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The ultimate guide to Dollar Vs NASDAQ 

The ultimate guide to Dollar Vs NASDAQ 

Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.  -By Benjamin Graham  When it comes to investing, many investors restrict themselves to only India. This may be because of a lack of knowledge, expertise, a certain perspective, and/or many other factors. Let’s simplify the equation of whether should you consider investing in the US market or not.  When you invest in the US market, there are two returns that an Indian investor gets:  Returns from rupee depreciation Return that the US market is generating Rupee depreciation against the Dollar  When the rupee becomes less valuable with respect to the dollar, that means the rupee has depreciated. This means that to buy 1 USD, we need to pay more rupees than we used to pay earlier.   Due to Interest Rate Parity, inflation is likely to be higher in emerging economies like India because of the growth and inflation in developed counties will always be lower. Because of this difference in inflation and interest rate, the currency of an emerging economy is likely to depreciate. So, if we look at the rupee, it has depreciated by almost 4% annually in the last 10 years. If we look at the graph below, we can see that every year the rupee has depreciated.   Source: EduFund Research Team Note: Period understudy is between Jan’12-Dec’21.  Therefore, the Indian investor will be benefitted from the rupee depreciation of approximately 4% annually. And we should not rule out that this 4% depreciation in the rupee is compounding. If you invested $1000 (Rs.53000) in the year 2012 when USDINR was at Rs.53/Dollar, it would have now become Rs. 75000, without even considering the returns of NASDAQ.  NASDAQ performance  Now, let’s look at the performance of the NASDAQ compared to the Sensex Index, Mid-cap Index, and Small-cap Index.   Source: EduFund Research Team Note: Period understudy is between Jan’12-Dec’21. When we look at the Indian market, we say that better returns are generated in mid-cap & small-cap sectors, where the risk is also high. when compared to the large-cap sector.   In the above graph, if we compare the performance, we can say that NASDAQ has given better returns than the BSE mid-cap & BSE small-cap index in the past 10 years, whereas the risk is also low when investing in NASDAQ (Index). NASDAQ has generated more than 17% CAGR (Compounded Annual Growth Rate) over the past 10 years whereas BSE Sensex, and BSE Mid-cap BSE Small-cap have given CAGR of 13%, 15%, and 16% respectively. The US market is generating more returns than the Indian market when compared with the benchmark.  Let’s talk about the US market  Some of the companies’ size is more than double the economy of some developing countries. For example, the revenue of Amazon and Apple both surpassed the value of the GDP of Pakistan (296 $ billion) by almost 90 $ billion and 69 $ billion, respectively.   Source: EduFund Research Team  Companies like Amazon & Apple; have achieved economies of scale and their traction in the market is constant. Despite excellent performance over the years, these companies are still generating wealth for investors. Amazon and Apple have given 1525% & 953% returns in the last 10 years.  The story doesn’t end here There are some large companies across the globe like Alibaba & Industrial & Commercial Bank of China (ICBC), with a market size (capitalization) of $314.76 Bn. & $254.65 Bn., respectively. So, investing in these companies is also possible through investing in US ETFs, which gives global exposure. Having said that, investing in the US market not only helps you to generate good returns but also helps to diversify the risk.   An opportunity for Indian Investors  Interest rates in India are likely to increase, which is a cause for concern. Due to this, many foreign investors are pulling out their money from India to their home country because many attractive asset classes are present outside India. All this will also lead to demand in the US market.  After the Covid rally in the market, it has bottomed out, and there are high chances that the US market will see a rebound.  Let’s consider three scenarios:  Best scenario – If we look at the past returns of NASDAQ, which has delivered 17% annually, and the rupee depreciation which is depreciating at 4% annually. Then, the Indian investors will get 21% returns, which is most likely to continue.  Average scenario – Even if the rupee doesn’t depreciate, the returns that NASDAQ has delivered are higher than the BSE Sensex, BSE Mid-cap, and BSE Small-cap.  Worst scenario – Even if NASDAQ doesn’t deliver or delivers fewer returns, then the rupee depreciation will help to generate the returns, which is likely to happen.  FAQs What are the benefits of investing in US market from India? When you invest in the US market, there are two returns that an Indian investor gets:  Returns from rupee depreciation Return that the US market is generating A chance to invest directly in big companies like Apple, Microsoft, Netflix, etc What does Nasdaq stand for? Nasdaq is an American stock exchange. It stands for National Association of Securities Dealers Automated Quotations. It compromises of US's top 20 companies like Apple, Amazon, Google, Meta, etc. Some of these companies have a market value bigger than of countries like Pakistan and even India! How can you invest in the US from India? You can invest in the US market from India by downloading the EduFund App. Open your US account on the App in a seamless process with no extra charges. Click here to know how US stocks! Therefore, the rupee will work as a hedging tool with no extra cost and risk while investing in the US market.  If you are investing in the US market (dollar currency) either of the three things is going to happen, which is in your favor. Start investing in the US market as the market has bottomed out, and the market will see a rebound. 
