Someone on Twitter mentioned that index funds create alpha. I don’t know how is that possible but what is certainly possible is that you can create investment alpha with your own behaviour.
It is a known fact that the returns of an investment instruments (say mutual fund) and the actual return of an investor vary significantly.
Why is that?
When I started working 14 years ago, all I had was a bag of clothes, many books, little money and a big will to achieve something.
God knows when my ‘will to achieve’ turned into a desire to earn more money.
As I earned more money, my desires grew too.
Before I realised, I was on this hedonic treadmill.
I bought a car, one more car, a time share, traveled places, bought expensive stuff and worked to raise my standard of living. More money needed.
I thought I was getting happier only to realise that the happiness was short lived.
More stuff and more stuff.
I became an excess user of credit card and weekend shopping became my pastime. What I didn’t realise I was betting my future income on my current desires.
What I forgot to stop and ask was “Am I making myself any happier than I was already?”.
Anways, life went on.
And then, 6 years ago, I quit my job to be on my own.
OK. Silly question.
To recollect, Aadhar is an identity database of all Indian Citizens and contains your personal details as well as biometric data. You provide this data through authorised centres and personnel only.
Once you go through the process and receive your Aadhar Card, this is what it is supposed to look like.
One asset class that has always baffled me is Real Estate.
It is the first investment most of us make. Sometimes, to get a roof on the head and sometimes because “you can never lose money with real estate“.
Like all good myths, there are these stories of how ‘someone’ has made it big time in property investments.
You and I too get carried away and start to dream big. The shopping spree starts – buy a couple of apartments, commercial shops and offices and even land tracts.
We hope to have the inspiration of the genius work for us too.
Apparently, this real estate investor has been able to traverse through various real estate cycles and made money, big time.
I too want to believe that the genius does exist somewhere.
Who doesn’t know about HDFC Mid cap Opportunities fund? It is one of the star funds from the HDFC MF stable.
The fund started its journey in July 2007, almost at the height of the previous bull market. Its current fund managers are Chirag Setalvad and Rakesh Vyas.
The fund seems to have done really well. The regular plan of the fund boasts point to point returns of 28.63%, 20.95%, 26.26% and 17.82% for 1, 3, 5, and 10 years respectively. (see image below)
Compared to its benchmark, Nifty Free Float Midcap 100, the performance of which is 28.32%, 16.91%, 19.25% and 11.49% for the corresponding periods. The benchmark performance excludes dividends.
Even the expense ratio of the regular plan is one of the lowest in what most of its peers charge.
It has been an impressive streak of performance, no doubt.
Yet, every time an investor came asking for advice about this fund, I would say NO.
Why? Where’s the problem?
Consider this case where
Here are the questions for you:
Now the story.