Mutual Fund Masterclass - Part 1 - E26

On this Episode we cover:
"- How SIPs and XEROX are similar
- Before knowing which Mutual Fund to select, what we really need to know
- The best products for short term goals
- Why Liquid Funds are in the same category as FDs and RDs
- Why FDs and RDs are NOT tax efficient. And how they are taxed.
- The definition of an 'Equity' fund
- The break down of Equity MFs
- Why holding ~5% cash for MFs is important
- Hybrid Funds and Arbitrage Funds
- Why Pattu has used Taxation as a handle to categorise Risk in MFs
- Pattu's thoughts on SEBI's risk meters!
- How to invest for 'medium term' goals. Go easy.
- Pattu delves into actively managed and passively managed funds.
- We hear about 'Factor' funds (under passively managed funds)"
GListen to the previous episode here-
• The Financial Planning... - E25
GListen to the next episode here-
• Mutual Fund Masterclas... - E27
In association with ‪@pattufreefincal‬
A link to our audio shows:
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[@avichaltyagi8987]

I recently binged your whole playlist over the last few weeks and want to appreciate the fact that the quality of the discussion in terms of story boarding and the flow has increased tremendously. Kudos to the interviewer here!!

[@uuuserr]

When you say Mutual Funds . Pattu Sir comes to mind

[@dheerajsharma1036]

Nice way to tease the next episode

[@mwiths]

I have doubt in mind.
So I have joined mutual funds by 5years before with my fund manager. And it's mainly regular fund on all the mutual fund I bought. Now totally there are 7-8 mutual fund including my spouse.
My question is should I have to continue in Regular funds in longer time with my fund manager or is there we can ask the fund manager to move from the regular plan to the Direct plan.
What are the ways I should approach.

[@anandvaidya67]

Many actively managed direct funds do charge far less than 2%. eg: Nippon Flexicap 0.41%, Kotak Taxsaver 0.54% etc Probably Pattu is referring to 'Regular' funds?

[@privacyowl]

Pattu’s main point is what may outperform today might not do it tomorrow. So why pay extra (even something as low as 0.4%) when you can just buy a benchmark index fund and get the market returns for lower price?

[@akshaynaik1719]

Isn’t it more important to know how many funds consistently underperform index , rather than top funds? I think there will be very less. So we just need to avoid them.

[@privacyowl]

What’s the guarantee the rest of them will outperform the index. You are filtering them out with past returns but that doesn’t mean the “overperformers” will continue to outperform in the future

[@akshaynaik1719]

@@privacyowl exactly my point, the argument i see most often that active most funds don’t beat index look at data for so so years, then that is also past performance of index, what’s guarantee that index will keep beating active funds. And instead of chasing top funds we just need to look for a fund’s beating index most of the time and there are many of those who are consistently doing it.

[@privacyowl]

@@akshaynaik1719 my question to you is simple, let’s see you pick a fund that’s been consistently beating the index. What makes you think it’ll continue to do so in the future??

[@akshaynaik1719]

I didn’t mean to argue but will answer your questions as per my understanding.
There is no guarantee that active will beat passive so there is no guarantee that passive will beat active.
What best you can do is stop predicting future and find funds which are managed by good fund managers and are being in top quartile most of the time, which means beating benchmark and the category.
There are plenty of websites which gives you data for last 10 years as well

[@privacyowl]

@@akshaynaik1719 First of all, I’m not trying to argue. I’m just trying to put forth my points. So if I came across as argumentative, I’m sorry. Since you can’t predict the future, your point is just buy a top performing fund and you should be good. My point is (and the opinion of the experts is) since you can’t reliably predict which fund will outperform in the future just buy the benchmark which every fund tries to beat (and often fails). The benchmark being an index fund. Because data in the US shows that in an efficient market, more than 90% of the funds will underperformed the benchmark, when the benchmark is chosen correctly. For example, if you have a flexicap fund you can’t choose nifty 50 as the benchmark and say I’ve been beating it. In fact the severe underperformance in the large cap world shows how difficult it is to beat the index.

[@TheNishant30]

Dude, just stop interrupting him. You don't even let him finish and ask a new question halfway through.

[@arunbhatt5653]

When the person is genuinely interested... naturally he/she will ask questions..... it's ok as long as the guest doesn't mind interruption