NextGen Investing Made Easy

NextGen Investing Made Easy

NextGen investing is made easy for all new investors! If you are looking for investment opportunities that will help you grow your wealth then understand that big tech is in! But firstly, let us understand what Big Tech is. Big Tech can be categorized as major technology companies that have an unparalleled influence on technology and indirectly our lives. These are the most prolific and burgeoning companies of our times. Often big names like FAANG, i.e., Facebook1, Apple, Amazon, Netflix, and Google2, are considered members of this elite club. These Big Tech companies are so vast in their operations that no other player is comparable to them. Most of us are consuming products of these FAANG companies in one way or another other like using a platform for ordering something from amazon or having social media account, etc. If we look at the cumulative market cap of FAANG stocks is $7.07 trillion, which is double the size of India’s market cap (which stood at $3.46 trillion). Furthermore, when we look at the next five players in the US, the market cap of (Microsoft, Tesla, Taiwan Semiconductor, NVIDIA, and Visa) stands at $4.83 trillion depicting tremendous difference and room for growth when compared to the top five players. While these numbers are huge, these companies have been growing at a sustained pace and are commanding their own sweet share in the market. For example – Facebook is possibly the largest social networking platform (this includes WhatsApp, Facebook, and Instagram). Similarly, Google is the undisputed leader when it comes to search engines. Here's a chart that depicts the growth story of these companies. Source: EduFund Research TeamNote: The period under study is between Mar 19-Sep’21. The revenues of these companies often surpass the value of the GDP of several countries. For example, the revenue of Amazon and Apple both surpassed the value of the GDP of Pakistan (296 $ billion) by almost $90 billion and $69 billion respectively! Source: EduFund Research Team This undoubtedly shows us how efficient these companies are in their business operations and how well they’ll augur in the future. These companies' most significant plus point is that they all are driven by data, the new ‘oil’! These companies are sure to grow more in the future. Imagine if you had invested in these companies and how your wealth would have grown by now. But there’s absolutely no need to worry because we live in a world that is technology-driven. In the words of Joseph Krutch, ‘Technology made large populations possible; large populations now make technology indispensable.’ This clearly shows us how indispensable technology is in our lives. The next big tech thing happening around us is the next tech. As the name suggests, various firms are investing heavily in new-generation technologies like those shown below. Let’s briefly go through these next-gen technologies. Internet, this is just unmissable! We all know how rapidly internet technology is progressing. 5G services are already up and running commercially in over 64 countries worldwide. Robotics and AI is the new talking point of the industry. Automation and AI have helped solve several of the problems industries face and are sure to grow even in the future. Self-driving cars as a field have tremendous scope and future. The future of automobile manufacturing is meant to be entirely automated. In 2020, the 3D printing industry was worth 13.7 $ billion. It is expected to grow to 63.46 $ billion by 2026, which means a CAGR of 25% approx. This shows how resilient the future is. Various chipsets power today’s world. Almost all devices have a semiconductor chip installed, from a simple LED bulb to a complex supercomputer. Thus, this industry is sure to flourish in the future. Unified Payments Interface (UPI) is living proof of how well and strongly the fintech industry can grow. Fintech unapologetically has to be a next-gen industry. We don’t want to miss the bus this time, right? There are several ETFs that invest in such future tech. Here are a few theme-based US ETF recommendations from us-  Ticker Name Segment Name 1 Year Return 3 Year Return 5 Year Return DRIV Equity: Global Mobility Global X Autonomous & Electric Vehicles ETF -0.02% 113.23% N/A PRNT Equity: Global Robotics & AI 3D Printing ETF -29.95% 31.60% 25.64% SNSR Equity: Global Internet Global X Internet of Things ETF 1.54% 87.85% 102.81% ARKF Equity: Global FinTech ARK Fintech Innovation ETF -44.17% N/A N/A FIVG Equity: Global 5G Defiance Next Gen Connectivity ETF 