Zerodha Educate - SoundSage

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In the first part of our conversation we spoke about absolute basics of factors investing and dove deep into the two major factors — low volatility (low vol) and momentum. We spoke about why these factors exist and the explanations, return expectations, and how to use them in an asset allocation framework.

For this episode, we focused on the other two factors—value and quality. We talk about how value as a factor is different from the popular "value investing", how to really measure the value and how to implement them. We also covered what is meant by quality, why it works and if it's a real factor.

Sankaranarayanan Krishnan is a quant fund manager at Motilal who has rich experience designing factor models and managing factor funds.

We hope you enjoy listening to this conversation

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Asset allocation is one of those fancy-sounding terms. We all keep hearing about it non-stop everywhere, but very few investors think about it, and even fewer have a sensible asset allocation that works for them. At its simplest, asset allocation is not putting all your eggs in the same basket. In other words, it’s about spreading your money across different asset classes like equity, debt, gold, and real estate. This naturally leads to the question: how do I figure out a good asset allocation. Asset allocation is as much a science as it is an art.

The objective of asset allocation is to help you reach your financial goals. Coming back to the question of how you figure out a good asset allocation, there’s no perfect asset allocation that’s objectively good for everyone. There are multiple approaches, and each has its own pros and cons. For example, a naive asset allocation that has equal allocation to different asset classes is a perfectly sensible strategy in the right context and for the right type of investor.

In this episode, we caught up with Ashutosh Bhargava, fund manager and head of research at Nippon India Mutual Fund. Ashutosh manages the Nippon India Balanced Advantage Fund, among other funds. Given the nature of the fund, he’s thought deeply about the concept of asset allocation and its various dimensions. In this conversation, we talk about:

His background and how he stumbled on asset allocation
Various approaches to asset allocation
Static asset allocation vs. dynamic asset allocation
Selecting the right parameters to guide asset allocation decisions and their trade-offs

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Dark patterns are tricks used by applications and websites to make users do things they don't want to. They rely on exploiting our behavioural biases and cognitive limitations. We all encounter dark patterns in our daily lives, like:

Making it easy to subscribe but hard to unsubscribe.2. Pre-selecting actions like purchasing insurance, offering tips, payment methods etc. 3. Some e-commerce platforms "sneak" new items that you didn't choose just before the payment step. 4. Hiding or obscuring important details. 5. Using scary and fearful language. In this conversation, Ashish Aggarwal (head of public policy at NASSCOM), Kailash Nadh (CTO at Zerodha) and Bhuvanesh R (Zerodha) discuss how dark patterns are harmful for users and the kind of regulations that must surround them.

The entire transcript of this conversation is available here.

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Trading is one of the most stressful activities. It's a also very lonely activity. Every second there is a change in your profit and loss which leads to happiness, sadness, stress anxiety, and a cocktail of other emotions making trading an emotional roller coaster.

On the occasion of #WorldMentalHealthDay, Dr. Preeti, a clinical psychologist at Lissun, chats with Abid Hassan, founder of Sensibull. They dive into why prioritizing mental health is a game-changer for traders aiming for long-term success in the markets.

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Financial influencers or finfluencers have become incredibly popular in the last 4–5 years. While there are a lot of amazing people who teach people about trading and investing, there are many that sell greed and set wrong expectations. SEBI recently came up with a consultation paper on regulating finfluencers. In this video, Nithin, Abid (Co-founder & CEO of @BeSensibull) and Sandeep Parekh (Managing Partner of Finsec Law) discuss the issue of finfluencers, SEBI's consultation paper and the challenges of regulating them.

Check out this post for the transcript and relevant links.

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Thomas Carlyle, the Scottish writer and philosopher, called economics the dismal science. I don’t know if you’ll agree but having read economics textbooks, I certainly think they’re dismal. They’re filled with unnecessary complexity, pointless jargon and theories that have been dead and buried for decades. While economics as a discipline has progressed, the textbooks used today are stuck in the dark ages.

Then I came across Macroeconomics: An Introduction by Alex M Thomas and I regretted not having this as my textbook when I was studying. Though it’s meant to be a textbook, it doesn't read like one. It’s a brilliant book that weaves classical economic theories with excerpts from wide-ranging Indian literature to highlight the structural, social and cultural complexities of the Indian economy. It’s one of the very few books to do so.

Apart from just making macroeconomics more relatable Alex introduces an alternative approach to understanding macroeconomics, which questions the dominant (marginalist) approach. This alternate approach is inspired by the works of the old masters like Adam Smith, David Ricardo, Karl Marx, John Maynard Keynes, and Piero Sraffa. I learnt a lot while recording the podcast. I hope you enjoy listening to the conversation as much as I enjoyed recording it.

Link to the book: https://www.amazon.in/Macroeconomics-Introduction-Alex-M-Thomas/dp/1108731996

1:27 - About Alex M Thomas

4:51 - What is political economy?

6:35 - Theory of interest rates

10:11- Why should you read this book?

11:29 - The problem with economic teaching

14:41 - How is this book different?

15:41 - The dominant (marginalist) approach

18:57 - How to approach economics

22:32 - The economy as an embedded system

26:10 - Theory of wages

29:52 - Marginalist theory in policy making

34:15 - Theory of money

44:15 - Modern monetary theory

If you have any questions or thoughts about the topics in the conversation, post them on TradingQnA.

If you enjoyed listening to this episode, do let us know @zerodhaonline on Twitter.

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In the last 15 years, Indian asset management has grown leaps and bounds. One of the amazing success stories of this period has been Mirae Asset management, which is best known for its well managed equity funds.

