Month of August was good for all funds, especially small and midcap funds, they moved up by an average of 11.54% to 7.83% whereas large cap funds moved by 2.5% +, this market movement was due to large inflows from foreign institutional investors and optimism that the rebound will happen sooner than expected.

So, the markets are not worried about the economic recovery this year, it has already factored in the growth potential of 2021-22 and has rallied in the hope of faster recovery.

This also means markets are not cheap to do lumpsum investments now, Systematic route spread over period of 6 months+ would allow us to average out our investments either ways.

If the time frame for investments are more than three years to fund long-term goals, please continue your investments through SIPs or STPs as earlier, if the STPs are stopped please restart them.

Our suggestion is to set aside funds for emergencies/contingencies in sweep accounts, ultra-short-term funds, relook at your life insurance cover, health insurance cover, also buy Corona Kavach policy for max cover.

If you have high costing loans like credit card, personal, car loans, redeem from your nonperforming schemes and close these loans

Stay safe, Stay healthy.

Trust this mail finds you well,

Markets in July have impacted our MF portfolios to the extent of +7%, the reasons were Apr-Jun quarter results were encouraging than we had thought, fund flows from foreign institutional investors have been healthy.

The recent update from US central bank is they would keep their interest rates at zero for extended period – may be till 2022, this means central banks and governments across the world may keep supporting the economies till 2022. And there are deliberations in US to print additional 1 trillion more (75 lakh crores), some of these monies will find its way into Indian markets and can keep them elevated. Given this scenario we suggest diversifying investments across asset classes – equity (domestic and international), bonds & gold.

Suggested asset allocation and schemes

Equity

No lumpsum investments, Continue with SIPs and STPs – as per plan

Debt

25% of bank FD allocation to Banking & PSU debt funds for 1-3 years

Axis Banking and PSU debt fund/IDFC Banking and PSU debt fund

Gold

Max 10-15% allocation – for hedging against inflation/dip in equity

HDFC gold fund / SBI gold fund

International

Max 10-15% allocation – to diversify against country risk

PGIM Global opportunities fund – SIP/STPs only for 30 months minimum.

Most importantly set aside emergency funds for min six months, pay off high interest-bearing loans, equip with adequate risk covers – both life and health.

Stay safe, stay healthy.

Month of June has been positive for the portfolios including equity and debt funds, the markets have rallied due to inflows from foreign institutional investors in stocks to the tune of 23000+ and 38700+ crores in the last one and three months, which resulted in 4.80% and 24.40% absolute gains, our mutual fund portfolios have delivered 6.7% and 23.0% on an average across funds.

Markets as compared to highs of Jan 2020 is still -17% away, so our portfolios will need some more time to recover in the current context , markets have been surging purely on inflows from foreign funds which is a good sign in the short term but our economy has to recover and be resilient . Flows can elevate/bring down markets sharply during these periods of uncertainty in absence of expected revival in economic activity and response to the pandemic.

So, at this point of time we feel we need to be cautious and defensive, our suggested category of schemes based on time frames are

1. For less than five years – Short term debt, banking & PSU, selectively gold and arbitrage funds
2. For more than five years – Equity funds

We suggest continuing existing systematic investments as this is meant for long term and to average out market fluctuations, we will accumulate more units compared to Jan 2020 highs now so it’s a discount buy.

Before you invest please ensure adequate funds for contingencies are set aside (6 months expenses + EMIs), pay life and health insurance premiums on time, pay off high interest loans ( eg: credit cards ,personal loans )

We wish you a safe and healthy year ahead.

According to Kubler Ross Model, we are in the fifth stage – ACCEPTANCE , which is acceptance of medical crisis and uncertainty around us ,from today Unlock 1.0 phase starts ,economy and markets will start recovering slowly in a phased manner with knee jerk reactions as and when we see covid19 escalations.

Our portfolios will look better due to last week’s rally in the markets which are expected to prolong this week too on good buying from foreign institutional investors along with domestic money managers.

As stated in my May month’s email, the real test is due in July/August 2020, actual numbers of Q1 (Apr-Jun qtr.)  would be known, which will decide the further course of action by policy makers, RBI and markets.

