The Next Generation of Wealth Creation

We have a better standard of living than our previous generations and the coming generations will have a much more better standard of living. This is a India centric statement and we shall demonstrate this statement with some facts and figures. So Ladies and Gentlemen, please get ready for reading an article which will leave you optimistic for the future. TerminologiesTo start of with, we have our Gross Domestic Product (GDP) which is a widely used measure for the economy. It is basically the value of everything (goods and also services) produced within the country. After the GDP we have something which every Indian is familiar with – Population. While GDP is a measure of a country’s economy, the GDP-per-Capita is an average number derived by dividing the GDP with the total po... Read Full Article

Q3FY18: Portfolio Performance

In this post, we highlight the performance of the portfolio for the quarter ended 31st December, 2017. We document our portfolio performance on a quarterly basis for the benefit of our readers and those who are interested in knowing the performance of our advisory service. This post focuses solely on the performance of stocks and not the company results. Performance Q3FY18 was a good period for our portfolio with 15.37% returns. Nifty 50 index itself delivered 6.95% returns and thus we were able to generate an out-performance of 8.42%. Once again, we cannot complain of the performance and our reasonably satisfied. Our clients are heavily invested in liquid and ultra-short funds as we look for more opportunities to invest in. On a risk-adjusted basis, we have been doing reasonably g... Read Full Article

2017: The death of debt funds

Debt funds are seen as a safe avenue for investing. Marketing debt funds is a common way for advisors to boost up their AUM. Portfolio advisors talk of debt-equity split in the portfolio as a safe-risky asset class split. After a stellar year (2016), debt funds faced a terrible year. At a time when equity markets are in a strong bull run and investors are grinning at their 20% p.a. and higher CAGR, a few are sweating over their debt fund returns even if their equity gains are pushing up the over all returns. 2017 bursts a famous myth – Debt funds are safe to invest in. Most investors and advisors fail to deep dive into the facets of investing in debt securities. It is not simple as investing in a fixed deposit AND neither is it an alternate to fixed deposits for the layman inve... Read Full Article

Future returns of Nifty and Sensex

In this post, we will try to estimate the expected returns from the broad market indices (Sensex and Nifty) over the next decade (By the year 2027). The idea of this post is to show our readers that we are not in a raging bull market bubble and that despite the markets being at a all time high, long term investors have ample opportunities even today to make high returns! For estimating the future returns of Nifty and Sensex in this post, we will not use any fancy terms like GDP, growth, earnings, etc. We will just use the average historical returns of equities as an asset class and an assumption of broader market returns reverting back to these averages (Currently we are lower than the average). Adjusted for dividends, the broader markets have given ~ 6.5% p.a. over the last 10 years.... Read Full Article

Q2FY18: Portfolio Performance

In this post, we highlight the performance of the portfolio for the quarter ended 30th September, 2017. We document our portfolio performance on a quarterly basis for the benefit of our readers and those who are interested in knowing the performance of our advisory service. This post focuses solely on the performance of stocks and not the company results. To see the fundamental performance of our invested companies, read: Performance of invested companies Performance Compared to a stellar Q1FY18 performance of 15.12% returns, Q2FY18 was rather modest with a 6.72% return. This is a good number for a quarter performance. Our portfolio outperformed the Nifty50 by 3.02% this quarter. As we write this post, our portfolio has crossed its previous high and is a... Read Full Article

GDP Growth vs Stock Market Returns

This post is to primarily study the relation between GDP growth and stock market returns. In the long run, does the stock market return equal (or be close to) the GDP growth rate? Also, do developed markets give lower returns than emerging markets? We will use statistical data and not qualitative aspects like infrastructure, supply of labour and capital, etc (Developed markets have far more vibrant capital markets which make it easy to raise capital). India is viewed as one of the major emerging economies with high potential to grow its GDP sustained over a long period of time. Post 1991, India has attracted a lot of foreign investment due to various factors such as demographic advantage (young working population), resources and political stability. Indian investors are now blindly... Read Full Article

Q1FY18 – Portfolio Companies Performance

Of 12 companies in our new client portfolios (2016 and later members), 10 companies have declared their results for Q1FY18. Two companies have seen a dip in their revenues on YoY (Year-on-Year) basis and two companies have seen a dip in their net profits. In a tough quarter for corporate earnings due to GST roll out hurdles, we are satisfied to see a healthy growth rate in our portfolio. Contrary to high valuation premiums of growth stocks in the current market scenario, our portfolio stocks are in the “Cheap-To-Fair” valuation zone on the EV/EBIDTA, PE Ratio and PB Ratio basis. Most companies have macro tailwinds in their favor and w expect revenues to grow at a healthy pace. We have always emphasized on the construction of a well balanced portfolio between growth and value... Read Full Article