2.11% N/A N/A IGF Equity: Global Infrastructure iShares Global Infrastructure ETF 11.11% 19.57% 34.25% CIBR Equity: Global Cybersecurity First Trust NASDAQ Cybersecurity ETF 0.67% 80.84% 122.84%  Investing in all the themes under one Roof! Now since we have seen several theme-based ETFs, now let’s look at some ETFs that take care of all! The more diversity in the portfolio, the lower the risk involved. Below are the five ETFs that invest majorly in tech companies, these are not theme-based. The portfolio of these ETFs is diversified across tech companies: Ticker Name Name Total Assets ($ B) 1 Year Return 3 Year Return 5 Year Return 3-Year Net Flows ($ B) QQQ Invesco QQQ Trust 180.36 7.30% 110.74% 182.08% 36.55 VUG Vanguard Growth ETF 77.38 7.43% 93.76% 145.59% 7.84 IWF iShares Russell 1000 Growth ETF 67.23 8.43% 91.87% 152.41% -7.70 IVW iShares S&P 500 Growth ETF 34.36 12.54% 87.50% 142.75% -3.88 TQQQ ProShares UltraPro QQQ 19.17 8.46% 361.00% 721.84% 18.02 Source: EduFund Research TeamNote: Data as on 30th Jan’22. The above-listed funds have the highest Assets Under Management and provide investors with constant returns. Thus, these funds are ideal for investors seeking long-term capital growth. What’s in it for Indian investors? An Indian investor investing in the US market will be benefitted in two ways (i). from the returns that have been generated by these ETFs (ii). from the rupee depreciation3, which has been depreciating at 4% approx. annually for the past 10 years. So, if the fund gives a 20% return and the rupee depreciates by 4% approx.., then the total gain will be 24% for the Indian investor. Here's a chart that explains how the rupee is depreciating over the period. Source: EduFund Research Team.Note: The period under study is between Feb’14 to Feb’22. The big tech companies or tech-based ETFs have generated stable and healthy returns over the period. So, as an investor, you should consider adding US ETFs to your portfolio. FAQs What are the benefits of investing in the US market from India? Indian investors can benefit in two ways: They make returns in dollars and benefit from the rupee fall. Another great benefit is a chance to invest in top companies like Apple, Amazon, Google, Meta, and many more! Which US companies should you invest in as an Indian? There are many US companies that you should invest in as an India such as Apple, Microsoft, Google, Meta, Amazon, Netflix, etc. You can either directly invest in these companies by buying their stocks or you can buy US ETFs and invest based on the industry of your choice and its corresponding companies in the USA. What are some ETFs that invest in technology? Here are five ETFs that invest majorly in tech companies: QQQ Invesco QQQ Trust VUG Vanguard Growth ETF IWF iShares Russell 1000 Growth ETF IVW iShares S&P 500 Growth ETF TQQQ ProShares UltraPro
ETFs vs Mutual Funds

ETFs vs Mutual Funds

ETFs are very similar to Mutual funds, but they are not mutual funds. It's just a matter of grasping the difference between ETF and mutual funds.  EduFund believes that understanding where each instrument makes the most sense, and the investor doesn't blindly follow the crowd and the trend. At the very outset, let's know why they are so similar before diving into their differences. Similarities between Exchange Traded Funds(ETF) and Mutual Funds (MF)  Both Exchange Traded Funds and Mutual Funds represent a basket of professionally-managed securities: stocks, bonds, currencies, commodities, real estate, etc.  The placement of these securities is done either thematically or otherwise, depending upon the type of mutual fund or the ETF you chose. Both offer various investment options and professional portfolio managers oversee the investments. Thus, saving your time and energy for research. ETFs and Mutual funds are highly diversified because of the basket of securities. Thus, they are less risky than investing in individual securities like stocks, bonds, commodities, currencies, etc. How does this help reduce risk? Imagine if you are holding a stock that is performing poorly, and thus your return will also be poor; perhaps you may lose money too. However, suppose you have an ETF or a mutual fund. In that case, this poor performance of that stock may be compensated for by the good or average performance of other stores and assets, which together will give you a better return than holding a single asset otherwise. Difference between ETF and mutual funds?  