last week, if the foreign investors had sold only 0.05% of the stock, it would have doubled the importance of the stock in MSCI's list. 

This would have made many ETFs and other investors, who have to follow the list, double their holdings too.

Here’s a rule in the list that makes it so if a few investors sell a bit of stock, many others are forced to buy a lot more. And if they do buy more, the stock’s price would probably go up.

This situation might seem odd and doesn't make sense if you think about smart investing. 

Essentially, the rules of the index (which is just a list of stocks) are influencing the actual stock prices, which seems backward. 

This kind of strict, rule-based investing can sometimes twist the market and even lead to big problems like bubbles. 

While index investing is generally a good approach, this example shows that it can have unexpected downsides and isn't always perfect.

Simple indexes like the Sensex or Nifty work well, but the newer trend of creating indexes specially made for investing doesn't really make much sense. 

Investors who prefer passive funds should stick to the main, well-known indexes and avoid the more obscure ones.

Follow Chakrivardhan Kuppala for more insightful posts in #personalfinance, #wealthmanagement and #investing. 

Chakrivardhan Kuppala

🚀 Let's Analyse the IPO Surge with Strategic Precision! 🌟

As the prospect of initial public offerings (IPOs) becomes increasingly competitive, startups are levelling up on financial health to allure savvy investors. 

The trend is clear: robust profitability is key, even if it leads to tough decisions like workforce reductions and strategic reorganisations.

🍲 For instance, Swiggy, in its sprint towards a $1.2 billion IPO, has reduced its workforce and streamlined its service offerings by merging certain verticals into its quick-commerce service, Instamart. Such strategic moves aim to paint a financially appealing picture for investors from giants like Prosus and SoftBank.

🌐 Meanwhile, The Good Glamm Group is also trimming its sails, reducing its workforce by 15% as it eyes a profitable public debut by Diwali 2025. This is part of a broader 12-month restructuring effort that also saw the company raise Rs 245 crore at a steady valuation, gearing up for a stronger financial future.

✈️ On the travel tech front, ixigo has made a commendable financial comeback in FY23, turning a profit of Rs 23.4 crore after a loss the previous year. This turnaround is a strategic alignment with its IPO ambitions, demonstrating the potential for robust investment returns.

🛍️ In the retail sector, Dunzo has cut down its workforce by 30% while securing $75 million in funding, showing that even backed ventures are not shying away from making bold moves for greater profitability.

📈 Across various sectors, from InShorts to Flipkart, new leadership appointments and strategic partnerships are enhancing governance and operational efficiency, ensuring the companies are IPO-ready.

It's evident that for today's startups, demonstrating a lean, profitable operation is not just a choice but a necessity to captivate both public market investors and late-stage venture capital.

What do you think about this?

Let's watch how these strategies unfold in the run-up to their public debuts.

Follow Chakrivardhan Kuppala for more insights #personalfinance, #wealthmanagement and #investing. 

#IPO #Startups #FinancialHealth #BusinessStrategy #CorporateGovernance

Should you trade off a higher salary for ESOPs? 

Companies offering Employee Stock Ownership Plans (ESOPs), especially start-ups, have increased significantly recently. 

Employers are taking recourse to ESOPs when hiring and retaining employees for the long haul. 

For a start-up, paying higher compensation at the initial stage can often be challenging, and conserving and investing cash in operations are its top priorities.

By way of ESOPs, they give employees a part of the company’s equity instead of or sometimes even along with higher salary and salary hikes, benefiting both.

How do ESOPs add value to you as an employee?

If you are getting stock options as a part of your annual package, it can be a source of sustained wealth creation. 

It can even compensate for a sub-market salary if you are joining an early-stage company and getting a strong equity component.

The major benefit is that when the company executes a buyback of ESOPs or launches an IPO. 

This makes ESOPs a great tool for you to build wealth.

Did you know that last year, 29 startups in India bought back ESOPs from their employees, giving them financial gains of over $335 million? 

There have been many big buybacks, like Flipkart's Rs. 600 crore buyback in 2020 and Cred's Rs. 100 crore buyback in 2021. 

Also, when Freshworks, a startup providing software services, went public with a $100 million IPO, over 500 of its employees became millionaires.

Additional Tax Burden

- ESOPs can lead to two types of taxes. 

