Transcription
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Welcome to India's Best Mutual Funds by Phenology 30.
This is probably the most popular Indian mutual fund shortlist. It is so important that before I make it, you can see I have brought a new shirt as well!
Anyways, this time the format is a bit different. We had to ensure that this series, for which we work so hard on the back end, is just for you guys. This should not come in the format of tips. Do not get mutual fund tips because if there is no purpose, then don't do this series.
This time, I have spent a little more than before, where we have focused a lot on showing how the back end pays. Is there elimination selection of funds? These are all the steps through which we can prepare each category.
I will tell you how I can manage the funds. I am going to buy our large cap mutual fund. This year's selection process is this: Pranjal Kamra with Finology for Investors starts India's Best Mutual Funds for 2025.
Now, look at every year. Like this year too, when we start the selection, let's talk about large caps.
Dialmitrip Funds and ETFs are now index funds, i.e., those which mimic Sensex, Nifty, or any such index where the fund manager puts his money. One who doesn't use his brain buys shares in the index, whichever index it's tracking. He picks it up and takes it to the active position, that is, where the fund manager uses his intelligence trying to outperform the market and charges a higher fee in return.
ETF, i.e., a basket of stocks that you readymade, just like you buy shares, you can also buy it from a broker. When you want to sell, you have to find another buyer. You will not have to redeem it from AMC.
If we could, we had these three options. Now, when we have to filter out these three, here's what we need to focus on: data of the last 10 years is useful to us.
If I look at the data, it looks like this: active funds have taken over index funds, and India will also take ETF in the same category. Almost all ETFs track the index, so now when I'm saying index, we understand both ETF and index.
The data shows that over the past 10 years, active funds have outperformed index funds at 37% per year, i.e., active funds have given higher returns. But this data is not very good in the last 10 years.
Missing is because at the end of 2017, SEBI also did reclassification, i.e., from 2018 to 2024. It's been almost 7 years where if mutual funds are reclassified, then what used to happen earlier can be a fund called large cap, but that extra return to please investors is brought in mid cap and small cap.
By putting it this way, the investor is thinking that he is investing in low-risk funds because he's going into large cap, but funds to bring extra returns are taking extra risk.
Strict rules were changed, as if a rule came that if there is a large cap fund, then it should be 80% invested in the top 100 companies in India. The result was that this active funds used to outperform index funds have slowed down.
The second result is that fund managers, where earlier they used to select from 5000 stocks, now have a basket of 100 stocks. Money is restricted to the top 100 companies. You have to select and invest companies from among these, i.e., the scope of giving out performance has reduced.
Now you can show your skill in the remaining 20 points only. You can go beyond 100 companies, and this is in the data.
Looks active in the last 5 years, funds outperformed index funds by just 0.7%. In the last 3 years, active funds have outperformed index funds only by 0.2%.
Now a question arises: yes, very less. It's only 0.2%, but active funds are outperforming. It needs to be analyzed because still, where index funds are completely top 100 companies, top 50, top 30, whatever the index we are tracking, where we invest our money, large cap funds still have it at 20.
There is scope for him to take more risks and do many more. Even if you take funds, you will get up to Rs 20 extra if you are taking risk, and then you invest 0.2, 0.3. But if you are generating alpha, then it is very... it's not good.
There's another problem in it that this looks good when we turn the category on and off. Look at the average, but the data says that most active funds are above 50%.
In the long run, globally, index funds do not outperform; I perform due to which the overall category looks good. But overall, globally, in the long run, active funds are prominent in this category and do not outperform index funds.
So your odds of finding that winning fund are also less, so don't take that risk. Those who outperform should also be 20. But what is the return by going out of your category?
We are bringing it; this can also happen. So over there, even by taking extra risk, you get extra returns. I am being brought to take extra risk.
If it is so, then I will move to the next category, whose video will come after a day or two, and midcap.
So because of all these factors, we decided that it was important that at Finology, we are committed to providing our investors with the best. Align with the mindset, and a large cap.
What is the mindset of an investor? The mindset of a large cap fund investor is that he wants to invest in bonds or FDs, then wants more returns, but he is not comfortable taking risks. Safety is also required, and that is because large safety should also be taken care of in the cap category.
Have we thought this year too? We should focus on index funds. Active funds data should be taken along with it; it says it's not worth taking the risk.
Now once we've decided if you want to go for an index fund, then the choice should be: should I take the ETF route or the index fund?
Go through the key that AMC offers. Now what happens in this is that when you buy an ETF, if you look at its cost, it is a little less expensive. It seems less, but when you buy ETF, you go through a broker.
If you buy it like stocks, then GST will be applicable on it. It seems that STT is also applicable on it. Exchange turnover charges are also levied, and overall, if I add these up, then the cost structure becomes almost equal.
So here both it is neutral. The second comes this list of accessibility can be seen in these videos. The whole country watches; someone like this can also happen who does not invest in stocks. He does not have a demat account.
So ETF is a little restrictive that you can buy it only through the exchange. You must have a trading account. Index funds are very flexible. If you want, you can buy it through a broker.
So buy through a distributor or RIA. Buy through or buy directly from AMC. So the index is accessible to everyone. Investing in funds is why it is also here preferred index.
The third important point is to look at liquidity. You should buy ETF; you can buy it, but to sell it, it is your responsibility to establish yourself in the market. We found a buyer like we would buy the property.
If we want to sell it, then find a buyer. But this is the problem with index funds. No, you can leave any day you want. Even among ETFs, most of the popular ETFs have liquidity in them, but the percentage is also...
Why should I take this risk upon myself? Also, we prefer index funds. Then questions I thought, okay, if you want to go for an index fund, then what kind of index fund do we need?
We need a market cap weighted index fund or should I get an equally weighted index fund? The difference between the two is that the market cap weighted index fund has no share in that proportion or percentage.
It takes the proportion in which that index... Let us assume that if the Sensex is... If TCS is at 6, then this fund should also have this. I bought that stock at Rs 6 even in the index fund.
