{"id":2101393,"date":"2019-03-11T11:07:29","date_gmt":"2019-03-11T05:37:29","guid":{"rendered":"http:\/\/stockviz.biz\/index.php\/?p=2101393"},"modified":"2019-03-11T13:59:13","modified_gmt":"2019-03-11T08:29:13","slug":"most-investors-would-be-better-off-indexing","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2019\/03\/11\/most-investors-would-be-better-off-indexing\/","title":{"rendered":"Most investors would be better off indexing"},"content":{"rendered":"

If you had invested in this fund in April 2006, would you still be invested in it?
\n\"\"<\/a>
\nBetween 2006-04-03 and 2019-03-08 (13-years), SBI Magnum MIDCAP FUND – REGULAR PLAN – GROWTH has returned a cumulative 268.66% vs. NIFTY MIDCAP 100 TR’s cumulative return of 321.39%. Annualized returns are 10.96% and 11.96%, respectively.<\/p>\n

A point of out-performance, a gallon of pain:
\n\"\"<\/a>
\nBetween 2008-01-01 and 2013-01-01 (5-years), SBI Magnum MIDCAP FUND – REGULAR PLAN – GROWTH has returned a cumulative -27.09% vs. NIFTY MIDCAP 100 TR’s cumulative return of -1.54%. Annualized returns are -6.34% and -0.31%, respectively.<\/p>\n

When it comes to discretionary active management, the problems are many:<\/p>\n

    \n
  1. There are over 40 asset management companies. Almost all of them have a midcap fund. Almost all of them claim to be “value” investors.<\/li>\n
  2. Value, as described in Graham And Dodd, cannot scale to the 10’s of thousands of crores that these funds collectively manage.<\/li>\n
  3. So almost all funds are, at best, index plus<\/em> a value and\/or GARP and\/or quality tilt<\/em>. <\/li>\n
  4. And occasionally, fund managers blow it. They hop over to other funds. Or retire.<\/li>\n
  5. And occasionally, the investing style goes through a bad patch.<\/li>\n
  6. And usually, the business of fund management (accumulating assets) wins over the profession of fund management (superior risk adjusted returns.)<\/li>\n<\/ol>\n

    There is no way that any investor can dodge all these minefields. So, the risk that a mutual fund investor takes = market risk + manager risk + style risk + capacity risk. <\/p>\n

    Investors should primarily allocate to index funds (take only market risk.) Actively managed discretionary mutual funds should be a niche.<\/p>\n","protected":false},"excerpt":{"rendered":"

    If you had invested in this fund in April 2006, would you still be invested in it? Between 2006-04-03 and 2019-03-08 (13-years), SBI Magnum MIDCAP FUND – REGULAR PLAN – GROWTH has returned a cumulative 268.66% vs. NIFTY MIDCAP 100 TR’s cumulative return of 321.39%. Annualized returns are 10.96% and 11.96%, respectively. A point of … <\/p>\n","protected":false},"author":2,"featured_media":2089693,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3471],"tags":[31],"class_list":["post-2101393","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing-insight","tag-etf","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2101393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=2101393"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2101393\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media\/2089693"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=2101393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=2101393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=2101393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}