In this episode, I caught up with Swarup Mohanty, the CEO of Mirae Asset Investment Managers (India). Swarup has been at Mirae since day 1 during a period when both Mirae and the Indian markets have grown immensely. I hope you enjoy listening to the conversation as much as I enjoyed recording it.

In this episode, he speaks about:

0:00 - Introduction

2:55 - Influx of young investors into the markets

5:55 - The evolution of Indian asset management

10:15 - Thoughts on the current market cycle

15:05 - The biggest mistakes investors make

20:55 - What’s it like to be the CEO of Mirae?

26:15 - Performance chasing

31:17 - Are there too many AMCs in India?

34:14 - Active vs passive

If you have any questions or thoughts about the topics in the conversation, post them on TradingQnA.

If you enjoyed listening to this episode, do let us know @zerodhaonline on Twitter.

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We are at an important crossroads in history. The pandemic might seem like it’s behind us but we have a raging war in Europe, unprecedented sanctions, currency crises, inflationary pressures, and volatile markets. There are early signs of a shift away from the dollar and uncertainty about the US led global order.

So what does all this mean for India and the world? We caught up with Debashish Bose, Managing Director—Public Equities at Oaks Asset Management, to make sense of it all.

In this conversation, Debashish talks about:

How money is created in the modern world
The geopolitical divide
Fall of Yen and Japan’s currency conflict
Limited power of central banks
Cracks in the current dollar-dominated system
Advice for investors and much more

Debashish had come on the show previously and we had talked about making sense of the macroeconomic developments in the world. You can check out that conversation here:

You can follow Debashish on Twitter for more. We hope you enjoy this insightful conversation as much as we did, recording it 😀

Timestamps 0 - Introduction

1:34 - Creation of money

10:14 - Financial repression

11:50 - The geopolitical divide

16:33 - Japan’s currency conflict

27:43 - Do central banks have enough power?

32:34 - Is the dollar system breaking?

40:10 - China, Russia and deglobalisation

47:46 - Bretton woods III?

55:00 - What to do as an Indian investor

1:08:30 - What about gold?

If you have any questions or thoughts about the topics discussed, post them on TradingQnA.

If you enjoyed listening to this episode, do let us know at @zerodhaonline on Twitter.

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Up until the 1990s, the Capital asset pricing model (CAPM) was the dominant model used to explain market returns. But in 1992 Nobel Laureate Eugene Fama and his partner, Ken French said that market returns can be explained by three factors namely:

Value: the tendency of cheap stocks to outperform costly stocks
Size: the tendency of small cap stocks to outperform large cap stocks
Market factor: the risk premium of the market over the risk-free rate, like a government bond.

Over a period of time, other factors like quality, momentum, and low volatility were added. Institutions were the first to adopt factor investing but with the popularity of ETFs, around 2010, factor ETFs also known as smart beta ETFs started becoming popular in the United States. Given that Indian markets are still very young compared to the US, we just had our first wave of factor or smart beta funds around 2017. But in the last 3 years, there has been an explosion in factor ETFs and mutual funds.

But investors often think of factor investing as a guaranteed way to generate higher returns than the market. They often look at the historical returns of factors like value, momentum, quality, and low volatility and think that these factor funds will always outperform Nifty, which isn’t true. Having said that, factor investing can play a very important role in your portfolio, and it’s important to know how to use these funds in your asset allocation.

This week on the show, we caught up with Sankaranarayanan Krishnan, a quant fund manager at Motilal who has rich experience designing factor models and managing factor funds. In this conversation, we start with the absolute basics of factors investing and talk about two major factors — low volatility (low vol) and momentum. We talk about why these factors exist and the explanations, return expectations, and how to use them in an asset allocation framework.

In this conversation, Sankar talks about:

How did he become a quantitative fund manager
What are factors
What drives the returns of factors
Will factors continue working forward?
Factor performance in India
Are factors free lunch?
Introduction to low volatility and momentum
Why do low volatility and momentum anomalies exist
Does the macroeconomic environment matter for factors?
What would make low volatility and momentum stop working?
Various approaches to implement low volatility and momentum strategies and what investors should know
Are factors replacement for active funds?
Factors funds, diversification and asset allocation
Will factors always outperform marketcap-weighted indices?
His personal investing philosophy
Career advice for someone who wants to pursue opportunities in quantitative finance
Book recommendations.

This was an absolute masterclass on factor investing, and we hope you enjoy listening to this conversation as much as we did recording it. We have an upcoming episode on the other two factors—value and quality.

We also have an introductory note on smart beta funds on Varsity, do check it out.

If you have any questions about anything discussed in the episode or thoughts in general, do post them here on TradingQnA.

If you enjoyed listening to this episode, do let us know by tweeting, we are @zerodhaonline

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What does it take to survive multiple market cycles and create wealth?

This week, we have a really, really special guest. I caught up with Sankaran Naren, one of India's most admired and well-known fund managers, and the chief investment officer (CIO) of ICICI Prudential AMC. In this conversation, we spoke about his 3-decade career in the Indian markets as an investor, broker, and fund manager. He's perhaps best known for his contrarian style of investing that has helped him create immense wealth for investors. This conversation was nothing short of a masterclass on investing, and I hope you enjoy listening to it as much as we did recording it.

In this conversation, Naren speaks about:

How he discovered the stock market.
His thoughts on the current market cycle and the similarities if any between the 2008 crash and the 2000 dot-com burst.
What makes him optimistic about India.
Contrarian investing and value investing.
The influence of central banks on the financial markets.
IPOs of new-age companies.
Corporate governance in India.
Asset allocation and the role of gold, debt, and international stocks.
Asset management.
How he invests personally and his investing philosophy.
Career advice for people who want to enter finance.
Book recommendations.

