HDFC Mid cap Opportunities – The fund with a problem

by

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?

Read more

The fire drill

by
fire drill - preparing for financial emergencies

Just a couple of weeks ago, an apartment in London was engulfed in an unsparing fire incident which claimed over 30 lives and left many more injured.

In India too, one of the worst fire incidents to have happened in recent history is that of Uphaar cinema in Delhi.
It claimed 59 lives and left over 100 injured.

If you have started to wonder why I am talking  about fire on a investing blog, there is a reason to it. Just be with me.

A fire can be devastating. The effects – people are killed or injured, valuable property and other stuff are destroyed. Small businesses not able to bear the consequences can vanish in no time. It triggers a state of emergency – mental as well as physical.

If you are caught unprepared, it can be a terrible setback.

Can one prepare to face a situation like this? Yes, of course. 

Read more

The Will, the way and the worth

by
Will and testament - How to make

Raj Narayan Singh was an icon. A man with humble beginnings, he worked hard to rise to a position of influence. He had a large happy family, a prominent social status and a solid reputation in the industry. He was constantly busy in fulfilling his duties towards each.

But God has strange ways. Raj Narayan suffered a heart attack and passed away immediately. All his dreams came unfolded. His 2 sons started to spar over dividing the family business and the personal estate of Raj Narayan. Raj Narayan’s younger brother too is claiming a share.All the dirty linen is being washed in full public view.

Unfortunately, Raj Narayan had left no document to ensure that after his demise the assets are passed on to the family members in a peaceful way and love in the family persists. The court cases have been filed and the battle seems to be a long one.

Does this read like a scene from a movie?

Well, it is not. It is the reality.

Read more

Are you an investor seeking revenge? Here’s help.

by
Fragile Antifragile

Amit, an investor, initially invested in real estate or fixed income. Of course, he was advised by parents and close friends/relatives. These investments did not deliver enough. He is disappointed. He now is watching the fabulous returns of equity and all his friends are over the moon singing the song.

He is all set to fly too. In fact, he wants to make up for all the lost years and the lost returns with this investment. It is almost like he wants to seek a revenge.

Read more

What did you buy on a loan – Asset or Liability?

by
BOUGHT ON LOAN - ASSET OR LIABILITY

Consider this case where

  • Cost of a real estate: Rs. 100 lakhs or 1 cr
  • Own contribution – 20 lakhs
  • Loan – 80 lakhs
  • Rate of interest – 10.75%
  • Loan tenure – 20 years

Here are the questions for you:

  1. What is the EMI?
  2. How much interest will you end up paying over the tenure of the loan?
  3. What is the real total cost of your apartment?

Now the story.

Read more

An MDRT tag of an insurance agent means nothing – beware!

by
MDRT - A FALSE AUTHORITY

The world of insurance sales is murky and it gets proven every day. Here’s one more.

A reader recently emailed to me that his son had taken up amongst other insurance policies:

New Endowment plan with profit : Sum Assured 14.95 lakhs, started 2016, yearly premium is Rs. 40,836

New Endowment plan with profit : Sum Assured 8.55 lakhs, Table &Term is 814 & 30, started 2016, yearly premium is Rs. 27,067

It has been told by the well known agent that, this is a “Magic plan for retire & enjoy” which is a combination of LIC plans specially researched to meet the objective of securing a financially independent life assured and his/her spouse on retirement. and the net annuity will increase every yr. to take care of inflation approx. @ 9.00%.

It is relevant to point out a few words from the message:

  1. Well known agent
  2. Magic plan for retire and enjoy
  3. Securing a financially independent life assured

First things first. I was not sure about the well known agent thing. As I replied with my observations, he mentioned to me again that the agent was MDRT, USA.

He did so multiple times suggesting that he considered it as some sort of an certified authority, in this case, in insurance.

It’s time to break the myth.

Read more