Capitalmind with Deepak & Shray

Deepak and Shray discuss the unexpected quirks and consequences of investing in mutual funds and pooled vehicles in general. The discussion covers how your returns and experiences can be impacted by other investors' actions, including issues with inflows, outflows, cutoff timings, and NAV calculations. Specific cases like DHFL, Yes Bank, and Zee promoter bonds are examined to highlight how complexities in pooled vehicles can affect investment decisions. Additionally, the episode provides insights on how to navigate these challenges and the importance of understanding the nature of pooled investments.

00:00 Introduction

00:43 Understanding Mutual Funds and Pooled Vehicles

02:43 Complexities of Pooled Vehicles

07:43 Impact of Inflows on Fund Composition

13:18 Challenges with Outflows and Debt Funds

20:00 Timing Issues and NAV Calculations

29:04 ETFs vs Mutual Funds: Arbitrage and Market Behavior

33:01 Case Studies: Yes Bank, DHFL, and Zee Promoter Bonds

37:50 Side Pocketing and Arbitrage

49:12 Investor Strategies and Market Timing Challenges

55:43 Conclusion and Final Thoughts

In today's episode, we break down profit shares and performance fees, one of the most debated topics in the asset management industry. Are they a fair way to align incentives, or just another way for fund managers to charge more?

We get into the nitty-gritty of who can charge performance fees in India and how it works, the meaning of terms like management fee, hurdle rate, catch-up, and high watermark, and whether performance fees actually create skin in the game for fund managers. We also discuss why losses and performance fees don't go well together, whether investors should care about profit shares or just post-fee returns, and whether paying a performance fee is ever worth it.

We also explore some of the murky areas of the industry, including hidden fees, commission structures, and the psychology behind why investors accept certain charges without question.

At Capitalmind PMS, we don't charge a performance fee, and we explain why we chose this model. If you've ever wondered how fee structures impact your long-term returns, this episode is a must-listen.

00:00 Introduction and Disclaimer 00:42 Overview of Performance Fees 02:35 Understanding Management Fees 05:32 Performance Fees and Hurdle Rates 07:34 Catch Up and High Watermark Concepts 11:04 Complexities in Fee Structures 14:31 Skin in the Game and Incentives 29:34 Management Fee Only Model 31:17 Incentives and Performance in Fund Management 32:43 Principles of Charging Profit Share 33:14 Small Funds and Profit Share Justification 34:41 Mutual Funds and Profit Share Dilemma 35:49 Historical Examples and Active Management 37:37 Challenges in Asset Management 45:20 Regulatory Perspectives on Fees 51:09 Evaluating Investment Options 56:52 Final Thoughts on Profit Shares

Deepak and Shray analyze the implications of this budget on consumption, manufacturing, investments, and its impact on your wallet.

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More about us: https://cm.social/pms

Connect with us : https://cm.social/pms-connect

Deepak's Twitter: @deepakshenoy

Shray's Twitter: @shraychandra

Capitalmind Twitter: @capitalmind_in

In this episode, Deepak and Shray dive deep into the dynamics of the Dollar-Rupee equation. With the rupee at 85 to the dollar, what does this mean for us as investors and consumers? Are we losing 3-4% in dollar terms every year without realizing it? And if so, does investing in global assets provide a better hedge? Join us as we break down historical trends in the exchange rate, the RBI's role as the on the same and why inflation differentials drive the long-term trajectory of currencies (or why they may not in this case). Along the way, we explore everything from dosa economics to the peculiarities of India's remittance-driven current account. Packed with insights and a dash of irreverence, this episode is a must-listen for anyone trying to make sense of exchange rates and their impact on real wealth.

Timestamps

00:00 Introduction 00:31 Historical Context to the Rupee Dollar Equation 03:12 The Role of RBI in Currency Valuation 03:55 Dosa Economics 05:06 Inflation and Exchange Rates 09:29 Impact of RBI's Market Participation and Forex Reserves 17:49 Current Account and Financial Account Dynamics 23:14 Foreign Investments and Market Freedom 30:02 Tariffs, Exports, and Currency Manipulation 36:13 The Impact of Dollar Inflows on the Indian Economy 37:00 RBI's Role in Managing Rupee and Inflation 39:19 Government Bonds and Interest Payments 40:43 RBI's Forex Market Participation 43:04 Rupee Appreciation and FEMA 58:16 Investment Strategies and Global Opportunities 01:03:29 Speculation and the Non-Deliverable Forward Market 01:11:46 Concluding Thoughts and Future Outlook

Ever wondered if the Indian stock market still needs Foreign Institutional Investors (FIIs) now that domestic investors are stepping up? Shray and Deepak chew over this hot topic in our latest episode.