What will be the equal weightage of the total money? What happens is that if there are 50 stocks in Nifty, then he will buy each stock of this fund at Rs 2 per stock. That means the weightage of every stock will be equal.
So now which of these two should be chosen? There is a problem with this market cap. In the weighted approach, this market cap... There is a weighted approach; there is an index in its name.
If funds are increasing their expense ratio, then higher market cap now cost-effective. What is a weighted index fund, and when do we need it? That our returns mimic the market.
Even if we look at the proportion according to the market, if you go ahead with your investment, then you will get returns that will be able to mimic the market in a better way.
So that's why we prefer that we get market cap. If you want to go for a weighted index fund, then this... After doing everything, we still have some left.
Despite so many steps of elimination, 61 pat, and we had to choose one of them. But we just had to choose which one we wanted. The index to be tracked is Nifty 100, 50, or Sensex or any other index.
We will focus on this; we got the answer. Liz Joe is one of the world's greatest fund managers. One of them is they coined a concept whose name was Diversification Wala.
No, the verse with W. He used to say that very diversify more than necessary. If you have too much, then you will have a problem. You will not get the benefit of diversification.
Disadvantages of Diversification: You will get a research form of Avance's research. It says that when more than 30 companies you diversify, if you invest in a fund, more than 30 in your portfolio, if there are investments, then diversification is important.
The benefit becomes negligible when this... The data was with us, and now on your screen, there is a chart where this study is also saying that 20 to 25 investments or stocks, there is an optimum level where diversification also becomes almost as much as is needed.
Returns are also maximized, so we were looking for an index where the values range from 20 to 30 stocks, and there should not be over-diversification.
When we were looking for it, we found it. There are 30 stocks in Sensex; Nifty has 50 stocks, so we thought perfect diversification and returns will be available in Sensex.
But we only did not want to go into this theory; we also wanted to backtest the data. When we have studied Sensex and Nifty for the last 10 years, and if we compare the returns of the past years, a little bit, but yes, the Sensex has outperformed Nifty.
Now in front of you, and that is why the index is our... It became clear to us that we had to go with the Sensex.
When we also look at the Phenology 30, if you were making it, then it is Phenology 30. Phenology, not 50, not 40, for a reason that we have this.
It seems that a maximum of 30 investments is enough, and that's why Phenology is also in 30. 30 stocks for long term and above.
Otherwise, even when we find the relevant index, we wanted our Phenology to be 30. This philosophy is reputed, and that is why we chose Sensex.
But selection is still not over. It happened because now we had reached the point that we market cap required in large cap category.
Weighted Sensex Index Fund is also included in this. If there were options, how would we select them now? Best fund had three criteria.
The first was to look for tracking errors. Whenever an error is added to the index, if any changes come, how quickly the funds will respond to them. Mimics changes from the index.
The share that came out or the proportion, how quickly did the changes happen? Index funds capture it should be at least... The first one can be mimicked that well.
This was the second criteria: the expense ratio. The least we need is that one is like that. The fund manager is not using his brain.
If you want to copy what you are indexing, then what is the fee for? The fee should be minimum. If you want, then the lowest fees in this category then contact us.
It was very important for this, and the third was wide reach. This fund should be of such an AMC that we don’t have to go through it many times.
Let's assume that everyone is online. It is very comfortable; it is not necessary. Someone will have to invest offline, go to the bank, from the distributor, from the RIA.
If anyone wants to do it online, then this fund should have good availability for all three categories.
When we gave weightage, the result came. Thank you, HDFC index is fully the same as last year. The fund's Sensex plan is the best large cap mutual fund for India for the year.
Sensex of 2025 is HDFC Index Plan. In this, if your retirement is far away, so I would prefer that you choose the growth option.
So now we had to choose the next fund for those who have a little... If you have market experience, then that wallet can digest a little more, whose edge profile is a little younger than the wood 40.
This fund should be a better one for them. Pick then the previous fund. So this time we had to choose between an actively managed large cap or large and mid cap funds.
So first of all, the hard data, and this hard data was expected for two reasons. The first expectation was that of a large cap fund.
This is the universe; this is the classification. This is a very narrow market capital of India. Only top 100 companies are given large scale companies based on sector-wise.
The cap is now set at 50 percent in an active fund. If there are 60 stocks, then those 100 stocks, the fund manager has to choose 50-60 stocks from these stocks.
You have to choose which ones would normally be there in a fund, and you have to invest the money at 80% there itself, i.e., the scope of showing talent is very limited.
So that is why in an active fund, I am a fund manager. I do not want to pay extra fees to pick stocks because stock picks, if there is no scope to do it, then when there is scope, if not, then I will pay him the fees for showing his talent.
Why give extra? It is better to buy index funds.
The second category is large and mid cap, in which 100 companies started. It is already large cap plus the next 150.
There are also companies, i.e., market cap wise 101 to 250 companies, which SEBI says that mid cap company means a basket of 250 stocks.
If you have 50 to 60 stocks to choose from, then the basket has become two and a half times bigger, i.e., the fund manager has scope to showcase his talent here.
To show from a talent perspective, active fund means I am dependent on the talent of the fund manager. I am betting on showing my talent.
Qualitative end from scope perspective, from a rational perspective, this category seems I am looking better. But only because of that, I don't want to go; I want to see the data as well.
What does the data say? So the data is now in front of you. The large end midcap funds have outperformed by 45 times.
Sometimes you have done it for five years, sometimes for two and a half years, then you have done it for three years.
Large end midcap funds outsold large cap funds. It has performed agreed that this large cap.
There is more risk than just the fund large caps here. Large and mid caps, but I am assuming that this fund is only for those people who have large caps, especially index large caps.
Being too passive seems too safe; they seem to want to take a step up. Are in the riskometer, then if you take a step up, do you want to take risk meter for higher returns?
So historical returns, I think this shows that this category of there is incremental risk, and it is justified by substantially higher returns.
The returns are marginal; the returns are not substantially higher. There are returns, and I think risk to reward in this scenario is justified specifically.