If you have any questions about anything discussed in the episode or thoughts in general, do post them here on TradingQnA.

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One topic we keep talking about on the podcast is debt funds. As we've alluded to numerous times in the show, most investors focus too much on the equity part of their portfolio and ignore the debt part. They often take debt for granted and invest based on recommendations or based on whatever partial understanding they have. This often ends up backfiring whenever there are bad phases in the debt markets like the IL&FS, DHFL, and Franklin episodes.

The other risk that investors don't pay much attention to is the interest rate risk. Rising interest rates are bad for debt funds, and falling rates are good for debt funds. Given the strong inflationary pressures, RBI has hiked interest twice over the last month, and that has led to the debt fund NAVs falling. Predictably, over the last 3 odd months, the most common query from mutual fund investors was, “why are my debt fund NAVs falling?.”

So we caught up with Mahendra Jajoo, the CIO of Fixed income Mirae Asset India. In this conversation, Mahendra talks about:

What's happening in the debt markets
Why are debt fund NAVs falling
Why are interest rates rising
What's causing inflation?
Why have debt in your portfolio?
How should investors invest in a rising rate environment
Tips on building a debt portfolio and much more

Hoep you find this useful.

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Retirement is the ultimate goal for everyone. We work, save, and invest so that we can kick back and retire comfortably, but a vast majority of Indians aren't ready for their retirement. This is due to structural economic issues, lack of awareness about the need for retirement planning, the lack of quality advice, among other reasons. PGIM India Mutual releases an annual survey of retirement readiness among Indians, and the last one was in 2020. Given that we're living through this mega COVID shock that has disrupted the personal finances of pretty much everybody, we thought it would be the perfect time to talk about the importance of retirement. So Sahil caught up with Ajit Menon, the CEO of PGIM India Mutual.

In this conversation, Ajit talks about:

What does retirement mean
The good, bad, and the ugly from the PGIM India Mutual Fund Retirement Readiness Survey 2020
Why are Indians saving less?
How has COVID changed retirement planning
Why should you think about retirement?
Thinking about how to structure various aspects of your retirement
How to build that mindset to think about retirement readiness
Retirement readiness around the world
Advice for someone starting to think about retirement today

And a whole lot more. This conversation was absolutely brilliant and full of insights. We hope you enjoy it as much as we did recording it.

If you have any questions about anything discussed in the episode or thoughts in general, do post them here on TradingQnA.

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The way the markets have run up post the March 2020 crash have equally surprised and perplexed investors. Given the pace of the recent bull run, that's understandable. A lot of smart people are wondering what's happening in the markets. But that's how the markets work—they don't have to make sense and they rarely do. So, we caught up with Kalpen Parekh (MD & CEO, DSP Mutual Fund) and Sahil Kapoor (Head of Products & Market Strategist, DSP Mutual Fund) to get a sense of the madness in the markets and what you should do as investors:

In this conversation, Kalpen and Sahil talk about:

Some key takeaways over the last 1-1.5 years
How to make sense of inflation
The disconnect between the real economy and the markets
A bird's-eye view of the Indian and the global economy
Are the markets in a bubble?
Investing in the age of markets where central bank actions have a massive impact
Why do investors stop investing in equities early?
What can be done to get people to stick with their investments
How not to get carried away by all the madness around
Asset allocation
How to think about fixed income in a low-interest rate environment
Keeping your behaviour in control and avoiding mistakes
Can you pick the best fund or best fund manager in advance? Discussing Sahil's article on this.
International investing and the role of global funds in a portfolio
The role of gold in a portfolio
How the Indian mutual fund industry looks in the next 5-10 years
Sahil and Kalpen's investment philosophies
Book recommendations

You can follow Sahil and Kalpen on Twitter for more of their perspectives.

If you have any questions about anything discussed in the episode or thoughts in general, do post them here on TradingQnA.

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The CFA Society India recently published the second edition of The Investor’s Guide to Shareholder Meetings in India. As investors, even though we hold stocks of various companies, we rarely think about our rights. Investors also rarely realize that by virtue of the shares they hold, they are entitled to voting rights in a company. It's a chance for them to question the management and engage with them so that they aren't taken for granted as minority shareholders.

So we caught up with Sivananth Ramachandran, CFA, Director of Capital Markets Policy (India) and Amit Tandon, Founder and Managing Director, IiAS, who worked on the report to talk about:

The objective behind publishing the report
Shareholder meetings post-COVID
Basics of shareholder meetings
Why don't retail investors attend these meetings
Evolution of corporate governance in India
Do the votes of retail investors count?
Things to look for when analysing shareholder proposals put forth by companies
ESG investing and the role of shareholders
Shareholder activism and ESG
Shareholder meetings in India vs other countries

and a whole lot more.

Please enjoy this conversation with Sivananth and Amit.

Here's the link to the An Investor's Guide to Shareholder Meetings in India. If you have any questions about shareholder meetings and shareholder rights, do post them here on TradingQnA.

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In this episode, we have a really really special guest. We caught up with Prashant Jain, the chief investment officer (CIO) of HDFC Mutual Fund. Prashanth is a market veteran and the first India fund manager to manage a single mutual fund scheme for over 25 years. He manages some of the largest active mutual fund schemes in India. Over his nearly 25+ year career in the investment management industry, Prashant has pretty much seen all the cycles of the Indian markets. The experience and insights he shared in the conversation are all the more relevant to us given the euphoric mood in the Indian markets currently.