They examine questions like whether foreign investors are responsible for recent market declines, who the primary owners of Indian companies are, and why foreign ownership is decreasing. They discuss the impact of regulatory changes, such as increased KYC requirements and the end of tax benefits for investments through Mauritius, Singapore, and Cyprus. The episode also delves into the differences between Foreign Portfolio Investors (FPIs) and Foreign Direct Investors (FDIs), as well as the significance of retail and domestic investors in the market. The hosts conclude by discussing the future of foreign ownership and whether retail investors should continue their systematic investment plans (SIPs).

With retail investment soaring, the influence of foreign money seems to be waning—or is it? They also discuss the consequences of significant foreign withdrawals during global crises and compare the patterns of FII with Foreign Direct Investment (FDI), highlighting the intricate details of market shifts. They also take a look at global capital flows through the case studies of Hyundai's, Holcim and British American Tobacco among others. Tune in to understand why studying both FII and FDI activity is crucial for grasping the bigger picture of market behavior.

More about us: https://cm.social/pms

Schedule a call with us: https://cm.social/pms-connect

Deepak's Twitter: @deepakshenoy

Shray's Twitter: @shraychandra

Capitalmind Twitter: @capitalmind_in

Deepak's first book: http://amzn.to/3CgkGea

In this episode of the Capitalmind podcast, Deepak and Shray dive into SEBI's recent report analyzing the profits and losses of F&O traders. The report reveals a staggering statistic, showing that over 90% of individual traders have lost money in F&O trading in the past few years. They explore the reasons behind these losses, the demographic impacts, and whether F&O trading is more akin to gambling than investment. They also discuss SEBI's new rules aimed at curbing losses and what these changes mean for both novice and seasoned traders. Tune in to understand the full implications of SEBI's analysis and what it means for the future of F&O trading in India.

00:00 Introduction 00:42 SEBI's Report on F&O Traders 01:41 Deep Dive into SEBI's Findings 02:32 Analyzing the Losses 06:00 Demographics of Losing Traders 07:57 Potential Misinterpretations of Data 18:06 The Appeal of F&O Trading 29:30 Speculation vs. Investment 30:39 The Role of Speculators in the Market 40:44 Comparing Trading to Performance Sports 43:11 The Discipline of Trading 43:42 Challenges of Undercapitalization 44:28 Intrinsic Value of Activities 45:10 Learning from Trading 49:08 Capital Requirements and Market Dynamics 52:18 Sophistication and Risk Management 57:20 Regulatory Impact and Market Participation 01:15:25 The Role of Speculation and Regulation 01:20:38 SEBI's New Rules and Their Impact 01:25:35 Conclusion and Final Thoughts

In this episode, recorded in early October 2024, we're diving into a topic that's on everyone's mind: Is holding cash a smart move in these unpredictable markets?

We're in what some are calling one of the most "unloved" bull markets—stocks keep rising, but investors (ourselves included) are uneasy, waiting for the other shoe to drop. To help us unpack whether cash can actually give your portfolio an edge during uncertain times, we brought in none other than Deepak Shenoy.

Together, we explore whether holding cash can protect you from potential downturns or even help you outperform the benchmarks. We also dig into the challenges fund managers face with cash calls, why getting back into the market can be harder than it seems, and how strategies like STPs (Systematic Transfer Plans) play out in real life.

Deepak shares some great insights, comparing today's market to historical events like the 2020 Crash, Russia-Ukraine war, Brexit, and the 2008 financial crisis. Plus, we look at what Warren Buffett has done with cash during past downturns—and why even he hasn't always gotten it right.

This episode is packed with practical takeaways including:

1) When holding cash makes sense—and when it doesn't

2) Why fund managers sometimes get cash calls wrong

3) The emotional side of staying invested vs. going to cash

4) How IPOs and market liquidity can impact your cash strategy

If you've ever felt that itch to "do something" with your portfolio when markets are shaky, this conversation is for you. We break down the mental tug-of-war between holding cash and riding out the market, with Deepak sharing actionable advice that will help you stay prepared, no matter what happens next.