- First, any profit you make from ESOPs is taxed as capital gains, depending on your income tax bracket.

- Second, ESOPs are often given at a price lower than the market value at the time they become yours (vesting). 

- The difference between the market value and the price you pay is considered an extra income and is taxable.

- If you turn your ESOPs into shares after they vest but can't sell them right away, you'll still have to pay taxes on them that year, even though you haven't received any actual cash from selling the shares. 

Risk of Buyback or IPO Failure

- Getting ESOPs from a young company can be risky because buybacks or public offerings (IPOs) don't happen often; they're just potential outcomes. 

- If the company doesn’t do well, your ESOPs might not end up being worth much.

- If your ESOPs are in addition to a regular, competitive salary, there's less risk. 

Consider these points:

- Does the company have a promising growth outlook, and do they share this information openly with employees?

- What's more important for you right now — a higher salary or the chance to build significant wealth if the company does well? 

-Would a higher salary be a big step up from what you're currently making, and is it worth giving up ESOPs for? 

Follow Chakrivardhan Kuppala for more insightful posts on #personalfinance, #wealthmanagement and #investing. 

Dear connections

I had the privilege of meeting Mr Ganesh Mohan, CEO of Bajaj Finserv Asset Management Ltd, along with my business partner and friend, Mr Chakravarthy V. 

It's meetings like these that remind me of the value of connecting with pioneers who are shaping our industry.

Discussing the evolving landscape of mutual funds in India with Mr. Mohan was enlightening. 

With more than twenty years of corporate experience, his knowledge is incredibly valuable for anyone interested in learning about the finance industry.

His perspective on the challenges and opportunities we face today has deepened my appreciation for the complexities of our field.

Thank you, Mr. Mohan, for generously sharing your knowledge. 

Follow Chakrivardhan Kuppala for insightful posts on #personalfinance, #wealthmanagement and #investing. 

🎉🎊 Early morning Zumba with the best crew! 🌅�* There's truly no better way to start the day than moving to the beat with smiles all around.

🌟 I'm excited to share a slice of our morning routine here, where each day begins not just with coffee, but with vibrant Zumba sessions that energize our bodies and spirits. It's amazing how a dose of music, dance, and camaraderie can transform the start of our day.

🎶 Today, like every day, we were greeted not just by a playlist of upbeat tunes, but by the smiling faces of our Zumba family. It's these faces, full of enthusiasm and determination, that truly define our sessions. Together, we laugh, we sweat, and we push each other to be our best selves.

💪 It’s not only about maintaining fitness; it's about creating a space where everyone can come to recharge, connect, and start their day with positivity. The impact extends beyond the physical benefits; it's a mental and emotional boost that carries us through our busy lives.

🙏 I am grateful for this community and the opportunity to share this part of my day with such a fantastic group of people. Every session is a reminder of how collective energy can make any challenge enjoyable and any goal achievable.

🌈 Thank you to all who participate and make each morning memorable. Here’s to continuing our journey of health, happiness, and high energy!

👉Follow Chakrivardhan Kuppala for more🎉🎊

#Zumba #CommunityWellness #MorningEnergy #HealthAndHappiness

Will THIS company be more productive in the next 10 years? 

This question becomes important if you follow long-term investing.

And you would not want stocks to enter your portfolio which will give you mediocre or low returns. 

Then, how could you locate companies that are likely to be more productive in , let's say, the next 10 years? 

Answer is = Pick up companies having a MOAT in their industry. 

The term "Moat," was popularized by Warren Buffett. 

- Businesses that can maintain a competitive advantage over others to keep making money and hold onto their customers for a long time.

- These companies are not just survivors; they thrive, making them attractive for long-term investments.

How to spot a company that has a MOAT? 

- Look for Leaders: 

Identify companies that are leaders in their industries. For example, a tech company holding 70% market share in its niche likely has a solid moat.

- Check the Numbers: 

Check the financials for consistent revenue growth and high-profit margins over the past decade. 

- Assess the Barriers: 

Understand what keeps competitors at bay. Is it innovation, customer loyalty, cost advantages, or regulatory protections?

- Project Future Growth: 

Use historical data to project future performance. 

If a company has grown its revenue by an average of 8% annually, can it maintain or improve this with its current advantages?

Takeaway! 