In this wide-ranging conversation, Prashant spoke about:

His journey into the markets
The evolution of our economy and the Indian markets
What does a good business look like to him
His research process
His thoughts on portfolio construction
What does being wrong look like
His thought on using macro inputs in an investing framework
Whether the opportunity set of stocks in Indian markets is limited
The road ahead for India
His thoughts on quality at any price
Active investing vs passive investing
Indian valuations, global valuations, rates and inflation
Advice for aspiring analysts and portfolio managers
How he invests

If you have any questions about this episode, you can post your queries here and we'll answer them.

Disclaimer: Mutual fund investments are subject to market risks. Please read all scheme related documents carefully before investing. This show is for informational and educational purposes only and should not be construed as investment advice or a solicitation to invest. Please consult your financial advisor before making any investment decisions.

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Gold is probably one of the most controversial and perplexing asset classes. Some well-known investors like Warren Buffett call it useless while other investors take the middle path and recommend small allocations. As for investors, they often struggle to think about it in a portfolio construct. So we caught up with Chirag Mehta, senior fund manager at Quantum Asset Management who also manages the Quantum Gold Fund.

In this conversation, Chirag talks about:

His journey into the markets
His perspective of what happened in the markets last year
What moves gold prices
Why do Indians love gold so much?
Historical performance of gold in India vs equities and bonds
Pros and cons of various gold options like physical gold, gold ETFs, Sovereign Gold Bonds, Gold Mutual Funds etc
What roles gold plays in a portfolio
How much to invest in gold
His thoughts on some popular arguments against investing gold
Central banks actions and their impact on gold going forward
How do Indian gold ETFs and Mutual Funds manage their gold, where do they store it, safety measures etc
Things to keep in mind when picking gold funds
His personal investment philosophy
Some unique stories from his career
Some reading recommendations

You can explore gold mutual funds on Coin and gold ETFs on Kite.

If you have any questions about investing in gold, you can post your queries here and we'll answer them.

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In part 1, Rishad gave a quick intro to personal finance if you are new to investing. The pandemic has put a lot of stress on people's finances. So in part 2, we decided to focus on how to manage your personal finances in these challenging times.

In this part, Rishad talks about

His experiences with investors during the pandemic
How to prepare your finances in these difficult times
Basics of health insurance
Importance of having nominees for your investments and other accounts
How to prepare for eventual market downturns
How to think about philanthropy if you have the financial ability to help people in these trying times

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Millions of new investors have started investing post-pandemic, and this is a good thing. But given that the returns in the past year have been spectacular, many new investors continue to make the same old mistakes and have wrong expectations. They tend to take the basics for granted. While pretty much anything investors do will work out in a bull market, these mistakes can come back to haunt them when the markets take a turn for the worse. We've spoken about how to think about investing, how to pick mutual funds and build a portfolio (part 1, part 2) in previous episodes but not much about personal finance.

So we caught up with Rishad Manekia of Kairos Capital. Rishad is a Registered Investment Advisor and helps people simplify their personal finances. In this first of a 2 part series, Rishad gives you a blueprint of sorts on the basics of personal finance so that you can start your investing journey on the right foot.

In this conversation, Rishad talks about:

The right mindset for investors
The first step in personal finance
How to budget
How to set goals
How to invest for short term and long term goals
Figuring out the right asset allocation for various goals
Basics of insurance
How to manage your behaviour during bad market phases
How to review and maintain your personal finance plan
The most common mistakes he sees investors make

Do check out the personal finance chapter on Varsity, and If you have any questions about personal finance, please do post them here.

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We recently did a Twitter live session with Amit Grover, the Head - Learning & Development, DSP Mutual Fund on the right way to invest in Equity Linked Savings Schemes (ELSS) or tax-saving mutual funds. When you invest in an ELSS mutual fund, you can claim a tax deduction on investments up to Rs 1.5 lakhs and you can save up to Rs ₹46,800 in taxes.

In this chat, Amit answers:

What are ELSS funds and how do they work
For how long should you invest in an ELSS mutual fund
ELSS funds vs other tax saving options like PPF, tax-saving fixed deposits etc
How to analyse an ELSS fund
The important factors to keep in mind when choosing an ELSS mutual fund

and more.

You can visit Coin to explore ELSS Funds.

If you have any questions about investing in ELSS Mutual Funds, you can post your queries here and we'll answer them. You can keep track of all the live weekly Coin Chats on Twitter.

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Though the momentum effect is widely known in developed markets like the US, it's still relatively unknown in India. Over the past few years, there's been growing interest in the momentum style of investing. UTI Mutual Fund recently launched India's first momentum index fund which tracks the Nifty 200 Momentum 30 Index. But investors often extrapolate the past returns of momentum as a style and tend to think that momentum will always deliver superlative returns. So we caught up with Aman Singhania, the Vice President & Head of Index Development & Research at NSE India.

In this conversation, we talk to Aman about:
His journey into the markets
What is the momentum style of investing
Why does the momentum effect persist
How is momentum measured
How have momentum investing fared historically in the Indian markets
Are market capitalization-weighted indices momentum oriented in disguise?
Multi-factor investing
How should investors think about momentum
His investing philosophy

You can also check out the Varsity chapter on personal finance to dive deeper. If you have any questions, please do post them here.