Because in this also only India's Rs 5-6000 top 250 market cap companies can be selected from which, in my view, is a step towards SEBI.
Strict classification is necessary for an industry-wide approach, but India, even if I say no to the top 250 companies, if I look at their market cap, I think that all the companies are in my sight.
Informally, it seems to be a large cap; that's why this category is for its risk adjustment. The returns seem to be better, which is why we have made a large cap funds active large cap funds.
Instead of recommending this fund, we recommended the next one decided to do it from the large end midcap category.
Now in this category, our first filter was that we needed a fund that was proven substantial long term. Don't fall prey to track record recent bias.
Now this reclassification happened in 2017. That is, this category existed in a way its new definition 2017 se so sa year.
When it happened, we had 7 years of data. We looked at the entire data of 7 years. We wanted a fund with a history of seven years.
If I did not need any new funds, then I would have to do this. We wanted consistency in categories. Consistency was very important for us.
Because the covid cycle was down, we had already seen the turn of these funds. The filter he has taken since 2017.
Funds should be in existence, so we knew this fund had started a downward cycle. If you have seen it, then rolling returns for us.
Rolling returns were very necessary when we compared 19 funds in this category. Only seven funds are like this as compared to the benchmark index who invested their capital on a rolling return basis.
If the benchmark is consistently beaten, we have only 7 funds left. After this, the next filter was very simple; we had to look at the cost that among these seven funds, the lowest cost.
Which fund will give us consistency? We had to see the reputation of AMC. His fund management team had to look after these four.
After looking at the factors, the time came to reveal the fund. Drum rolls please, and our choice is Kotak Equity Opportunity Fund.
One year, five, be it year or year, consistently every time on a rolling returns basis, this fund has increased its expense ratio has beaten the benchmark.
The overall reputation of the fund house is impressive. Is it very good? Doesn't have very high AUM?
Though we are looking at large & mid cap and large, this factor is given very high importance in cap. They do not give importance, but some people do.
If so, let me tell them this is the best ELSS mutual fund or tax. Now see which is the best saver mutual fund.
Let's start with the evil first. First, if we get this out of the way, then this category, the problem with this is that it takes 3 years.
The money you have deposited is locked in for 3 years. That money got stuck, and when we reached mutual, if we talk about the stocks of the fund, then one of the biggest advantages is what we discuss.
That you deposit the money today and withdraw it tomorrow or the day after. Flexible suits this category very well, but in particular ELSS, you...
If you are not able to withdraw money for 3 years, then one big pro, which is generally for mutual funds, he's not here.
So if you think that you can start investing with mutual funds right now, you are experimenting, you are not sure. You just have to try it and see how it feels.
You can't stay for 3 years anyway. If you cannot stay, then you do not get into equity mutual funds.
We should, but sometimes we feel that we don't... No, I am thinking of staying for 4 years or 5 years.
But just in case something happens, if you want flexibility, then this category is for you. Now this person doesn't exist who belongs to him.
There is also a huge pro that I will come. Who is this category or this fund for? Because I don't want you to fall into this category.
Invest in if it is suitable for you. If not, you can also watch this video of yours. Waste time if this is suitable for you.
If not, I will tell you pro, then I will tell you who it's for and who it's not for so that you can decide which video you will watch next.
Do you want to see it or not? If you have this, do you feel that this is a huge pro? If someone feels that I have money, what I want to invest, I also invest in mutual funds.
But there was something of discipline in me. Sometimes I lack the impulse to take off. Because of discipline, without any essential, I take out the money whenever I need it.
I would spend my money at such a place. What I regret is if your temperament, you feel struggling with discipline, so this category is very good.
You will invest the money now; do you have discipline? Or if not, you won't be able to survive 3 years. That's why I really like this category.
So for me, whoever is this, this is also the biggest pro. Now we come to what this category is for.
Whom this category is for you? If you are a beginner and you think that no, I take decisions impulsively. If you are a beginner, you are investing for the long term.
Do you want to plan any of your short? There are no term goals right now for which you can work. This category is very beneficial for the long term.
It is better than 99% investors. You will be able to invest in a disciplined manner. Second is if you think you have constantly struggled with discipline or you can always reap momentum by investing.
If you take it, then you are not a beginner. You have been trying, but you will never be able to create a corpus.
It increases if you redeem the funds. Real wealth is not being created; this is the category for you. You must invest here; you should do it.
And of course, if you are still old, if you are in a tax regime, then do tax planning. This fund is still a very good option for you.
Smollett is locked in for more than 3 years. Returns happen in other products. Of course, the wallet is the highest, and there is risk too, but lowest lock-in potentially highest MPN of returns and ATC up to Rs. 1.5 lakh.
So overall, very good tax saving. The package is very good for those under the old tax regime. Only good option is in these three categories you fall; this is the fund for you, and you should watch this video next.
So let's go now how we approached fund selection, selected, and look at the fund reveal. In fact, most of the categories in this category, it is very important for us in rolling returns point to point.
Look at the returns as of 5 years ago from today. I have looked at the returns for 3 years from today. Many a time, time bias comes into it that that fund might have been created just 5 years ago.
The market fell a lot when it was launched, and today we are seeing the market grow. If that fund is giving good returns, then bias becomes apparent in point to point.
Rolling returns, if taken over a longer period of time, if we look at the intervals breaking them down, then one, if you get a more consistent picture, then this usually one of the firsts for us.
If there is filtration criteria, then this... When we looked at the category, there were 39 funds available, and out of these 39 funds, only 20 funds gave gains over the long term.
Beat your relevant benchmark. So 19 out of 39 funds were eliminated, and 20 funds left. Now when we come to the second step, which of these 20 funds is ELSS?
Not so much with the category either, but there is a little problem with large caps that these funds are also the most large cap buyers can invest their capital in the portfolio.
i.e., for these generating outstanding alpha a bit, it is difficult, and we shouldn't even want this. The first purpose of funds is tax saving.