Investing in companies with strong moats can be a successful strategy for those committed to long-term investing. 

Before you invest, ensure you understand the strength of a company's moat and its potential to continue delivering results. 

What are your thoughts on this strategy of long-term investing? Please share in the comments below! 

Follow Chakrivardhan Kuppala for more insightful posts on #personalfinance, #wealthmanagement and #investing. 

How to get the BEST returns on your SIPs? 

Many people do SIPs nowadays. However, in my interactions with some of my clients, I have seen there are a few things that people often ignore.

These small factors often lead to the generation of sub-optimal returns. 

Here are the To-Dos to ensure that your mutual fund SIPs aren't sub-optimal

Consistency is a key

- SIPs are most effective when maintained consistently across all market conditions. 
- In the last fiscal year, SIPs witnessed an impressive ₹2 lakh crore inflow, with ₹19,000 crore coming in just March 2024—an increase from the ₹4,000 crore in 2016-17.

SIPs with financial goals

- Ensure your SIP investments align with your long-term financial goals. 
- Adjust the amount you invest as your income grows to keep up with your goals and lifestyle inflation. 
- This approach helps prevent a future shortfall when you need funds the most.

Avoid Common Mistakes

- Nearly 40% of new SIP accounts are closed prematurely, often during market downturns. 
- However, lower market prices should be a signal to buy, not panic and sell. - - - Last February, for example, 49.8 lakh new SIP accounts were opened, but 21.33 lakh were closed, showing a significant drop-off in persistence.

Don't Wait for the 'Perfect Time'

- Waiting to invest at the market's bottom is less effective than starting immediately. 
- For instance, a comparison between SIPs started in January 2020 and March 2020 (during the market low) revealed only a minor difference in returns—Rs 6.6 lakh vs. Rs 6.3 lakh, with annual returns of 13.7% and 13.9%, respectively.

SIP Timing Flexibility

- The exact day of the month you start your SIP plays a minimal role in overall returns.  
- Whether it's the 1st, 15th, or 30th, what truly matters is that you are investing regularly.

Commitment to long-term investing

- SIPs are designed to leverage the volatility of the market for your benefit. 
- By investing regularly, you reduce the risk and enhance the potential for higher returns over a longer period. 

Start simple, stay consistent, and adjust as you grow—your future self will thank you.

Follow Chakrivardhan Kuppala for more insightful posts on #personalfinance, #wealthmanagement and #personalfinance

#InvestmentTips #SIP #FinancialPlanning #WealthBuilding #StayInvested #LongTermInvestment

Just a few weeks ago, I had an enlightening ☕ meeting with a client who's been with me for over three years. 

Amidst our discussion, a particular moment stood out: they shared how our partnership 🤝 helped them navigate through a tough financial period, emphasizing it wasn't just the advice but the genuine care and understanding ❤️ that made the difference. 


This conversation was a vivid reminder that behind every financial chart 📈 and strategy, there's a personal story 📖 and a set of dreams 🌟 waiting to be realized.

Our relationship, cemented in mutual trust and respect, highlights a crucial lesson: true success in finance goes beyond mere numbers. 

It's about deeply understanding each other's life goals 🌈 and committing wholeheartedly to achieve them together.

I'm sharing this encounter to spotlight the real essence of our industry—it's the human connections and shared trust that not only drive better outcomes but also enrich our work life 💼.

Let's all dedicate some time this weekend to reflect on those meaningful partnerships that have shaped our professional journey and look forward with optimism to the new possibilities they will bring.

Here's to more stories of collaboration 🤗, growth 🚀, and collective success 🏆. Wishing you all a refreshing weekend!


👉Follow Chakrivardhan Kuppala for posts on #personalfinance, #wealthmanagement and #investing. 

#Collaboration #Success #FinancialPlanning #WeekendInspiration

How to pick up the right index funds for your portfolio?

Index funds are dominating the Indian investment landscape for a reason. 

Index funds meticulously track a market index, aiming to replicate its performance rather than outperform it. 

Popular options include Nifty 50 and Sensex funds, offering exposure to large, established Indian companies. 

But the world of index funds has expanded significantly:

Broad Market Exposure: 

- Broad market index funds, like Nifty 50, Nifty Next 50, or Nifty 500, offer a diversified basket of stocks across various sectors. 