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With interest rates at all-time lows, these are tricky times for fixed income (debt) investors. The consensus view seems to be that we are done with the rate cut cycle and the RBI may gradually start increasing rates. Most debt fund categories have delivered handsome returns in the past 2-3 years given the series of rate cuts. But if the rates start increasing, investors will have to moderate their return expectations. Given this backdrop, a lot of people have started talking about floating rate funds and how investors can use them in a rising rate environment. But the reality is that it is not quite that simple. Coincidentally, IDFC Mutual Fund has just launched its floating rate fund. So, we caught up with Arvind Subramanian, fund manager & head of credit research at IDFC Asset Management to learn how these floating rate funds work and if how investors should think of them in a rising rate environment. In this conversation Arvind talks about:

How his journey in the markets began
The current Indian interest environment
What are floating rate funds?
How do they work
What are interest rate swaps and how are they used to create synthetic floating rate bonds
Investment universe of floating rate funds
Role of a fund manager
How floating rates perform in rising and falling rate environments
Whether floating rate funds are a perfect hedge for rising rates
Where does a floating rate fund fit in a debt asset allocation framework?
Risks in these funds
Return expectations
His personal investing philosophy and how he invests

We also highly recommend you listen to this conversation with Suyash Choudhary of IDFC Mutual Fund on how to get your asset allocation right when investing in debt funds. This conversation perfectly compliments the conversation with Arvind on floating rate funds.

If you have any questions about floating rate funds or debt funds, do post them here.

We'd love to hear your thoughts on this conversation. Hit us up on Twitter.

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All the issues in the debt mutual fund space in the past 3 years have highlighted just how important it is to get your debt allocation right. But unfortunately, a lot of investors spend a lot of time thinking about equity in when deciding their asset allocation but take the debt part of the allocation for granted. And this has come back to haunt a lot of investors ever since the IL&FS crisis.

In the previous episodes, we have spoken at length about why you need debt in your portfolio and the right way to think about debt. But we figured investors need a framework on how to go about getting their debt asset allocation right. So, we caught up with Suyash Choudhary, the Head of Fixed Income at IDFC Asset Management. In this absolutely brilliant conversation, Suyash talks about:

How his career in the markets started
How the Indian debt markets and debt mutual funds have evolved throughout his career
The core reason for having debt in a portfolio
Core and satellite approach to debt asset allocation
Pitfalls of diversification in debt
Is it wise to rely on common rules of thumb when investing in debt
Should investors invest in credit risk or high yield funds?
Biggest lessons for investors in the last 3 years
How should savers and retirees think about the current challenging low-interest rate environment?
His personal investing philosophy, investing mistakes, lessons and favourite books

You can check out these previous conversations on investing debt:

Understanding what's happening in the debt markets with R Sivakumar, CIO of debt at Axis Mutual Fund

Should you invest in debt mutual funds with Arvind Chari of Quantum Mutual Fund

If you have any questions on the topics discussed in the episode, do post them here.

You can also check out the Varsity module on personal finance to learn more about the basics of debt mutual funds

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Motilal Oswal AMC is launching a new 5-year constant maturity G-sec ETF, the first one in India. It’s an interesting product for a lot of reasons. And also given that ETFs have been around for a while and investors have a lot of misconceptions. Today, we caught up with Prateek to talk him about how ETFs works and the new Motilal Oswal 5 Year G-Sec ETF.

In this conversation Pratik talks about:

What ETFs are and how they work
Difference between ETFs and mutual funds
ETF liquidity
Do's and don'ts when buying and selling ETFs
The Motilal Oswal 5 Year G-Sec ETF and what makes it unique
Role of debt in a portfolio
Common mistakes investors make when investing in debt funds
Historic performance of the 5 Year G-Sec index across cycles
Risks in the ETF
Taxation of the new ETF and a whole lot more

If you wish to invest in the ETF: https://coin.zerodha.com/etf-sgb

Earlier episodes with Pratik:

Should you invest in index funds? - https://link.chtbl.com/owrqKj2y

The need for global diversification - https://link.chtbl.com/-NE9Jqzf

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One of the things that investors struggle with the most is with having the right expectations when investing and we've talked about this in the previous episodes as well. Mid-cap funds and small-cap funds tend to have higher returns than large-cap funds. But what most investors don't realize is that those higher returns come with a cost - that is higher risk or volatility. Most often than not, they just look at line charts comparing large-cap funds with mid and small-cap funds without looking at the deep and sharp drawdown and invest. If you look at the inflows and outflows of mid-cap and small-cap funds, you can clearly see that most retail investors tend to invest in these funds when they have already gone up and sell when they crash. So, in this conversation, I caught up with Rahul Singh, the Chief Investment Officer (CIO) of Equities at Tata Asset Management. In this conversation Rahul talks about:

Whether the Indian markets are too small enough for good opportunities the nature of mid and small caps and how should investors think about them and allocate to them.
His own investing philosophy and that of Tata Mutual Fund
His thoughts on the current market phase
Current market valuations
International diversification
Large-caps vs mid-caps.
Is it the right time to invest in mid-caps and the case for investing in mid-caps and small-caps
How to invest in mid-caps and small-caps
His own investing philosophy
Investing mistakes and lessons

Prateek Singh is the founder of LearnApp, an online learning platform with courses on investing, personal finance, trading and more, do check it out.

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To say this year has been a roller-coaster ride for the markets would be an understatement. A lot of new investors saw their first serious market crash since 2008, although it didn't last as long, it was brutal nonetheless. But what was surprising was the dramatic recovery even as all the economic data was dismal. We wanted to make sense of the disconnect between the real economy and the stock market and also how investors should look at investing going forward. So Prateek caught up with Anand Radhakrishnan, the Chief Investment Officer of Equity at Franklin Templeton India. In this absolutely brilliant and wide-ranging conversation, Anand talks about:

The opposite journeys of the economy and the markets
The major economic concerns, both Indian and global
Thought on the return of inflation globally
How should investors think about this current market phase
Why are the markets going up when the economic data is grim
Thoughts on the current market phase and the factors that would determine the market direction ahead
Current market valuations and concerns on potential overvaluation concerns
Sector leadership going forward
Thoughts on gold
How Anand invests personally
Some investing lessons he's picked up over his career

Hope you folks enjoy this conversation with Anand.