Still then and for next six months we can focus on things under our control which are

1. Maintain emergency funds for next six months expenses (household + education + EMI payments) – do not opt for moratorium on EMI’s unless and until necessary, payments towards credit card dues needs to be made first , then personal loans , then other loans.
2. Review life insurance and medical insurance cover – these are contingency planning tools which always must be adequate – we can help you assess the quantum of insurance cover required for your families.
3. Continue your investments through SIPs /STPs , this is not the time to stop unless if you need for the above contingency tools – our rational is if you were accumulating investments at 42K Sensex then why should you stop at 32K Sensex if all the other factors remains same, Today the NAVs/prices of large cap funds are available at 2017 levels, midcap fund at 2015 levels , small cap funds at 2013 levels

We suggest you use this opportunity to keep accumulating more units through your systematic investments, so and when markets recover our portfolios will reflect returns as anticipated.

Given that interest rates in conventional fixed deposits have dropped to 6% levels and with no taxation relief, debt mutual funds offer the benefit of indexation or inflation adjusted investments,  so that your taxes comes down if you hold it for more than three years. Categories like short term, corporate bond and banking & PSU schemes with good quality portfolios are our recommended investments in the current scenario. Invest through lumpsum route in these funds to generate better tax adjusted returns with low risk.

Happy and Safe Unlock 1.0!!

Month of April has been eventful, stock markets recovered from the lows it touched in march , debt funds rattled by Franklin Templeton’s decision to wind down/shut down their six of their debt schemes, this was a huge shock to all of us as we never anticipated such a move, and we are as equally sad as everyone , this has created a lot of panic, credibility issues . At this point we would reiterate and reassure that this was one of an event, we are checking all the schemes which are prone to any such risks and are taking actions accordingly. RBI has quickly stepped in and provided a pipeline of funds available to mutual funds incase they face lots of redemption pressure, which has soothed the nerves and we are slowly returning to normalcy. Our portfolios last month have recovered by 5% to 12% based on scheme allocations, so this month’s portfolio looks much better. We have been reading, listening and trying to understand how the portfolios will withstand the lockdown and ensuing affects of post lockdown, as of now we feel month of July 2020 will reveal the real effects on the economy , as the data for the first quarter ( Apr-Jun) will be released by companies , we can see the amount of stress in their balance sheets, profit and loss statements, based on which portfolios will react. Despite all the negatives is there a silver lining? Yes! we feel equity markets are quite attractive at this stage, please see the graphical representation below, which clearly indicates this is the opportunity to invest aggressively in equities if you have time frame of more than five years+. So, continue your investments through SIPs and STPs.

Also please set aside emergency funds in your bank savings/flexi accounts or mf liquid funds for six months which includes household expenses, EMI payments, Please pay off your entire credit card bills on time . Stay Safe!!

The new financial year has started on an uncertain note of a kind that no one has dealt before, the effects of the pandemic are felt across jobs, livelihoods and the entire economy. The markets have crashed so are our investments, March 2020 will go down in the history as one of the worst months destroying livelihoods and wealth. Given this scenario how do we face this crisis in relation to our personal finances?

We are in midst of a problem that has not yet fully unraveled itself. We are not able to gauge the full impact of the pandemic on the world economy. In such times the best investment strategy is stay where you are as in the past. Continue with the plan as before the pandemic. This is not the time for changing your investment plan. Sometimes doing nothing, choosing to wait, thinking through and taking measured action yields greater value.

The mutual fund portfolio for this month would show losses, it’s difficult to fathom these, but given the current situation it’s better to ignore them, markets should bounce back once the pandemic scare is handled effectively in the coming months.

This waiting time can be utilized to complete some important tasks, we would suggest you make a WILL, will send you the format in a separate mail as an attachment,

focus on emergency funds – plan to set aside three to six months of expenses in your SB accounts, flexi deposits, bank FDs, liquid funds

Based on your cash flows, after setting aside emergency funds, continue paying EMIs though RBI has given three months moratorium, please pay off your Credit card dues, EMIs on personal loans, car loans and home loans as before. Don’t stop unless and until there are cash flow issues, even then please pay off your credit card dues as the interest rates charged are higher compared to other loans

Stay Safe!!

As we start the month of March , we are under the fearful grip of Corona Virus and its impact on economies and markets, Markets have faced recession in the past due to oil shocks, raising interest rates and so on and never because of a virus and at this scale, which is why no one is able to access the impact and suggest a direction in which way the markets are headed, which by itself will create more fears and start a contagion of declining prices in stocks and other assets.