- This spreads your investment across different industries, reducing risk.

Market Cap Focus: 

- If want to target specific company sizes, you can choose- Nifty 100 (large cap), Nifty Midcap 150 (mid-cap), and Nifty Small Cap 250 (small cap) to cater to your preference. 

Sector Spotlight: 

- Index funds let you have exposure to specific sectors like banking or technology. 

-This can be strategic for experienced investors with a good understanding of the chosen sector.

While you pick up an index fund for your portfolio, consider the following: 

Low TER:

- The Total Expense Ratio (TER) signifies the cost of managing an index fund. 
- Lower TER translates to more money staying invested and potentially growing for you. 
- While index funds generally boast lower TERs, even a small difference can significantly impact your returns over time.

- For example, let's say you invest ₹1 lakh in two different index funds that track the Nifty 50, but one has a TER of 1% and the other has a TER of 1.25%. 
- Over 20 years, assuming a constant 10% annual return, the difference in TER could translate to a significant gap in your final corpus.

Tracking Deviations:

- Tracking error indicates how closely an index fund mirrors its underlying index. Ideally, you want this deviation to be minimal. 
- Look for index funds with consistently low tracking errors in their monthly fact sheets.

Does your portfolio have index funds? 

Did you consider these points when selecting index funds? 

Follow Chakrivardhan Kuppala for more insightful posts on #personalfinance, #wealthmanagement and #investing. 


Timing the market vs. time in the market

Do you ask yourself - should I book profits, or should I keep your investments and ride them out?

The answer may be in the basics...

Why do stock markets generally go up?

The value of something increases when more people want it than there are available supplies.

For stocks, another key factor is the earnings of the companies.

Stocks represent a share in a company, and the main goal of a company is to increase its profits for its shareholders.

As long as companies keep making more money, their stock prices usually go up.

Looking at the Nifty 50 index, which tracks the performance of 50 big companies in India, we can see how this works.

Since 2000, the profits these companies make (shown as EPS or earnings per share) and their stock prices have mostly moved in sync.

This means that as long as these companies continue to grow their profits, we can expect the stock market to generally rise.

For those investing in stocks or mutual funds for the long haul, this should be reassuring.

Instead of getting distracted by short-term ups and downs, it’s better to focus on the long-term potential of the companies you're investing in.

But should we really be scared of investing when the market is at an all-time high?

Let's look at the facts.

Over the last 21 years, from January 2000 to 2020, the Nifty 50 index has often reached new highs—in 55 out of 252 months.

Although there were years with many new highs and others more stable, on average, the market reached a new high every five months.

From 2000, there have only been eight years when the market didn't hit a new record.

Particularly since 2013, almost every year has seen new highs, except 2016.

So instead of acting like a trader or speculator, here is what you should consider

 Always stick to your planned mix of investments - debt + equity + gold. 
 Adjust your investments from time to time to keep the balance you originally planned. 

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Wrong Thought About WARREN BUFFET Investing 

Investing isn't just about snagging a great quote; it's about understanding the full context.

In his 2023 annual letter, Buffett busts some popular myths that many investors, perhaps unknowingly, build their strategies around. 

Here are the 3 key clarifications:

The Myth of Few Big Wins: 

You might have heard, "Just make two or three big financial decisions right, and you're set for life." 

Sounds easy, right? Not so fast. 

Buffett stresses the importance of not just those few good decisions but crucially avoiding major pitfalls. 

It’s about navigating through a financial minefield—steering clear of serious mistakes like market timing errors, poor stock selection, and investment scams.

The Quality vs. Price Dilemma: 

Buffett famously said, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” 

While this is a guiding principle, it’s not a hard-and-fast rule. 

Charlie Munger, in the same letter, advises that investing in fair companies at wonderful prices can still work, albeit on a smaller scale. 

This nuanced perspective is often lost in the echo chamber of investing advice.

Simplicity vs. Ease in Investing: 

"Investing is simple," they say. 

But Buffett counters this by stating it’s not easy. Identifying wonderful companies with honest management and understanding their business is just the start. 

The path to investing success also requires a blend of luck and deep insight, a fact often overshadowed by oversimplified advice.

So, next time you hear a Buffett quote that seems too good to be true, dig a little deeper. 