ETF trading happens on the stock exchange, just like a simple stock on the (NSE) or (BSE) in Indian markets, or it will be listed on the NYSE or the Nasdaq when trading in the USA. Mutual Funds are not listed on the stock markets; they must be purchased manually from the fund through your financial advisor or online brokers. Investing in ETFs is very simple, i.e., they can be sold or purchased at any point in time in the day, just like a stock. However, this happens only once during the day - after the market has closed for mutual funds.   The mutual fund company does this by buying or selling mutual funds based on the investor's instructions. This delay can be very costly if the market fluctuations are very dynamic. Straightforward and anytime trading of ETFs sounds cool, but not all ETFs are tradable, leading to illiquidity concerns. ETF purchases are made at the prevailing market price - typically near the NAV but not precisely the same. Generally, an investor purchases the mutual fund at the price of its NAV. Hence, most mutual funds allow automated transactions but ETFs do not due to price volatility.  ETFs have a lower expense ratio as compared the mutual funds.  The expense ratio is the fee you pay the manager for managing your securities. The reason is quite simple, ie: the trading of mutual funds, leaves a long paper trail, and thus the exchange of hands for this paperwork is more.   The paperwork translates to higher costs to the fund manager, and eventually to the investor.   On the contrary, ETFs are traded directly by the investor and thus naturally explain the lower charges.  Based on management, most of the ETFs are passively managed, whereas there are quite a few actively managed mutual funds, but there exist some mutual funds which are passively managed.  What is better?  Well, neither of the two is perfect! You can achieve diversity using any two options based on your goals.   Naturally, a portfolio balanced by combining both offers greater variety and lower risk. Notably, there is no reason this must be a tightrope walk situation.   Both, Mutual funds and ETFs can live together in a portfolio perfectly happily. FAQs What's riskier - ETFs or Mutual Funds? One thing that investors must understand is that the riskiness of a fund doesn't depend on the structure of the investment, but rather primarily on the underlying holdings. So, there is no reason to believe that one of these two investment options could inherently be riskier than the other. Why should one choose a mutual fund over an ETF? It's always great to have various options to choose from and that's what mutual funds provide to an investor. Mutual funds give an advantage of variety that ETFs can't. Are there any disadvantages of ETFs? Every coin has two sides. Although ETFs could be proved extremely fruitful in increasing your savings in the long run, they may also have a few drawbacks. Some of them include a higher trading fee, trading errors, potentially less diversification, etc. What is the main difference between ETF and a mutual fund?   ETFs are very similar to Mutual funds, but they are not mutual funds. ETF trading happens on the stock exchange, just like a simple stock on the (NSE) or (BSE) in Indian markets, or it will be listed on the NYSE or the Nasdaq when trading in the USA. Mutual Funds are not listed on the stock markets; they must be purchased manually from the fund through your financial advisor or online brokers.   Are ETFs safer than mutual funds?   Any investment has some element of risk attached to it. The risk of investing in an ETF or mutual fund varies based on the choice of the investor, no two mutual funds carry the same risk, and this applies to ETFs as well.  Which is better, an ETF or a mutual fund?   Well, neither of the two is perfect! You can achieve diversity using any two options based on your goals. Naturally, a portfolio balanced by combining both offers greater variety and lower risk. Notably, there is no reason this must be a tightrope walk situation.    What are the two key differences between ETFs and mutual funds?   ETF trading happens on the stock exchange, just like a simple stock on the (NSE) or (BSE) in Indian markets, or it will be listed on the NYSE or the Nasdaq when trading in the USA. Mutual Funds are not listed on the stock markets; they must be purchased manually from the fund through your financial advisor or online brokers.   Mutual funds are actively managed investment options, while ETFs are passively managed investment options.    Consult our expert advisor to get the right plan for you TAlk TO AN EXPERT
How much crypto should you hold in your portfolio? 

How much crypto should you hold in your portfolio? 