So our mutual fund portfolios as of February end will not look that good, our portfolios are always been constructed with asset allocation in mind and schemes mapped as per time lines, so the damage would be far lesser and hopefully it wont impact our needs in any ways.

In this scenario suggest you to hold on and brace yourselves with patience as this too shall pass.

Markets in Jan started on a good note and corrected in the later parts of the month, the big positive news is that there is reverse in trend in small cap and midcap funds they have delivered 7%- 5% returns this month, whereas largecap funds have delivered less.

We expect the following themes to deliver this calendar year

1. Mid and small cap funds
2. Short term debt funds
3.Gold may continue rally this year too due to geopolitical situations around the world

Markets are nervous due to corona virus scare and budget announcements. We anticipate Budget 2020 to be investor friendly 🙂

Probable budget announcements

1. Tax slabs may be tinkered so that tax payers get some benefit coming year

2. Long term capital gains tax and dividend distribution tax may be removed

3. Long term capital gains time line maybe revised from 12 to 24 months – discourages from early redemption in equity based funds

4. Dividends will be taxed as per investor tax slab rates like bank FD interests – bad for investors in higher income brackets

Lets hope for the best !

HAPPY INVESTING !!

Wishing you and your family a very Happy New Year !!

May this new year fulfill all your personal financial goals .

Month of December was fruitful as the benchmark indices both Nifty 50 and Sensex moved up by 1.66% – 1.87%, foreign portfolio investors have been pouring money into the markets, cumulatively for the year they have invested more than 1 lakh crores, for the month of Dec the provisional figures are upwards of 7000 crores. Month of Jan may see consolidation as markets will wait for government actions regarding disinvestment targets to manage fiscal deficit.

Budget next month may not be a great event to influence the market , apart from reduction in personal income tax rates. So markets may be sideways in the near term, which will also show up in our portfolios , Large caps have done well so far, we are hoping mid cap and value funds to start performing this year .

Happy Investing !!

NOVEMBER HIGHS

In November markets have hit a high of 41000 on the Sensex and 12100 on the Nifty scale , this is on back of lots of Hopes of economy bouncing back sharply and Monies flowing into the country by foreign portfolio investors, and not to miss our own mutual fund friends who are pumping in 8000 Crores monthly into the markets.

Within the sensex,stocks of 30 companies forming the index 8 out of 30 have gained more than 20% from Jan till Nov end, while the sensex and nifty are up 11-13% which means the market is up due to select few stocks and it is not a broad based rally, which is unsettling to say the least.

Markets are expensive when it comes to pure large cap funds, so we expect a limited movement in the NAVs of equity funds going forward. Its better to invest in Large & midcap, multi cap funds at this stage apart from value funds since they have been the biggest under performers ,although there is no momentum in the mid and small cap funds,this may be a good time to add mid and small cap funds to the portfolio based on the risk appetite and time frame.

We suggest always to use the SIP or STP route to make investments instead of lumpsum given the high valuations in the market at this stage.

Markets last month have reversed the trend of correction and has started moving up, due to improvement in sentiments, festive season cheer , uptick in sales of auto and consumer durables. News sources indicate that government is formalising reforms program to be unveiled in the coming months.
On the global front US China trade wars have not escalated which is a positive sign.

In the indian markets we see Large cap valuations are higher compared to mid and small caps, SIP/STPs can still continue, fresh allocations would be better off into multicap funds rather than pure large cap based funds.

At this point of time , we would recommend the following category of debt funds to invest in viz.. Short term, Corporate Bond, PSU & Banking , Low duration funds if you have a time frame of > 1 year.

Markets last month was in the grip of extreme negativity till third week of September, markets also reflected extreme pessimism, but the announcement from the government on corporate tax cuts bought the change in sentiment and revived the markets by 5%+ in a single day , but the market movement was short lived and corrections followed thereafter.

The Silver lining is that the Government has taken steps and has intervened to address the issues faced in the economy and shown the intent to continue in that direction, which is a good thing. Portfolios will look better compared to august, we believe the month of october will see spurt in sales of consumer goods due to festive season and would lift the sentiments of the markets and investors.