Prateek Singh is the founder of LearnApp, an online learning platform with courses on investing, personal finance, trading and more, do check it out.

The information contained in this communication is not a complete representation of every material fact and is for informational purposes only. Statements/ opinions/recommendations in this communication which contain words or phrases such as “will”, “expect”, “could”, “believe” and similar expressions or variations of such expressions are “forward – looking statements”. Actual results may differ materially from those suggested by the forward-looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risk, general economic and political conditions in India and other countries globally, which have an impact on the service and / or investments. There may have been changes in matters which affect the security subsequent to the date of this communication. Stocks / Sectors / Securities mentioned may or may not form part of fund’s portfolio and do not constitute investment advice or recommendation to trade in stock/ sector/ security in any manner whatsoever. The AMC, Trustee, their associates, officers or employees or holding companies do not assure or guarantee any return of principle or assurance of income on investments in these schemes. Please read the Scheme Information Document carefully in its entirety prior to making an investment decision and visit our website http://www.franklintempletonindia.com for further details.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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Index funds and ETFs are steading becoming popular among Indian investors as they realize the importance of costs and the fact that fund managers generating alpha is hard. In the past year or so, we've discussed index funds and the merits of passive investing in multiple conversations but we haven't spoken much about Exchange Traded Funds (ETFs).

The folks at Mirae are betting big on ETFs and they are launching a fund of fund (FOF) that invests in Nifty 50, Nifty Next 50, and Nifty midcap 150 ETF. This has the 2 benefits of equity taxation for the FOF and also the rebalancing inside the FOF is tax-free. So we caught up with Siddharth Srivastava, the head of ETF products at Mirae Asset India to talk about all things ETFs, index funds, and Mirae's new fund offering.

In this conversation we talk about:

What an ETF is, how does it work and how is it different from an index mutual fund
The global and Indian ETF landscape
His thought on why ETFs aren't popular among retail investors
Liquidity issues in ETFs and what should investors do when buying and selling ETFs
Why Mirae is launching index ETFs when it is known for its active funds
What makes the new Mirae Asset Equity Allocator Fund of Fund unique and it's advantages
His thought son how investors can use Mirae Asset Equity Allocator Fund of Fund in a portfolio
Investing in this ETF vs buying the ETFs individually
His personal investing philosophy and his investing lessons
His favourite books

Please enjoy this conversation with Siddharth of Mirae.

We would love to hear your thoughts, feedback and suggestions on the podcast. Please do tweet your thoughts @CoinbyZerodha. You can also post your question on ETFs and mutual funds here on TradingQnA.

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In part 1, Vidya spoke about why mutual funds, having the right expectations, setting goals, importance of asset allocation, and how to pick an equity fund. We figured given all the issues, the topic of debt mutual funds deserves a separate episode unto itself. Debt is supposed to be the boring part of your portfolio that provides stability while equity provides growth. But we've seen that investors driven by past returns, star ratings, and poor understanding of the various categories of funds have seen losses in the debt part of their portfolios. In this episode Vidya talks about:

The need for a debt fund in a portfolio
How to analyse and pick debt funds - the do's and dont's
Understanding credit risk and duration risk
How to use gilt funds
What is rebalancing, the need for rebalancing and how tor rebalancing?
Growth vs dividend plans and why it makes NO sense to invest in dividend plans
Vidya's investing philosophy
Her favourite books

Do check out PrimeInvestor for some insightful perspectives on investing, fund selection, portfolio construction by Vidya and her colleagues.

You can also check out this LearnApp course on the basics of investing in mutual funds.

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Since Feb 2020, we've seen historic and unprecedented volatility in the Indian markets. We saw the fastest fall in the markets and also one of the fastest recoveries in the history of the Indian markets. All this was within a space of a few months. Surprisingly, we are seeing a sharp uptick in the number of new investors enter the markets, but the mistakes some of them are making are the same old ones. Over the past few months, we've had conversations with some of the most experienced participants in the markets to put this insanely volatile market phase in perspective.

But we also realized that investors were lacking context on how to think about investing even before they put their first rupee to work. So we figured, there's no better time than this to do this. Given that Vidya has been interacting with investors for the better part of a decade in various capacities, we reached out to her and she graciously agreed to talk to us.

In this conversation, Vidya talks to Prateek about:

How to think about risk and reward when investing
How to set goals and why a goal-based investing framework helps you invest better
How to have returns expectations
How do you figure out your risk tolerance
What the hell is asset allocation, why it matters and how to figure out the right asset allocation for you
Active vs passive funds
How to pick an equity fund
How to sort through the various styles of funds and how to include them in your portfolio
Do's and don't when picking an active funds
Growth vs dividend plans

Once you have heard the conversation, you will have a framework on how to think about investing, why you need to invest, set goals and pick your first fund.

Do check out PrimeInvestor for some insightful perspectives on investing, fund selection, portfolio construction by Vidya and her colleagues.

You can also check out this LearnApp course on mutual funds.

In part 2 of the conversation, we'll talk about the right way to pick debt funds, rebalancing and portfolio maintenance.