On 1st February, India's Finance Minister, Nirmala Sitharaman, announced that The RBI would issue digital Rupee or Central Bank Digital Currency in the coming fiscal year. She also said that discussions about private cryptocurrencies and central bank-backed digital currency have continued with the Reserve Bank. A decision is to be made after due deliberations. Besides the taxation announcement, the FM did not touch upon legalizing private cryptocurrencies. What is a digital asset? A digital asset or virtual asset is generated through cryptographic means, offering a representation (digitally) of value exchanged. It functions as a storage of a unit of account or value, including use in an investment or financial transaction, but not limited to investment scheme, and can be transferred, stored, or traded electronically. 1. Cryptocurrency A cryptocurrency is a currency that has digital or virtual existence. It uses cryptography to secure transactions. Cryptocurrencies do not have a regulating authority or central issuing. Instead, it uses a decentralized system to record transactions and issue new units. Cryptocurrency does not rely on banks in order to verify transactions and is a digital payment system. It is a system that enables anyone anywhere to send and receive payments. Some of the very well-known cryptocurrencies are Bitcoin, Solana, Ethereum, Tether, etc. Here are it's advantages and its disadvantages Advantages Disadvantages Potential for high reward 30% tax rate plus a TDS of 1% on the purchase price Replacing traditional banks Price Volatility with Cyber security issues Round-the-clock trading Complicated regulations are accompanied by transaction difficulties.  2. Crypto Volatility Investing in something that includes speculation is a way to add volatility to your portfolio. Without anything intrinsically valuable backing up the currency, crypto's market value is based entirely on speculation. This means that the invested money isn't very safe or secure, which makes its price extremely sensitive to even the slightest change in the investors' expectations and perceptions. Photo by Worldspectrum from Pexels 3. Crypto Taxation A flat 30 percent tax on digital asset gains regardless of any long-term or short-term holding by the investor. Additionally, if a virtual digital asset investor incurs losses during the transaction, it can't be set off against any other income. The gifting of virtual digital assets has also been proposed to be taxed in the hands of the recipient. The above example shows the profits earned in the period of 1 year by investing in Bitcoin. Here, there is a 30% taxation on capital gains or profits. Additionally, the buyer of the crypto pays a TDS of 1% on the purchase price to the government. What is CBDC? CBDC is Central Bank Digital Currency which is an electronic form of central bank money that citizens can use to make digital payments and store value. A CBDC, in short, is a digital currency issued by the central bank and is universally accessible. It eliminates the risks of extreme volatility and lack of government backing, which is seen in cryptocurrencies. Should you invest in crypto? Investing in crypto has definitely made money for a lot of investors. Investing in crypto assets is very risky but, at the same time, extremely profitable. But it is like signing up for a bumpy ride. Consider the volatility and the standard deviation. Imagine the value of your investments changing in value (increase or decrease) by almost 20-30% in a day. Now, let's consider the taxation part. The official budget announcement acts as the first step towards a full regulatory framework and a classification of crypto as a virtual digital asset. But a flat tax rate of 30% on capital gains is like losing almost a third of your profits generated from crypto. This tax rate further discourages day trading in the crypto market. Moreover, the central governments are also moving towards the banking sector for issuing CBDC, which is well-regulated and legalized. This provides a currency with more backing. Investing in the crypto market is very time-consuming. Since the market is working round the clock and is highly volatile, investors are likely to spend more hours in a day analyzing the market to keep a check on their investments. Investors also face a challenge of a time difference in the markets of different countries. For e.g., an Indian investor would have to be up in the middle of the night to check the movement of the crypto market. Another major factor to be considered in the Crypto market is the weightage of the investors. The majority of the crypto market is held by 4-5% of the big players in the market. This causes a great sense of unpredictability for retail investors. Any big decision (to buy or sell) by these players causes great manipulation in the market, which has an adverse effect on retail investments. In short, an investor with an extremely high-risk appetite can hold not more than 5% of the digital virtual asset (preferably a digital currency) in their portfolio. FAQs How much crypto should I have in my portfolio? Investing in crypto has definitely made money for a lot of investors. Investing in crypto assets is very risky but, at the same time, extremely profitable.   But it is like signing up for a bumpy ride. Consider the volatility and the standard deviation. Imagine the value of your investments changing in value (increase or decrease) by almost 20-30% in a day.   Can crypto make you a millionaire?   There is no guarantee that any investment will make you a millionaire. Investors should keep in mind that investing in crypto is extremely risky and can attract a flat 30% tax on their capital gains.  Is it worth investing a small amount in crypto? Given that investing in crypto can be extremely risky, it is advisable to hold 5% or less than that in your portfolio. You should ensure that you can afford to lose the amount you invest. How much should you have invested in crypto? Investing in crypto has definitely made money for a lot of investors. Investing in crypto assets is very risky but, at the same time, extremely profitable. But it is like signing up for a bumpy ride. Consider the volatility and the standard deviation. Imagine the value of your investments changing in value (increase or decrease) by almost 20-30% in a day.   In short, an investor with an extremely high-risk appetite can hold not more than 5% of the digital virtual asset (preferably a digital currency) in their portfolio. Anything more than this would increase the volatility of the entire portfolio and would question the safety of the principal amount. One must understand that crypto is a highly speculative and highly volatile investment.   Anything more than this would increase the volatility of the entire portfolio and would question the safety of the principal amount. One must understand that crypto is a highly speculative and highly volatile investment. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Is investing in BigTech companies beneficial for you?

