Tweet Buster: Why doing a Google search for best performing mutual funds may misguide you

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If India VIX is a good enough indicator of fear among market participants, then the week gone by had enough good news for us as the fear gauge index slipped almost 10 per cent in just five trading sessions. Investors, however, stayed away from metals and banks to hide in the safety net of FMCG and pharma stocks.

In this edition of Tweet Buster, we have compiled the best of gyaan from FinTweet to help you navigate an uncertain market, investment ideas and the do’s and don’ts of investing.

For newbies
Value investor Abhishek Basumallick says for people who are starting off their investment journeys, a couple of SIPs in Nifty and Nifty Next 50 index funds or ETFs is a great place to get started. “Helps with diversification also in building a strong base portfolio,” he says.

The don’ts of investing in debt
Edelweiss Mutual Fund CEO Radhika Gupta has an advice for debt investors in a low interest rate market. “Do not stretch the boundaries of either duration or credit to earn higher yield, especially on short term parking money where risk on capital can’t be taken,” she says.

How to beat the Street

Outsized money is rarely made by buying what everyone else is at a price higher than them. “Ask yourself, what gives me a right to earn outsized returns? Am I buying something different? Am I buying it cheaper? Am I holding on longer?,” says Gupta.

Two risk myths
Gupta warns against two myths:
1) Index funds are not risky (they only eliminate FM risk, not inherent market risk, which is large)
2) Gilt funds have no risk (they eliminate credit risk, but have duration risk which is meaningful)

Lure of easy money
At a time when the benchmark equity indices are hovering near all-time high levels, maverick value investor
Vijay Kedia says the desire to become a millionaire overnight is the root cause of failures in the stock market.

Buy Call
Sanjiv Bhasin of IIFL Securities has a target of Rs 1,350-1,400 on Cipla by the end of 2022. “Big positive for Cipla as it gets approval to import Moderna vaccine with commercial interest talks underway,” he tweeted.

Hard truth
PMS fund manager Shankar Sharma described the commonly used valuation metric P/E (Price-to-earnings) ratio as a largely oversimplified metric which is mostly useless. “It is impossible to PE across sectors, countries and periods. Interest rates completely influence PEs and anybody who says otherwise, needs some basic education in valuation,” he says.

Don’t Google it
DSP Mutual Fund’s Kalpen Parekh says the best way to search for a mutual fund is not by doing a Google search for the “best performing mutual fund” because best performers change every year.

Investing gems from Ian Cassel

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