The second purpose is to bring discipline returns. If there are other categories for this, then I understand this approach, and I like this balanced approach.
In fact, it should not be such that ELSS where people learn discipline and tax. A lot of people are coming there for saving.
Take a risk, and because of that risk, if there are negative returns in bad times, do not take extra risk in this category.
It is good for another reason; it's good because if I wish that this fund manager should not be... has it changed or now I don't like the fund.
The operation is going on; I don't like it. If the investor wants to exit, he cannot. That is, if the investor gets trapped, then in such a situation, I do not want our investors to face any...
You may not get stuck in aggressive or volatile funds because of the off-exit option. That is why here, if safety and stability are more important, then pure on the basis of alpha, we do not want to see this category.
When you can further filter out based on the returns, I don't want to do it, and it is safety-oriented. If you are going towards funds, then in such a case, it becomes very important that expenses should be controlled.
Like index funds, we picked up in the first video when you are not going after blind returns, moving towards consistency, stability.
So it is up to a fund house to manage the expenses. So when we apply the filter of expenses, we get three found funds that are lower than their category average.
If you charge an expense ratio, then after the expense ratios, we matched to the category.
Kya third filter was reputation stability, consistency, overall performance of the AMC. Because many times what happens to an AMC, one fund is very heroic, and four funds are very bad.
If we are doing this, then we had to see overall that the fund is a good asset gatherer or asset manager. People collect a lot of money in assets, or if you manage the funds well.
Then we compared the expense ratio, consistency, reputation from category average, and the overall track record of the AMC.
When we did these three things, we got three AMCs. ELSS funds received by Parag Park, Kotak, Miraya Asset is the ELSS fund of all three.
I am talking about Parag first. Now there was a problem with Parag Park that has the highest expense ratio among the three.
The second problem with this fund was that that is the tax saver variant of Parag Parik too similar, too much overlap.
Have a look at the end of Parag Park Flexi Cap Fund. We feel that if someone has pollen, if you want to go with the approach, then it is better.
The approach is to go for a flexi cap fund. And anyways, it doesn't make sense to take both the funds.
It is because both had a lot of similarities in funds, and I don't want you to have one. Both the funds are from the same AMC; hence this in the category we had to reject.
Also, expense ratio is the highest among the three of these. So now look because the funds were... We had no shortage of choices, and when we were spoilt for choice, we said we will be ruthless on any of our parameters.
We are not supposed to give any relaxation. 113 Every criteria needs one of these funds. Apply strictly, then first we needed a good criteria.
10 years to form the base for analysis fund history of every fund which has been in the market since 2014. It is from before, so we eliminated it.
We want you to show us your 10-year history. We will see how that fund performed in each cycle.
Has done rolling returns in different seasons. How are you doing? Look at this peacefully.
When we got this, we used this first filter. It is assumed that there should be a 10-year fund history. If you want, then thank you, our work will become a little easier.
That's it, out of 13 funds, we are left with 50 funds. Then our second criteria, this consistency was very important.
Shows and funds in upturn, downturn, it shows how it is, and it's rolling returns. So when we had rolling, if you apply a filter on returns, then your 15 funds that consistently beat the benchmark.
If you weren't doing it, then out of 50, we had the remaining 35 funds. After that, the third criteria, when we go into active funds, so any fund should always do very good funds.
Are not necessary, and in bad times when it gives us comfort when we underperform. A lower expense ratio that lets you...
Your performance was worse than mine. If I don't take the fee, then I get some comfort available if the expense ratio is low.
When we calculated the expense ratio from the category average, when we compared these 35 funds, we found that there are 18 such funds left which also have a history.
It was good, those who had a history of 10 years also outperformed in rolling returns and which has expenses less than the category average.
If you charge ratio also, then it is very good. It is less, but after applying this filter, we are left with only 18 funds.
Now these 18, how do we find that one fund among the funds? Here three or four factors come, and the first asset, the reputation of the management company is not with them.
There are one or two hero funds, or generally their funds if you do well. Then AMC filtration happens.
After this came his career as a fund manager. How has it been? Which fund has he managed before? He used to do this since he started managing this fund.
How is this fund doing? Fund Manager, and we have read the history of their team. Analyze that after this, we came to churning.
Who, how much churning does a fund do? Because the more churning that is happening, the more it is understandable that this fund is based on its philosophy or with your style and mandate.
Churning is not clear to us; many times it shows us confusion. Then lower churning is an important factor.
When these three or four, if we meet more criteria, then we have 18 four such funds remain which look very good.
Now I don't know the names of the funds quickly, or I don't remember, that's why they are all on the screen. India's top-notch with good reputation AMC has a good track record in these.
The rolling returns of the funds have been good. If I consider the expense ratio, then there are four such funds from which choosing a winner was difficult.
But notice one thing here, focused here. There is also a fund here. There is also a contra fund here, and there is also a flex cap fund.
Apart from that, we were also comparing value funds, and there are also multi-cap funds which cover the five categories.
Were comparing three categories of... There are two categories of funds at least labeled the way I look at the label the whole way has been eliminated from then out of these four.
Before choosing the best, it is important that we have to understand what these five categories are after all. What are the minor differences between them, and why did we combine them in the first place?
Come, let us pay flexi cap on flexi cap. As the name suggests, it is flexible. This is the only category where the fund manager has to...
It's complete freedom; it's almost complete freedom. If you want, invest as much money in large cap. You can invest as much as you want in mid cap.
If you want to invest, invest in small caps. If you want, you can buy value-oriented stocks. Growth-oriented take contra can also be taken; those with momentum can also take it.
i.e., one active categories where the fund manager's skill will determine the return of the fund. How is it that the mandate of that fund is like?
There are a lot of restrictions in large cap and mid cap. There are a lot of restrictions in cap funds. If there are no such restrictions here, there is no excuse for underperformance.
If there was dysprosium here, experience of the mentor team on their prior CV. This is the pinnacle of an active fund, and this with freedom comes a lot of responsibility.