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In this episode, Prateek (Founder of LearnApp) caught up with Radhika Gupta, the CEO of Edelweiss Mutual Fund. Radhika started her career with McKinsey and later joined AQR - the pioneering quantitative asset manager. She then started her own hedge fund which was acquired by Edelweiss Financial Services in 2014. She also led the acquisitions of JP Morgan Mutual Fund and Ambit's AIF business and became the CEO of Edelweiss MF.

In this wide-ranging conversation Radhika talks about:

Her experience at AQR
Common behavioural mistakes that investors commit
What is asset allocation why is it important
Static vs dynamic asset allocation
Decodes balanced advantage funds, how they work, the various models etc
What are equity savings funds and how do they work
What makes Bharat Bond ETF special and the advantages
How she invests personally

and a whole lot more...

Please enjoy this conversation with Radhika. Do let us know your feedback by tweeting to us @zerodhaonline.

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As we publish this episode the markets continue to remain volatile and the Nifty 50 and Nifty Midcap 100 are down about 25% while the Nifty Smallcap 100 index is down by 33% year to date. We understand that these can be nerve-wracking times for you. With that in mind, over the last couple of weeks, we've published conversations with some of the smartest and most experienced people in the Indian markets, people who've seen the previous bear phases. And in this episode, Prateek Singh (Founder of LearnApp) caught up with I. V. Subramaniam (Subbu), the MD, CEO & CIO of Quantum Advisors. Subbu has over 25 years of experience in the India markets and has pretty much seen every market phase in India, including the Harshad Mehta scam, dot com crash, the 2008 crisis among others. In this conversation, Subbu talks about:

How got started in the markets
What exactly was the Harshad Mehta scam and what he personally learnt from it
What you shouldn't do in a bear market
Common behavioural mistakes investors make
How to build portfolios during such bear market phases
How to avoid value traps if you are a direct equity investor
His thoughts the underperformance of value style of investing
Importance of asset allocation
How he personally invests

and a whole lot more.

Please enjoy this conversation with Subbu.

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Whenever there is volatility, equity markets get all the attention. Bonds typically don't move around as much as equities and hence they seem boring to most people. Moreover, the Indian bond markets are extremely shallow and are dominated by institutions. But the bond markets send far more useful and actionable signals about companies and the economy at large are far more insightful than movements of stock prices and indices.

And debt mutual funds, the most accessible products to retail investors are dominated by institutions and HNIs. And there are also a lot of misconceptions about the role of debt in portfolios. So, Prateek Singh (Founder of LearnApp) caught up with R Sivakumar, Head of Fixed Income at Axis Mutual Fund - THE best person to talk about all things debt and bond markets.

In this conversation we talk about:

When happens in a bond market when the equity markets crash
A birdseye view of the Indian and global economy as COVID-19 spread through the globe
Factors that move bond prices
RBIs recent actions to provide liquidity
Why do you need debt in your portfolio
How not to choose debt funds
Gilt funds and their use

and a whole lot more...

Please enjoy this conversation with Sivakumar of Axis MF. Please let us know your feedback on @zerodhaonline on Twitter or on iTunes ratings.

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One of the most prevalent yet ignored biases among investors is called the home country bias - the tendency of investors to invest all or most of their money in the country they live in. To give you some context, India is just 2% of the world marketcap - meaning a vast majority of the investment opportunities lie outside India. And old economy stocks dominate the Indian indices. We don't have the Indian listed equivalent of Apple, Google, Netflix, Amazon, Facebook etc, the biggest and most innovative tech companies in the world.

We've all been taught that we should diversify our portfolios across asset classes such as stocks, bonds, gold, real estate, etc. But In this wide-ranging conversation, Pratik Oswal, Head of Passive Funds at Motilal Oswal AMC talks to Prateek Singh (Founder of LearnApp) about:

What is global diversification and why it is needed
The opportunities and risks of global diversification
What does depreciation of rupee means and how it adds to returns
How to allocate to global funds in a portfolio
Comparing the S&P 500 and the Nasdaq 100 index funds

And a whole lot more...

Note: We had recorded this podcast with Pratik before Motilal Had received the approval for launching the Motilal Oswal S&P500 Index fund. We recorded an extended conversation specifically about the new fund from the 41: 50 mark.

Please enjoy this conversation with Pratik Oswal of Motilal AMC.

We've also launched a Zerodha Paathshala, a Hindi Podcast. You can check out the latest conversations here.

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Since mid-February, there has been a sharp sell-off in the markets as the Corona Virus pandemic spreads through the globe. As we record this, Nifty 50 is down 25% while Nifty Mid-cap 100 and Nifty small-cap 100 indices are down by over 30% and 40% respectively. This is the sharpest fall in the markets since the 2008 financial crisis. And you might be worried about your investments. So, we decided to talk some really smart people who've seen various cycles in the Indian markets to bring you some perspective on what to do and what not to do.

In this conversation, Prateek (Founder, LearnApp) talks to Kalpen Parekh, the President of DSP Mutual fund. Kalpen has over 2 decades of experience in the Indian markets. He was previously the Managing Director at IDFC Mutual Fund. He has also served in Birla Sun Life AMC and ICICI Prudential AMAC after beginning his career with L&T Finance.

We had coincidentally spoken to Kalpen when there was some volatility in the markets last time, you can listen to the old episode here.

Apologies for the poor audio quality. Given the work from home situation, there was a drop in the quality.