Look for the context and the complete message. Investing might be simple in concept, but it demands a thoughtful, well-rounded approach. 

Follow Chakrivardhan Kuppala for more insightful posts on #personalfinance, #wealthmanagement and #investing. 

The Sensex is close to hitting 75,000 points and the Nifty is nearing 23,000 points. Over the last year, these markets have given back 25-30% in returns.

Specifically, the smaller company indexes, called MidCap and SmallCap, have grown by 60%, even though they are considered quite pricey by market standards.

Given these high prices, an important question to ask is if the investors should keep their money in the market or pull it out and wait for prices to drop.

Why can it be a good idea to stay in the market?

Even though the market seems expensive, several signs suggest it might be better to stay invested:

 Strong Economy: The economy is doing well, thanks to people spending money, government investments, and healthy companies. These factors should help companies continue to grow and make more money.

Beginning of a Boom: We're just starting a period of economic growth. With likely cuts to interest rates by big banks like the US Federal Reserve and the Reserve Bank of India, investing in India might become cheaper, attracting more money into the market.

Are active funds doing better than ETFs right now?

ETFs and index funds are great when everything in the market is stable, but they don’t adjust quickly when things change.

They invest in a set list of stocks and don’t pick and choose based on what’s doing well or not. Active funds are managed by experts who pick stocks carefully based on their strategy.

They look at thousands of small companies and choose the ones that are not just doing well but are priced lower than they should be based on their financial health and growth potential.

Benefits of choosing specific stocks

Investing in these specific companies through active funds can lead to decent returns because these funds focus on companies that are expected to do well, unlike index funds that cover the average of all companies.

Takeaway!

The market data and overall economic signs don’t support pulling all your money out of the stock market.

Those who can handle some ups and downs and plan to invest for many years can consider putting money into a selected group of 20-30 companies through active funds looks promising.

This is an educational post and not a recommendation in any manner.

Follow Chakrivardhan Kuppala for more insightful posts! 

🚨🔻 Rupee vs. Stocks: which drop hits harder?

Currently, stock valuations, particularly for mid-and small-cap companies, are worryingly high. 

At this level, even a minor economic issue, whether domestic or international, could lead to a sharp fall in stock prices and there's a general notion that our economy will continue to grow over the next decade. 

This should be good for long-term stock prices.

A major concern right now is the exchange rate between the Indian Rupee and the US Dollar. 

Recently, the Rupee fell to its lowest level against the Dollar and hasn't recovered much since. 

What's going on? 

The US Federal Reserve has shifted its approach towards interest rates, indicating that the markets shouldn't expect the rate cuts they were assuming would happen. 

As a result, the US Dollar has been gaining against other emerging market currencies, and the price of gold has gone up in anticipation of worldwide inflation increasing.

You might think that this issue doesn't affect our daily shopping at the local store, but it has significant implications. 

Here's how a weaker rupee affects us all:

Inflation Rise

As the rupee falls, the cost of imported goods, especially crude oil which accounts for 85-87% of India's imports, climbs. 

This not only increases the price of petroleum products but also causes a ripple effect across various sectors. 

Interest Rates

To combat the weakening currency, the Reserve Bank of India might be compelled to keep interest rates high. 

High rates mean higher borrowing costs, which can cool off any potential reduction in inflation.

Gold and Education Costs

With the rupee depreciating, the cost of gold in India has surged by 20% over the past year. 

Additionally, if you're paying for overseas education or planning an international trip, expect to shell out more as the falling rupee doubles the financial strain with higher education and travel costs.

Long-term Effects

A weaker rupee means your savings and investments need to be strategically managed to guard against these financial shifts.

Follow Chakrivardhan Kuppala for more insights #personalfinance, #wealthmanagement and #investing. 

How mutual fund distributors can help you generate alpha? 

Generating alpha—i.e., achieving returns on investments that exceed benchmarks—remains a key goal for most of investors. 

But how do you consistently outperform the market, especially in a diverse and rapidly changing economy like India’s? 

Enter the mutual fund distributor.

Mutual fund distributors are often seen merely as intermediaries. 

However, they play a crucial role in enhancing investment returns through strategic advice and personalized portfolio management. 

Here’s a look at how distributors can add value:

Market insights & timing

With access to comprehensive research and market trends, distributors can provide investors with insights that are not readily available to the public. 