And very much outperform or both types of risks of underperformance. The reward is for the fund management team, and consistency is a must in this category.
Similar to this, but a little restrictive, the category is multi-cap where again multi. This means that you are in different categories.
You can invest, but only a little here. SEBI has defined that you will get 0 out of 00. Invest at least ₹ in large caps.
Invest in low mid cap at least ₹. Small, you can invest whatever is remaining on 25 in the cap. You can put it anywhere; it is flexible.
So I would say there are quite a few in this category too. You are flexible in whatever market cap. If you want, you can invest up to 50%.
Yes, but the problem arises when the market is in a very bull run, and I know it's going to get really messy from here on out.
By doing this in small caps, many times when I am looking for safety or not on this occasion, let's move out of small caps a little bit.
Do you settle for a little cash or a little large caps? Increase exposure to mid caps. This category may be a bit restrictive there.
If you go to such a market, then it is like the market. Even though it has fallen a lot, it is still expensive, and if someone is looking for safety.
So, this is where the fund manager gets a bit stuck. That at 25, you should invest money in small caps only if he feels he is bearish.
Even with small caps, it is adding restriction comes. The next category is now it is very strict about contra funds.
The definition is not contrary in general because a theme. There are thorets who try such stocks. The market is still very high after picking up the tax stocks which are not very bullish.
Or the market is ignoring the industries or in which there is no bullish trend. Now this funds can be a little tricky in the long run.
If my bet is right, then I thought about the right sector today. The market is ignoring it after 5 years. Watching the market realign, the next 5-10 years will also do bad things.
If momentum does not come, then these funds will be very... One like this can also underperform. Concentrated funds, which at least in theory are building a portfolio of stocks that ignored, neglected a bit too much.
It definitely becomes risky when you do this. You will try to go into the ignored pockets; then you will get value undervalued.
You will find bargain stocks, but if you want value, then I think the next category is better. Value funds, value funds, this is the PB matrix.
P is the matrix. Peg ratio is the traditional basic valuation metrics used to do it and also look for quality.
Quality plus decent bargain price. These funds are at least a combination of both. Here is what I want to tell you.
Look like definition fix in multi-cap is 25 here, 25 here, 25 here mid fixed in cap fixed in large cap.
These are the contra value funds here. This is not a very fixed criteria. So what happens sometimes is that a fund is labeled the value is contra labeled, but he is not practicing.
He is doing it. It would have been like any other fund operate, but just because everyone's rule is this that you can buy only one scheme in one fund category.
You can launch it as many times as you want before, but nowadays every mutual fund company is only a large cap fund can keep a mid cap.
If I can only keep the fund, then what happens many times? This is a category that is contra value focused.
This is a similar excuse for the AMC. How to collect money by withdrawing another fund? So I like this little category.
I am afraid of the contra value; I don't know which one this is being followed up to the level. Although some it is seen in the P ratio in PB, something is revealed in the holdings.
But sometimes it seems that these people are not taking advantage of their label. I am not following anyone just for the name's sake.
They had to invest funds, so they created this label. If it is stuck, then it is with two categories.
The problem is the third focused fund. This category I like. We prefer if funds there are less than 30 stocks in the scientific analysis.
It says that 30 benefits of diversification after stocks. If it ends, then focused is a category where the ceiling is limited to 30 stocks.
Should be less or too much diversified portfolio. You're over can't diversify again here. Market cap by category or class-wise, it is flexible.
There are restrictions here. It is not the case that you can sit with 100 stocks. Go give yourself some concentrated exposure.
When investors get all these things from us, comes up, and I ask myself this and on my team, we ask ourselves this.
What an ideal fund should be like if one dream mutual fund ho tomorrow? We will be from here and grow, and if we have a mutual fund, come Finology 30.
Tomorrow, if a mutual fund, if we have the funds, what approach would we like to take? And I will introduce a little personal bias here.
Here comes an ideal dream fund. If you are trying to choose, then there is bias. Here is some scientific data behind this in four.
I don't claim that we have picked one up. Then when I launch my dream fund, whenever I will do it, then how will it be? What will be the qualities of that flexi cap?
So that the fund manager can complete it. Be flexible and pick the right stocks. We will also be focused; we will not go beyond 30 stocks.
The third value would also be V. Don't want to extremely overpay for growth. I don't feel comfortable with that.
I don't want to compromise on quality, but quality at the right price. Quality at any price; otherwise, my funds there will be flexibility in the value.
And that I want a fund that will be focused, and when I try to combine these three qualities, I will do it and look at today's options.
Because today is Phenology 30, so it's Phenology 30. If I don't have a mutual fund, then I need it.
We need an alternate, and that is Parag Parik Flexi Cap Fund. Phenom track record. We have been talking about this fund for the last one year.
We have been a brilliant and consistent team ever. He did not have the greed for asset gathering. Shown very rarely, very selected.
These people take clearly distinguished funds. There is no overlap with ELSS. It is in the case, but its use case is different.
In the last two years, has this been out and out? Has been a top performer or not, but one reason for this is their value-based approach.
So as the market becomes expansive, they keep the cash with themselves and sit for a while. Like right now in his portfolio, it is at 16-17.
If there is cash, then that cash should be only in FD format. Returns are coming due to which from other funds.
Return in bullish market will eat up the mark, but this will give me more funds. Who doesn't like the top in a bullish market?
My priority is to perform that least underperform in a bearish market. If we do it, then there will be consistency, and it will be out and out bull.
It won't feel good in runs, but it will be consistent. I will remain trusted, and their approach will please me.
I like step number one very much. Now this one, the category was reclassified a few years ago.
Stock after reclassification of the market ranking ranges from 101 to 250th, i.e., top 100 largest by market cap. These are companies, so they have become large cap.
The next 150 companies are from 101 to 250. Till now, they have been considered as mid cap, i.e., this fund managers have a lot of scope in this category.
It is less if one fund has 50-60 stocks, and these are given to the fund manager out of 150. If he has to select 50-60 stocks, then choice is limited.
