Your Mutual Fund Strategy Needs These Hacks 🔑

Hey lovelies!

This is probably the 7287424th time you’re hearing this but, Happy New Year! 2024 must really hold a place in a book of records for being the fastest year since the Big Bang. Phew! Anyway, if you’re here, reading this newsletter, I want to assume we’ve already convinced you to invest in Mutual Funds. So go ahead and tell me:

Here’s what’s in store for you:

• Monthly Market Review - December 2024

• Picking The Best Mutual Funds Ft. Ankur

• Binge Of The Month

• 3.5 Minutes That Might Just Make You Rich🤯

‘Sup with the market

December was yet again not a great month, alright! But look at how far we’ve come. For context, Sensex & Nifty were in Jan 2024. Here’s Jan’s Market Moves, for context:

Global funds sold over $750 million worth of Indian stocks in 2024, with October and November seeing the heaviest exits, as per Bloomberg. This sell-off came after foreign investors had built up holdings to nearly $12 billion by late September—talk about a swift U-turn!

A myriad of challenges—sky-high interest rates, Lok Sabha Elections, Crisis in the Middle East, US elections, and a feeble rupee—created turbulence for Indian equities. But despite the foreign exodus, Indian markets held their ground. I’d even go so far as saying they did fairly well considering the circumstances.

📈 The NSE Nifty 50 Index still managed a modest 9% gain, notching its ninth consecutive calendar year in the green, thanks to consistent domestic buying. Local investors, it seems, are the true backbone of India’s market story! 🏏

Mutual Fund Selection Playbook ft Ankur Jhaveri

Despite all of what people say about social media, the pros far outweigh the cons if you know what you’re doing nah? Social media got you to us, and us to the various people and brands who are now our dear friends, team, and stakeholders. This is Ankur and we met him through LinkedIn! 👇🏼👇🏼

Do yourself a favor and head over to his newsletter. He simplifies finance in a way that even a 10-year-old could understand. Ankur is a BSFI expert and has some super valuable pointers to help you pick mutual funds:

1️⃣ Define Your Goal 🎯
Every investment starts with a purpose. Ask yourself:

• Why are you investing? Is it for retirement, a child’s education, or a short-term goal like buying a car?

• When do you need the money?

  • <3 years: Stick to debt funds.

  • 3-7 years: Hybrid funds balance risk and reward.

  • >7 years: Equity funds are an option, but only if you’re okay with some risk.
    👉 If you’re risk-averse, large-cap funds are safer than small or mid-caps.

2️⃣ Start With Rankings 📊
Rankings give you a great starting point when you’re unsure where to begin:

• Look at the top 2-4 funds in your category.

• Got recommendations? Analyze those.

• Avoid funds outside the top 10 unless you’ve got solid reasons.

3️⃣ Check the Basics 🔍
Now, dig into the fundamentals:

• Returns vs Expense Ratio 💰
  Look at these together! High returns can justify a slightly higher expense ratio. Pro tip: Opt for direct plans to save on costs unless you work with an advisor.

• Fund Manager 🧑‍💼
  The fund manager calls the shots—so their track record matters:

  1. Are their other funds doing well?

  2. Have they been with this fund for a while? Stability is key.

• AUM (Assets Under Management) 📈
  The size of the fund can indicate stability. Check for:

  1. No sudden spikes or drops in AUM.

  2. AUM forms a significant portion of the AMC’s category, ensuring the fund gets attention.

4️⃣ Dive Into Ratios ⚙️
Ready for some techy insights? Focus on these:

• Alpha 🟢: How much extra return does the fund give over its benchmark? Higher alpha is good, but it often comes with higher risk.

• Beta 🔄: Measures volatility.

  • Beta >1 = More volatile than the benchmark.

  • Beta <1 = Less volatile.
    Choose based on your risk appetite.

• Standard Deviation (SD) 🔺: Indicates how much returns vary from the average. A high SD is fine if alpha justifies the risk.

5️⃣ Advanced Metrics (Optional but Cool 😎)

• Capture Ratios 📈📉:

  • Upside (>100): The fund outperforms in a rising market.

  • Downside (<100): It limits losses in a falling market. Lower is better here!

• Risk-Return Scatterplot 📊:
  This visual graph shows how the fund balances risk and reward. For example, some funds may offer higher returns while taking a risk similar to their benchmark—a win-win.

6️⃣ Final Glance at Holdings 🛒
Lastly, take a quick look at what the fund invests in:

• What’s the mix of small, mid, and large caps?

• Are the major stocks aligned with your risk tolerance?

🔖 Binge of the month

I just about finished reading Kill for Me, Kill for You by Steve Cavanagh and I HIGHLY RECOMMEND IT!!!! It’s got so many interwoven storylines that keep taking you by surprise and I felt like I’d so much fun reading thriller fiction after a considerably long time. This book is so stimulating overall and that’s what makes it a great, fresh read :)

🍸 Cocktail Pe Charcha

Is it too overwhelming to research & plan your investment? Say no more, we can personally guide you into mixing the perfect financial cocktail to manage your money!

Instead, pick with intent. In a noisy world of investing, patience is underrated. A scattered, aimless, impatient approach to mutual fund selection won’t build wealth—it’ll dilute it. A mutual fund’s true worth lies in its ability to weather cycles and stay the course. The right fund doesn’t promise thrills—it delivers stability and consistent growth. “Real wealth isn’t built in spurts; it’s accumulated in quiet, deliberate steps.

To funds that don’t just perform, but evolve with you.🥂

Sayali❤️