For instance, data from the Association of Mutual Funds in India (AMFI) shows that portfolios managed with distributor guidance adjusted more swiftly to market changes in 2020, contributing to a 3-5% higher return compared to self-managed portfolios.

Customized portfolio strategies

Distributors help tailor investment strategies based on an individual’s risk tolerance, time horizon, and financial goals. 

A study in 2021 revealed that tailored portfolios achieve an average of 2% higher alpha annually compared to standard portfolios.

Cost-effective diversification

Distributors guide investors through cost-effective options to diversify. By strategically selecting the right mix of funds.

They help minimize risks and improve potential returns without additional costs typically associated with frequent trading.

Continuous Portfolio Review and Rebalancing

The importance of regular portfolio reviews cannot be overstated. 

Distributors actively monitor and rebalance portfolios to ensure they align with changing market conditions and personal financial goals.

This is critical in maintaining a trajectory toward generating alpha.

Takeaway

The value of a skilled mutual fund distributor in crafting a portfolio that not only meets but exceeds market averages is undeniable. 

Follow Chakrivardhan Kuppala for more insightful posts on #personalfinance, #wealthmanagement and #investing. 

Story of IPO to Un-IPO!!!

Recently, there was some drama about removing ICICI Securities from the stock list. 

Most of the big investors supported this idea, but most of the smaller investors didn't like it. 

However, because there were more big investors, the plan went ahead. Now, ICICI Securities will join back with its parent company, ICICI Bank.

Delistings of big companies are usually not very noticeable, but the ICICI delisting caught attention for negative reasons. 

It was widely discussed on Twitter, where people shared that bank employees were pressuring them to support the delisting.

These complaints seemed credible, as they came from accounts using real names and included specific details like bank managers asking for screenshots as proof of how they voted. 

If these claims are true, they raise serious concerns. 

It's troubling to think that bank employees knew about their customers' stock holdings. 

We have to ask who told them this information and why. 

It seems unlikely that these employees would act without direction, suggesting that the pressure to vote for delisting might be part of a coordinated effort with incentives. 

This kind of behaviour could undermine the independence of shareholders, which is crucial for fair corporate governance.

Many are eager to see how regulators will respond to this situation. ICICI Securities has had its share of troubles in the past. 

For instance, during its initial public offering (IPO) six years ago, the offering was struggling until the last day when ICICI Mutual Fund stepped in with a big investment from five of its funds to save the IPO. 

SEBI, later criticized this action, ordering the fund to return 240 crore rupees with 15% interest to the affected schemes. 

Just six years ago, ICICI Bank was working hard to make ICICI Securities a separate company, and now they are eagerly trying to merge it back. 

An unusual event in Indian business history.

The reason isn't hard to understand. 

The business of stock brokerage has become very profitable, especially with the current trends in the Indian stock markets. 

Here 'trends', means the huge amount of betting on derivatives.

The trading of derivatives in India isn't just growing—it's booming. In the past decade, the number of these trades jumped from about 1 billion to 85.3 billion. 

This huge number shows just how much excitement there is around this kind of trading. 

However, many people wrongly think that trading derivatives are the main part of the stock markets. 

A recent study by SEBI, the market regulator, showed a concerning fact: more than 90% of people trading derivatives end up losing money. 

This whole situation is a warning about several important issues: 

- the need for better corporate control, 
- the independence of shareholders, and 
- the importance of investors focusing on long-term investments based on solid business fundamentals. 

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Are quant and algo funds suitable for retail investors?

No doubt, AI has got into many areas, including investing and trading. 

Algo & quant funds have got a lot of traction in the last few years. Anything that captures headlines gets the attention of retail investors too. 

An important exploration at this point is - Are quant and algo funds suitable for retail investors?

Quant Funds: These use math to help decide where to invest and usually have a team checking the decisions.

Algo Funds: These follow set rules to automatically decide where to invest without any human help.

How Have They Performed?

Some of these funds have done well, like the Quant Mutual Fund. 

It got a 70% return last year in small-cap stocks. 

Other funds have also seen good results, like:
- Nippon India Quant Fund: 41%
- ICICI Quant Fund: 31%
- 360 One Quant Fund: 59%

Volatility:

These funds can be more unpredictable. 