That is why sometimes we have to even if you skip the category, there is at least one narrow universe due to which the fund manager's work becomes difficult.
And the result is this is our second point where we have been for the last 3 years. Midcap funds outperform their benchmarks at 84.
In these 25 funds have not outperformed who had been working in this category for 3 years. Those who have a history of more than 3, you need a track record of a year, right?
Out of that, there are 21 funds which could not beat the benchmark, and in this, it is not the fund manager's fault.
I can understand, yes, their compulsion is that their choice is very limited. And sometimes people take it to the other extreme as well.
Do people pick such a narrow category like large cap where there are 100 companies? Midcap where there are 150 companies, and these narrow performance of active funds in the category.
Let's compare it with index funds, and they say, look how bad the performance is. Better yet, buy my index fund.
I believe both approaches are wrong. Are index funds right or active funds right? We should select category-wise.
In some categories like large cap, index funds are better. In any category like active funds in flexi cap, better than we should go category-wise.
Active index in category and in both which specific fund became an obstacle in that. Our third pointer is valuations.
So there is a little problem in this category that is because we also look at the price. And when I go to see the price, I see that nifty.
The P of the mid cap 150 index is currently 44; it's expensive, I agree. Should not just look at P, but when I am looking at a particular stock, then context compatibility of the stock is 28.
28 average has been drinking for the last 5 years of and now is 44. I find our team expensive.
Looks expensive in the end market. If there is a lack of choices, then we are behind this fund. Whether I should go or not, I will have to take it.
There are many options in the market, so our opinion is another category which is a little... Of course, returns also increase safety.
It will be a little less on average, but it is worth the increased safety and security to the fund manager. You also get a lot of liberty.
The category is large & midcap funds where large 100 companies and 150 midcaps companies and fund manager gates 250 companies to choose from.
If you need an active fund, if you want to go towards that, then that is a better category. Then again this year too, unfortunately, we will have to give this category a miss.
And no matter how much we... Even though we don't feel comfortable with this, recommend a fund in the category.
Thankfully, we are not from any AMC. No type of mutual fund this series is for this series built on trust and integrity.
So if I don't like any fund in any category, so if I don't like it, don't tell me. Can you tell me if there is any such thing in this category this year?
Because of the valuations, we don't feel comfortable recommending any fund. If you own one, do you want to do goal planning properly?
Understanding how much risk you should take, want one of your own basically do it. Creating your own financial plan quickly, and you want to follow that plan.
If you want to bring discipline, then you rape. Go to finology.in and start your goal planning absolutely free for yourself and your family.
Small cap funds can do a lot for you. Volatile is a very risky category, so there are many things to consider while selecting the fund.
One has to be very careful. If you need it, we will understand in this video what is our small cap fund selection process?
Criteria of whether it is right for people and our fund selection is in this category. Let me tell you one good thing that its basket is very big, but it is small.
There is a cap, but the basket is so big that market except top 250 companies only cap-wise. All other companies are part of this fund.
There are many selections available for there. There are options, and this is also a con that the numbers are very high, but you are 250.
Go ahead and reach 500 companies, maybe even 1000. Go away after that; in most companies, the quality is not of investable grade.
Companies are not the third one, and the point is very important that this is the category where the fund manager's reputation is the make or break.
If he outperforms in this category, her career is much more than the industry set for life. But he is the one who becomes the hero in this category.
He is doing something like this. Take stocks that offer outsized bets, have the potential of, and the fund manager has placed a bet on them.
And the bet backfired. Companies are the bankers of this fund. The NAV goes down very fast.
Life-long effects of career pay of fund manager. It affects fund managers too; I am sure this very scared before touching the category.
And you need a very, very talented fund manager to handle this category. Then here, Dysprosium team and their track record in this category.
When you look at it, it's called dysprosium cap funds benchmark. Their index has not been beaten. Dispina has had very good years while there is a lot of scope for beating here because big bass skate is available.
But with many choices comes a lot of confusion, a lot of churning, and a lot Sara underperformed in this category.
Active funds honestly gave me disruptor funds in general. Disruptor one should go for index funds in Nifty Small Cap Index BSE Small.
Should recommend cap index fund. Honestly, we thought a lot about this. But one thing scares us, and that is we are also comfortable doing index funds.
We would have gone there if there was valuation comfort. Now what the data is telling us, what the data is saying that right now the average of this category benchmark.
He is 30 years old, and his average is 24, is around 24, i.e., right now the benchmark is. This is already substantially more expensive than the average category is known for its wallet.
And when your wallet will increase, if there is an expansive valuation, and the risk on both the downsides increases, especially in this category where there are a lot of...
A little bit of investor sentiment. Even a slight deterioration in economic factors, you will see that the Sensex and Nifty will fall.
It's on 10, but it falls to 10, right? So this category would have fallen two to three times.
If yes, then this is the reason why it is in this category. Expensive entry to you in real life can be very expensive on your wallet.
If you like our mutual fund pick, I like the way of doing it, and you can give me details category by category.
If you want to learn fund selection, then you can join. You can do Phenology and specially designed membership for those who want to learn investing.
Here you will find Phenology. You will get courses on Quest like check out our mutual fund course where you can fund step by step like us.
You will learn selection, but if you are into stock, if you are a market investor, then you can invest in the stock market.
Pay courses will also be available, and Phenology ticker. You will also get a premium subscription of Rs. You can perform advanced pro-level calculations like DCF, fair value, due point analysis, common size balance sheet, all these things too.
You will be able to access Finology One membership, specially designed for students of investing.
It is not a topic for many years now. It would have been easier for me to say invest in Sovereign Gold Bond. Now its new issue has come since last 10 months, which is not already issued sovereign gold.
He has a bond, and it is running at a premium. The discount is also gone this year. Investors are asking me this a lot.
How do we invest in gold? The best way is honestly people do this more than me. People ask how to invest in gold.
Ask the more important questions in my opinion. This is how much you should invest in gold. Now I didn't want to speak in the air.