In this episode, Deepak and Shray dive into the intricacies of mutual funds, Portfolio Management Services (PMS), and Alternative Investment Funds (AIF). We analyze the tax benefits of mutual funds, highlight the liquidity advantages, and compare them with PMS and AIF in terms of fees, transparency, and investment flexibility. We also discusses why different products cater to different investors based on their income levels, asset sizes, and risk appetites. The conversation covers the psychological and practical reasons investors might choose one investment vehicle over another, the role of fund managers, and the impact of regulations on investment returns. 00:00 Introduction and Overview 00:13 Comparing Mutual Funds, PMS, and AIFs 00:55 Tax Efficiency of Mutual Funds 01:28 Challenges with Mutual Funds 01:41 The All Weather Equity Portfolio 02:23 Why Mutual Funds Aren't the Default Choice 02:46 Understanding Different Investment Products 04:13 Tax Implications for Different Investors 18:33 The Complexity of Mutual Fund Selection 24:06 Liquidity and Size Issues in Mutual Funds 27:18 PMS vs Mutual Funds: Key Differences 27:29 Large Investors' Preferences 28:46 Challenges for US Investors 31:09 Systematic Transfer Plans in PMS 33:22 The Importance of Fund Managers 35:31 Process vs Personality in Investing 46:42 Choosing Between PMS and AIF 52:21 Conclusion: Tailoring Investments to Individual Needs

In this episode of the Capitalmind Podcast, we take a deep dive into the world of unlisted and private securities. We'll cover key topics such as:

• What exactly are unlisted and private securities?
• How do you value them, and what complexities should you watch for, like liquidation preferences and ratchets?
• Who can you sell these securities to, and what about corporate governance risks? Are these investments or just consumption in disguise?
• We also explore opportunities in the SME segment and how much of your net worth you should allocate to private investments.
• Whether you're considering investing in a friend's business or a pre-IPO startup like Swiggy, this episode will help you navigate the complex world of private markets.

Don't miss out! Send your ideas for future episodes to [email protected], and if you're ready to invest with us, visit capitalmind.in to learn more about our PMS service.

00:00 Welcome to the Capital Mind Podcast 00:37 Introduction to Unlisted and Private Securities 04:27 Private vs Public Limited Companies 07:32 Valuing Unlisted Companies 09:26 Complexities of Cap Tables 21:31 Exit Strategies for Unlisted Securities 41:19 The Impact of Swiggy and Zomato on Restaurants 42:57 Investment Opportunities in Unlisted Companies 44:01 Shenanigans in Private and Public Markets 44:49 Case Studies: Byju's and FarmEasy 49:22 The Role of Venture Capitalists 01:05:00 Strategic Investments and Their Impact 01:07:30 Challenges of Investing in Unlisted Companies 01:24:03 The Future of Private Investments 01:24:49 Conclusion and Final Thoughts

In this episode of the Capitalmind Podcast, Deepak and Shray dissect the surge in New Fund Offerings (NFOs) by mutual funds, dissecting why fund houses are launching new schemes and who truly benefits from them—whether it's the AMC, the customer, or intermediaries like distributors. We also discuss the economics of fund distribution, the role of intermediaries, and how to identify the best options for your investments.

The episode also ventures into the often not talked about side of financial advisory, the unrealistic expectations of managing wealth independently, and the vital role of professional advisors. Additionally, they explore the cyclic nature of NFOs, investor hype in bull markets, and the risks of market oversaturation, concluding with advice on navigating financial products during booming market conditions.

Whether you're a seasoned investor or just getting started, this episode is packed with insights that can help you make informed decisions.

Timestamps

00:00 Introduction to the Capitalmind Podcast and disclaimer

00:43 Overview of New Fund Offerings (NFOs)

02:29 Historical Context and SEBI Regulations

03:24 Fund Categories and Flexibility

05:00 The Role of Fund Managers and Themes

08:50 Marketing and Distribution Economics

12:04 Impact on Customers and Fund Houses

29:47 Advertising and Expense Management

33:33 The Role of SEBI in Fund Innovation

34:29 The Impact of Fund Variety on Investors

35:30 The Importance of Innovation in the Mutual Fund Industry

36:59 Challenges of Fund Categorization

42:43 The Role of Financial Advisors and RIAs

49:55 Mutual Fund Distributors vs. Bank RMs

55:27 When to Go Direct with Your Investments

01:05:50 The Cycle of NFOs in Bull Markets

01:09:01 Conclusion and Final Thoughts