For example, a small-cap fund from Quant had a volatility rate (up and down movements) of 20%, which is higher than the average small-cap index rate of 18%.

What's happening globally?

Big companies in the U.S., like Renaissance, manage billions of dollars in these funds, showing that they are widely used and trusted.

A similar trend may catch pace in India too in the coming years. 

Important Points to Consider:

- There are extra costs because these funds trade a lot.
- They use past data to make decisions, which might not always predict future surprises that cause big losses.
- These funds work best as a small part of your total investments because of their risks.

If you're thinking about investing in quant or algo funds, remember they can used as a small piece of a larger investment plan. 

They are in the high-risk - high return category. 

Follow Chakrivardhan Kuppala for more insightful posts on #personalfinance, #wealthmanagement and #investing. 

This is an educational post and not a recommendation in any manner. 

#Investments #Finance #QuantFunds #AlgoFunds #FinancialEducation

Why Gold Prices Are Hitting All-Time Highs?

Gold prices are skyrocketing, and 2024 has seen them reach all-time highs.

Here are some strategic insights for investors:

🔹 Economic Indicators and Fed Policy

Despite robust performance in the US labor and manufacturing sectors, and a slowing inflation rate, expectations of rate cuts have been dialed back.

However, the Fed’s March policy hinted at cutting interest rates by 75 basis points this year.

This policy adjustment is crucial as it comes amidst sticky US inflation and solid economic fundamentals.

🔹US Debt Concerns:

The burgeoning US public debt is alarming, with interest payments now making up approximately 38% of the US deficit.

This financial strain may force the Fed to lower rates to manage the growing cost of debt, adding a layer of complexity to monetary policy decisions.

🔹Geopolitical Tensions:

Recent escalations in the Middle East and prolonged conflicts like the Russia-Ukraine war are driving investors towards the safety of gold.

Additionally, the potential inflationary impact from rising oil prices due to these conflicts is contributing to the gold rally.

🔹 Investment and Market Trends:

Despite high prices deterring some retail buyers, central banks continue their robust pace of gold purchases, supporting high prices.

Moreover, the technical momentum gained as gold surpasses new thresholds is also attracting more investors.

⏬ What should an investor do?

Given the sharp run-up, a short-term pullback in gold prices is possible.

There seems to be a bullish outlook for the medium term.

Investors might consider using any price dips as opportunities to build or increase their gold allocations.

Those whose portfolios have become overweight in gold due to the price increase should consider rebalancing to manage risk effectively.

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#wealthmanagement and #investing. 

Are loans against mutual funds an intelligent choice?

Mutual funds are not just for investment growth; they can also be strategic financial tools.

Here’s why opting for a Loan Against Mutual Funds (LAMF) is becoming increasingly popular:

Preserve Your Investments

Taking a loan against your mutual funds means you don’t need to sell your shares.

This keeps your long-term investment plans intact and avoids premature redemptions that might disrupt your financial goals.

Cost-Effective Financing

Interest rates for LAMFs typically range between 9-11%, making them more affordable than personal or credit card loans.

This lower cost can lead to significant savings, especially compared to the higher rates often associated with unsecured loans.

Swift and Simple Process

The involvement of NBFCs and fintech companies has streamlined the borrowing process.

Getting a loan against your mutual funds can now be quick and hassle-free, providing access to funds when you need them, often without the long waiting periods traditionally seen with other types of loans.

Flexible and Convenient

Loans against mutual funds come with the flexibility of an overdraft facility.

They often have no foreclosure charges, and the flexible repayment options allow you to manage your finances more effectively according to your personal cash flow.

Tax Efficiency

By borrowing against your mutual funds instead of selling them, you avoid triggering capital gains taxes.

This can be a significant advantage, helping to maintain a lower tax liability while still leveraging your investments for immediate financial needs.

While the benefits are compelling, it’s crucial to align this decision with your overall financial strategy.

Loans against mutual funds offer a blend of flexibility, cost-efficiency, and quick access to funds, making them a valuable option for many investors.

Considering leveraging your investments this way? It might be time to discuss how this could fit into your broader financial plan.

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#wealthmanagement and #investing.


🚨Why did an INDIA-MAURITIUS tax amendment trigger a stock market slide🚨

Last Friday, the Indian equity markets, namely Sensex and Nifty, experienced a drop of over 1%. 