Based on 20 years of study by Prime Investor, we got some conclusions. First, that if gold, if it is in your portfolio, then it will last for 20 years.
The study says this on average at least historically rolling returns for an investor increased from 12.1 to 13.4, that is adding gold to your portfolio.
The returns of an average investor are expected to increase. Chances are very high. Notice one more thing: if you have gold in your portfolio, then your chances of beating inflation increase.
It happens because when the market stock, if the market is not doing well, then often if gold is doing well at that time, then your portfolio should compound consistently.
Although this benefit ends when your allocation to gold is at 20. By going over it, we will also get this; it turned out that there is harm.
Because if gold should be at 25-30 in your portfolio, if this happens, it will reduce the portfolio's volatility.
Increases instead of because the same your money is invested in the instrument for 25-30 days. If it is gone, then gold will not perform.
And the allocation is very high in the portfolio. If this happens, then your portfolio will stop.
When we combine these three things, does the conclusion come? Conclusion number one: you should have gold in your portfolio.
It should be below 20 and more than that. This should not affect your overall health. Portfolio returns will at least increase historically.
The third lot looks like this: more if you increase your gold allocation, so the chances of your returns being low.
Of course, all this data is too much. It is historical; it should happen in the future too. We can't accept any line in stone, but I need to rely on this kind of long-term data.
I like to do this; this is my approach. The conclusion is that a common investor should have 15 to 20 shares in your portfolio.
Now it depends on whether you should keep gold or not. How much do you factor into your risk profiling? Can you take risk? How much will be your returns?
I have expectations at your risk. I don't know about this type of online profiling. In the video, I am saying a general thing.
Yes, right now we have four major options. The first step is to invest in gold. Physical gold is second, digital gold is third, gold ETFs, and fourth, gold mutual funds.
Now let's talk about physical gold. There are two types of it. Different biofer cations are jewelry and bars or coins.
Now see which is the best financially. If you go or go back, you will directly... Gold price came down to 101, but it also has a use.
You can wear it; you can use it. It has some use left. Gold is their store of value that if you keep money in gold, then the money will keep rising and will beat inflation.
It is a store of value, but its aesthetic beauty, personal, no other use. So I would not say that jewelry is a... should not take that very bad deal.
No, it is not as good as the other options. If you take it for investment, if you are in this, then edge is not an investment option good.
But if you want work, then no, we had to buy jewelry anyway. This plus investment will also be done if both are use cases, giving you all the options.
Forget jewelry; it is the best option, but you have to take care that you keep that jewelry. You must use it a lot.
You are going to wear it yourself, and this should not happen that you can talk about investment without any need.
You are buying too much jewelry because you... If you are feeling happy, then stretch yourself without if it is necessary to wear some jewelry.
You have to take only that much investment by saying you should not lie to yourself. This is a clear other thing.
Clear out of all investments in gold; this is the worst deal and the highest making charges are already ₹3 plus GST.
There is also a real meaning of storing it. A little better investment option if you take gold as physical gold, but not in jewelry form, maybe bars or coins.
Biscuits are now a days most of us only coins can afford it. It is not that there are no making charges.
If it reduces, then where 10-12 percent is there in jewelry, but in this making is on 5, 6, 7, 8, and on 3, 4, 5% of the making charges will be levied on you.
There will be benefit in GST 3, but paying in it also, there is tension of storing it. Now to solve some of its problems, came to digital where a problem almost ends that you yourself should deposit it in your bank locker or in your...
If you want to keep gold safe in the cupboard of your house, then what do companies with digital gold do? You buy gold digitally from them; they give you a certificate or app will show you that it will seem that you have so much gold.
Instead, she buys gold and keeps it in her safe ware. She keeps it in houses and also has its insurance.
If it gets done, then by keeping it in the warehouse, even if something happens, because of the insurance, your gold is safe.
But there is one thing: the problem is that now this platform is open. Buy and keep gold in the warehouse for you.
His security is also his insurance; it is also their cost. So in these on buying and selling gold without platforms, an arbit or commission is charged.
i.e., the real price of gold you can buy. If you go and sell it, you will get it a little more expensive.
If you go, it will be a little less than the price of real gold. You will get less of it; you can say that it is digital.
If there is making and storing charge of gold, then although it is not as much as physical gold, it is not on 5, 7, 8, but you can assume that 2, 3, 4.
But this also seems like it; we accept it on 3. If yes, then % cost is incurred in this; commission is charged.
Both buying and selling are counted at 3. GST has been imposed on Rs 6, so it will definitely be imposed on Rs 1.
The advantage is that you don't have to worry about safety. Karni is insured; you don't need any other store.
The downside is that you have to buy jewelry like if you can't use it, then it's not useful till you sell it.
It was the first step for us. A 10-year history of the fund was needed so that how do we track their errors over the years?
I can see how consistently he is doing this. We live around gold prices, wanted to see the second one because of the ETF.
You have to do the redemption from the market like do you redeem the shares that your shares? It will be sold only when there is someone to buy it.
We don't need any new ETFs in India whose expense ratio is very low, but in whose market there are too many buyers.
If there is no seller, then there will be a problem in selling. That's why we had a threshold so that we require an ETF with a minimum AUM of 1000 crores.
The value should be of crores, i.e., 1000 crores rupees. If ETF units of Rs are in the market, then when we...
If these two filters are applied, then 17 gold ETFs are available today. If the situation is in India, then out of 17, only seven funds are left.
10 funds will be eliminated. Now the third filter was okay; tracking error is low. AUM is good, but these two, how much do I have to spend for the facility?
If you want to pay, then expense ratio category average gold ETF was 0.62%, and we got such funds.
You wanted someone who charges less than this, then when we filtered those funds, eliminate those whose expense ratio is 0.62.
If the amount is more than three out of seven funds were eliminated, and these four funds remain, which are now it is on your screen.
After that, in these four combinations, us to pick the best from the tracking error should also have been minimal.
Gold prices more accurately mimicked. Yes, the AUM should also be quite good and more high and minimum expense ratio.