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Index investing (passive investing) has become increasingly popular in the last decade across the world. Trillions of dollars have flown out of active mutual funds into low-cost index funds. But in India, these are still early days for indexing, we just have about Rs 7700 crores in index funds. Although Rs 1.6 lakh crores is invested in index exchange traded funds (ETFs), most of it from the Employees' Provident Fund Organisation (EPFO) and retail investors predominantly invest in index mutual funds. In the past few years, there has been small by steadily increasing chatter about the merits of low-cost index funds in India. Given the growing underperformance of actively managed large-cap funds, there also seems to be a growing realization that low-cost index funds may be the best way to get large-cap exposure. In the last few months, Motilal Mutual Fund has launched a suite of index funds tracking the Nifty 50, Nifty Next 50, Nifty Midcap 150, and Nifty Smallcap 250, and Nifty 500 indices.

In this sweeping conversation with Pratik Oswal, Head - Passive Funds at Motilal Oswal Asset Management Company talks to Prateek Singh (Founder of LearnApp) about:

How he got started in finance
What are index funds and how do they work?
The basics terminology of index funds
Impact and importance of costs when investing in mutual funds
His take on the active vs passive debate
Are index funds the best way to get large-cap exposure?
Liquidity concerns in midcap and smallcap stocks
Growth of index funds in India
Scope of smart beta funds in India
Portfolio construction with index funds
Motilal's previous experiment with index funds

Note: The latest AUM in index funds is Rs 7717.16 crores. When the podcast was recorded it was just a little over Rs 6500 crores.

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The Bharat Bond ETF by Edelweiss Mutual Fund opens for subscription today. This exchange traded fund (ETF) holds AAA-rated bonds issued by public sector enterprises. The Bharat Bond ETF is unique in a lot of respects. In this wide-ranging conversation, Dhawal Dalal, Chief Investment Officer - Fixed Income of Edelweiss Mutual Fund talks to Prateek Singh (Founder of LearnApp) about:

Why the Indian corporate bond market is shallow
Reasons for the lack of retail participation in the debt markets
The role of debt in a portfolio and how to use debt instruments in a portfolio
And finally, explains in detail what the Bharat Bond ETF is, the structure and the risk & rewards of the ETF

You can also check out this companion LearnApp video and this TradingQnA post for more details about the ETF.

Click here, if you wish to invest in the Bharat Bond ETF.

Please enjoy this conversation with Dhawal.

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Debt markets have suddenly become more action-packed than the equity markets. Ever since the IL&FS default, investors have slowly grown to realize that even debt carries its own risks. make no mistake, debt plays an important role in a portfolio. But it is imperative that you as an investor understand the various debt instruments and use them the right way.

Arvind Chari is the Head of Fixed Income and Alternatives at Quantum Advisors. In this webinar, Arvind lays out the case to invest in debt and the core tents to follow when investing in debt funds. Arvind has over 14 years’ experience in Indian fixed income markets across dealing, research and portfolio management. Arvind joined Quantum in 2004 as Research Analyst – Fixed Income to build the fixed income and macro economy research function and also to help develop fixed income and other asset class products for Quantum Mutual Fund. He also helped set-up an offshore India Bond Fund amongst the first of its kind then. Arvind holds a Masters in Commerce (M.com) and Masters in Management Studies (MMS) from the Mumbai University.

Arvind is also a really good writer. Here are a couple of articles that inspired us to ask Arvind to talk about the topic at hand today. http://bit.ly/2IGnO8k

http://bit.ly/2XhgERA

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These are unnerving times for investors with the markets being volatile. Long term investors should ideally embrace volatility, but we are seeing investors stop their investments. Volatile markets tend to induce investors to most often than not, make all the wrong choices. When markets undergo a period of under-performance, investors tend to stop their SIPs or worse yet redeem their investments.

This during a time when they should do the exact opposite. As an Investor, you should embrace volatility because you get to average your investment at various price points.

In this illuminating webinar, Kalpen Parekh (President, DSP Investment Managers) talks about:

The do's and don'ts of investing.
The recent under-performance of mid and small cap indices vs the Nifty 50 large-cap index.
How should you approach investments in mid and small-cap funds?
How Indian markets have performed over various market cycles and the parallels with the performance of the past 1-year.
How to think about debt allocation in your portfolio and some historical context on the performance.

The presentation used in the webinar: http://bit.ly/2J6F4r6

Here's the previous webinar on introduction to debt mutual funds by Kalpen: https://youtu.be/5AxNrSQrMg4

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Contra funds is a new and unique category that was carved out in the recent scheme reclassification by SEBI. By the very definition, these funds follow a contrarian investment approach and swim against the tide. These funds invest in stocks that are out of favor, special situations, and stocks that can turnaround. Taher Badshah is the Chief Investment Officer (Equities) at Invesco Mutual Fund. He also manages the Invesco India Contra Fund. In this webinar, he explains how a contra fund works, the investment process, and how to use these funds to build your portfolio.

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In the 4th and final part of the video, Winston talks about accrual management i.e., how to generate returns by managing the yield to maturity (YTM) in your portfolio. When you buy a bond, you earn an assured interest (coupon), which will accrue in your portfolio. In this part, you will learn how you can maximize this. Winston covers concepts such as:

What drives the return of a bond
How to increase the returns in your portfolio
Different types of risks
What is an yield curve, how to interpret it, and the types of yield curves.

Part 1: Google Podcasts, Apple Podcasts

Part 2: Google Podcasts, Apple Podcasts

Part 3: Google Podcasts, Apple Podcasts

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In part 3 of the webinar, Winston talks about Duration. It is one of the most important factors when you are choosing a bond or a bond fund. Duration is a measure of a bond's sensitivity to changes in interest rates. In order to understand duration, you will also need to have a working knowledge of discounting future cash flows or time value of money. To learn about the time value of money, you can check out this Varsity module on this: http://bit.ly/2ECfBS1

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