The reason? 

Foreign Portfolio Investors (FPIs) withdrew nearly $1 billion in a single day, driven not by concerns over India's economic prospects. 

However due to tax-related apprehensions linked to the India-Mauritius Double Taxation Avoidance Agreement (DTAA).

🔍 Why Mauritius?

Historically, Mauritius has been a favoured route for foreign investments into India, largely due to its low-tax regime. 

The DTAA between India and Mauritius allowed investors to avoid paying taxes in India, leveraging Mauritius's almost negligible tax rates. 

This led to substantial capital flows into India, with Mauritius being the second-largest source of FPI until 2017.

📜 Tightening Regulations

The Indian government, noticing significant tax revenue losses, amended the DTAA rules in 2017, eliminating tax exemptions for Mauritian entities on shares acquired in India after April 1, 2017. 

However, shares acquired before this date still enjoyed the exemption, provided the entities could prove legitimate operations in Mauritius.

🔄 Recent Changes and Principal Purpose Test (PPT)

In a further amendment last week, even these exemptions were tightened. 

Now, Mauritian entities must pass the "Principal Purpose Test" to qualify for lower taxes, demonstrating that their primary reason for operating out of Mauritius isn't merely tax avoidance. 

This aligns with OECD guidelines aiming to combat tax evasion globally.

🌍 International Pressure on Mauritius

Mauritius has faced international scrutiny for being a tax haven, prompting reforms. 

The EU and the Financial Action Task Force (FATF) have put Mauritius under watch, which has influenced major global banks to exit the jurisdiction, further impacting its financial services sector.

📉 Impact on Investment Flows

These changes have led to a reduction in investment flows from Mauritius, once a top source, now the fourth in ranking for FDI inflows into India. 

The uncertainty surrounding these amendments could potentially spook investors further, affecting future investment strategies.

📊 What Lies Ahead?

The full implications of the recent DTAA amendment are still unfolding, with potential impacts on past and future transactions. 

How is that going to affect the Indian markets in the coming time? 

Follow Chakrivardhan Kuppala for more insightful posts on #personalfinance, #wealthmanagement and #investing. 

#Finance #Investment #TaxLaw #FPI #India #Mauritius #EconomicPolicy #GlobalFinance #BusinessStrategy

3 Numbers of Mutual Funds 


I see this very often, people chase returns while selecting a mutual fund. And finally, some vital nuances are overlooked. 

If you see FY24, there has been an unparalleled surge in the small-cap funds. Surprisingly, for a good chunk of investors, high-risk funds like small-cap funds make up 100% of their portfolio. 

The point is - risk is often ignored in the light of reward, whereas I feel managing risk is the game and reward is the win. And chasing a win without playing the game honestly is cheating. 

Cheating with yourself. 

Here is the list of 3 risk ratios to help you figure out the risk associated with each MF scheme: 

1. Standard Deviation

- Used to measure the amount of variation in a fund's returns around its average. 

- Say, if a mutual fund has an average return of 8% and a standard deviation of 5%, it means that the fund's returns are expected to vary between 3% and 13% most of the time. 

A higher standard deviation indicates higher volatility.

2. Sharpe Ratio

- Helps investors understand how much extra return a fund provides for each unit of increased risk. 

- Say, a mutual fund has an average return of 12%, the risk-free rate is 2%, and the standard deviation is 5%. 

- The Sharpe Ratio would be calculated as (12% - 2%) / 5% = 2. 

- This means for every unit of risk taken, the fund returns two units of reward, indicating efficient use of risk.

3. Beta

- Measures a fund's sensitivity to market movements. 

- If a fund has a beta of 1.2, it is 20% more volatile than the market. 

- This implies that if the market increases by 10%, the fund is likely to increase by 12%; conversely, if the market drops by 10%, the fund might drop by approximately 12%.

Application of Risk Ratios

- Conservative investors may prefer funds with low standard deviation and beta, and Sharpe ratios higher than 1.

- Aggressive investors might seek funds with higher standard deviations and betas if these funds also offer higher Sharpe ratios greater than 1. 

Did you check these ratios while picking up the mutual funds? 

Follow Chakrivardhan Kuppala for more insightful posts on #personalfinance, #wealthmanagement and #investing. 

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