If yes, then when we consider the combination of these three as major, ICICI Prudential was the best gold ETF fund.
Tracking error is very low. The AUM is quite good, and the expense ratio is also good. The history of the fund is short, and it is also very long.
Today, in absence of sovereign gold bond, this is the best choice for most investors.
Look, liquid funds are one such category in which people often get confused that should I keep it in savings or liquid?
What are the differences between these three funds, and when should I invest in liquid funds? So in this video, we will tell you from our side.
I will definitely tell you the best liquid fund, but along with this, we will also tell you the first thing to start with.
This is how you will decide when liquid funds are suitable for you. Now see when we get a month old.
I have to keep money for one and a half, two to three months. If we want to keep money for it, then what do we often do?
We keep that money in savings account. Now we keep it in our savings account. We can't get FD done on Rs. 2.5 or 3 or 4.
Because in short-term FD, 15 days per month, very low interest rate even in FD of Rs. It happens around savings only.
And what if I make an FD, and the need arises earlier? Then penalty will be charged from half percent to 2 percent goes on premature withdrawal, and I...
There is a loss, and sometimes it is not even used like this. The case remains that I don't know when I need it.
I know it will happen soon, but in a month, two months, or three, the money's coming rolling in month by month.
The month is still pending, so what should I do now? Its a native sometimes auto sweep also, but no accounting through auto sweep.
There will be a complication, and secondly, there will be many bar LIFO FIFO means last in first out. First in first out, it's complicated.
There are concepts due to which our returns are true. We haven't calculated exactly what is in it.
We are able to do, and many times we see that only it is said that there was auto sweep, but the returns were very high.
Received less because LIFO FIFO is not known. What seemed so ideal? The solution cannot be found if too much frequency.
And the tax angle also has to be looked at. In such a case, there is no liquid fund. A good option comes out that if you want to keep the money for two to four months.
You never know when you will need it too much liquid to last him a day. You can withdraw your savings in two days.
A good return is also required from, but you have to pay a lot of attention to safety. You do not have to compromise on a highly.
You need a safe way to invest through your savings account. Now liquid fund to get higher returns.
Look, what happens with liquid funds? Mostly in such debt instruments, invests with maturity of 91 days or less than that.
Does not mean exactly it is not that your redemption will happen within 91 days. There should be funds in such instruments investing which matures in 91 days.
You can keep money in it for years. Although you shouldn't keep it, you can keep it because if you don't withdraw the money, a mutual fund which is a liquid fund is a sell the instrument which has matured.
And if the next person buys it, then he will waste your money. What type of investments can I make? There are majorly three types of investments.
The first is treasury bills; it the government issues it, so it is very safe. It is believed that the second is the certificate of.
If the banks issue this deposit, then because banks issue it, hence it is also considered very safe. Yes, government issue, there is more risk than security, but it is not too risky.
It is more risky than the category. The returns are also slightly higher in these compared to government-issued securities.
The third is commercial paper; it is called corporate paper. Entities issue i.e., big companies. Ta anything above reliance1 would be good.
We have both FD and liquid fund. Clear, clear difference. Tell me flexible liquid funds are more flexible.
You can withdraw the money today, and the money will be in your account tomorrow. Premature withdrawal penalty is applicable on FD.
It ranges from 0.5 to 1%. And if you find this, it is not decided when the money will be needed.
If needed, you should make an FD of the correct duration. You will not be able to get liquid funds in such a situation.
There is a difference between better option and purpose. Liquid funds are for short-term needs. FD is for meeting the debts; it is yours to keep wealth safe for the long term.
So this is the distinction between the two. This is very clear. Now we come to our how we selected the best liquid funds.
What is that fund? And now see which is liquid fund. No to funds because returns are very high.
No, you will not get a return of 15%. The FD can be around Rs. FD. If the return is slightly less, then the expense ratio becomes very important to reduce.
The expense ratio of 36 liquid funds, if the deposit amount is less than... We had the first thing we did was filter imposed on those liquid funds whose expenses ratio is less than category average.
Now category average was 0.15, so we saw who there are funds which charge more than this.
There are 16 funds for applying this filter out of 36 are eliminated, and we have the remaining 20 funds.
Now the second largest in liquid funds. Safety is an important thing because if I told you about government security, the safest is the bank one, more than that.
Risky corporate one is more risky than that. So if you want to maximize returns, then do more segments with higher allocation to corporate.
Give it in the future; the returns will increase, but people are coming in large numbers to liquid funds.
High degree of not for returns, more for returns than safety and savings for these two purposes that my short-term money for a month or two to fulfill your needs.
If you want to park, then buy more than return savings. If we go, we are after the highest returns.
We will not run after the highest safety. We will run away; we chose it because of safety, because of reputation, because of track record, because of how much risk this fund is taking.
Reasons and overall long-term performance basis pay. We chose Quantum Liquid Fund Direct Plan.
Quantum is one such AMC which is an asset just like pollen mercury. Management focuses on asset gathering.
No, we highly regard and respect this. You will never find them in the news. MC, these are the highest returns charts ever.
They will not remain so in other categories. It is difficult to recommend because let's play it a little safer.
But liquid funds are the category where absolutely we really like their safety-oriented approach.
I like, in fact, out of all 36 funds, this fund has given the highest performance in government securities.
The maximum allocation was 42, i.e., approximately half of the funds that it takes from you are given to these three, which puts it in the safest category.
Again, this shows its safety-oriented approach, which is very much in this category. If necessary, then safety is discussed here.
Now if you want a right balance between safety and returns, so for returns, you can look at our newly launched Phenology 30 where we brought 30 stocks for long-term investors.
Every day, 12 days, one new stock for 12 months. Stocks we expect you to buy in the next 5.
You will be able to hold it for 10-15 years. You can sleep peacefully without having to churn.
Link to such stocks Phenology 30 above. You can find it in the video description in the card.
Jaega, this is Pranjal Kamra signing off. Bye Bye.