SEBI has come out with its order regarding l’affaire Franklin Templeton debt funds. The 100-page document is categorical in its indictment of the AMC and the ways in which these debt funds were managed. 2 messages are clear from the order: One, investor protection is paramount to the regulator. Two, fund managers and AMCs cannot take their fund management responsibility lightly.
Mirae Asset has come out with a NFO of NYSE FANG+ ETF and a fund of fund (FOF) with the same underlying ETF. This ETF
ICICI Pru Nifty Low Vol 30 ETF now has a companion fund of funds that investors can use for SIPs and investments. Vidya Bala reviews the new offering.
Debt funds are back to worrying many of you. Returns are dipping, there’s a lot of talk on yield movements both at home and in the US, there’s the question of where rates will head now. Over the course of the past several weeks, we have fielded several questions from you on what this means and what you should be doing with your debt funds.
We’ve written extensively on the developments in the debt space in different articles. But here’s answering the questions that appear to worry you the most.
Target maturity funds invest with a stated maturity and pay you back when the maturity is reached. You can call them an FMP but one that is open-ended and takes fresh inflows and outflows.
With yields beginning to move up, more funds are now beginning to talk about ‘roll down strategy’ or a strategy where a maturity date is fixed thereby ensuring that the portfolio’s average maturity steadily falls as it nears maturity. For example, a 2027 target date fund will have a 6-year maturity now and a 5-year maturity in 2022 and so on, until the maturity reduces to near zero in 2027.
“Can I invest in hybrid funds” is a question that we often get. Ranging from the aggressive equity-oriented funds to arbitrage funds, the broad term is ‘hybrid’. We have already discussed some of the key categories of hybrid funds in our earlier articles.
However, this one will cover all of them in a single essay and let you know when and whether you need them.
Most of you are now comfortable with the fact that gilt funds can deliver negative returns in the short to medium term when rates move up. We have also written about it here. But the negative return prevalent in the past month or so, across most debt fund categories has troubled many of you.
HDFC Housing Opportunities Fund, a closed ended thematic fund, launched in December 2017. It sought to invest in housing and all other allied sectors including financing as the sectors looked attractive then. The fund has a mandate to invest at least 80% in its primary theme and up to 20% outside its stated theme.
Is it time to move from active funds to index funds?
The answer is no. There will definitely be more space for index investing in your portfolio but that doesn’t mean you can ignore active funds. We’ll show you some numbers on Indian active funds’ ability to beat the indices currently.
Performance data is clearly showing a declining trend for large-cap funds. Further, data and index behaviour shows that large-cap equity funds will continue to struggle to beat their benchmark convincingly. Selectively picking large-cap stocks directly or a passive strategy of holding large-cap index funds may become necessary
Pick up any equity fund today and the 1-year return looks absolutely uninspiring. 8%? 9%? 11%? Losses? Where is that bumper equity return? But if