Is investing in BigTech companies beneficial for you?

Investing in Big Tech companies is beneficial. These companies have a history of success and have gained thousands of loyal customers. But firstly, let us understand what Big Tech is. Big techs are major technology companies with unparalleled influence on technology and our lives indirectly. These are the most prolific and burgeoning companies of our times. Often big names like FAANG, i.e., Facebook, Apple, Amazon, Netflix, and Google, are considered members of this elite club. These Big Tech companies are so vast in their operations that no other player is comparable. Most of us consume products of these FAANG companies in one way or another, like using a platform for ordering something from amazon or having a social media account, etc. If we look at the cumulative market cap of FAANG stocks is $7.07 trillion, which is double the size of India's market cap (which stood at $3.46 trillion). Furthermore, when we look at the following five players in the US, the market cap of (Microsoft, Tesla, Taiwan Semiconductor, NVIDIA, and Visa) stands at $4.83 trillion depicting tremendous difference and room for growth when compared to the top five players. While these numbers are enormous, these companies have been growing sustainably and are commanding their sweet share in the market. For example – Facebook is possibly the most prominent social networking platform (including WhatsApp, Facebook, and Instagram). Similarly, Google is the undisputed leader when it comes to search engines. The following charts depict the growth story of these companies Source: EduFund Research TeamNote: Period understudy is between Mar’19-Sep’21 The revenues of these companies often surpass the value of the GDP of several countries. For example, the revenue of Amazon and Apple both surpassed the value of the GDP of Pakistan (296 $ billion) by almost 90 $ billion and 69 $ billion, respectively! Source: EduFund Research Team The GDP comparison shows the efficiency of these companies in their business operations and how well they'll augur in the future. The most significant plus point for these companies is that they run their business on the new oil of the industry – data What is the conclusion? - these companies are sure to grow more in the future. Imagine investing in these companies and how your wealth would have increased by now. But there's no need to worry because we live in a technology-driven world. In the words of Joseph Krutch, 'Technology made large populations possible; large populations now make technology indispensable.' As the name suggests, various firms are investing heavily in new-generation technologies like - Let's briefly go through these next-gen technologies. Internet, this is just unmissable! We all know how rapidly internet technology is progressing. 5G services are already up and running commercially in over 64 countries worldwide. Robotics and AI is the new talking point of the industry Automation and AI have helped solve several problems industries face and will grow even in the future. Self-driving cars as a field have tremendous scope and lot. The future of automobile manufacturing will get entirely automated. In 2020, the 3D printing industry was worth 13.7 $ billion with an expected growth of 63.46 $ billion by 2026, which means a CAGR of 25% approx. All these industry projections show how resilient the future is - various chipsets power today's world. Almost all devices have a semiconductor chip installed, from a simple LED bulb to a complex supercomputer. Thus, this industry is sure to flourish in the future. Unified Payments Interface (UPI) is living proof of how strong the fintech industry can grow. Fintech unapologetically has to be a next-gen industry. We don't want to miss the bus this time. Several ETFs invest in such next tech. Here are a few theme-based US ETF recommendations from us: Ticker NameSegmentName1 Year Return3 Year Return5 Year ReturnDRIVEquity: Global MobilityGlobal X Autonomous & Electric Vehicles ETF-0.02%113.23%N/APRNTEquity: Global Robotics & AI3D Printing ETF-29.95%31.60%25.64%SNSREquity: Global InternetGlobal X Internet of Things ETF1.54%87.85%102.81%ARKFEquity: Global FinTechARK Fintech Innovation ETF-44.17%N/AN/AFIVGEquity: Global 5GDefiance Next Gen Connectivity ETF2.11%N/AN/AIGFEquity: Global InfrastructureiShares Global Infrastructure ETF11.11%19.57%34.25%CIBREquity: Global CybersecurityFirst Trust NASDAQ Cybersecurity ETF0.67%80.84%122.84%Source: EduFund Research TeamNote: Period understudy is between Mar’19-Sep’21 Investing in all the themes under one roof Now since we have seen several theme-based ETFs, let's look at some ETFs that take care of all! The more diversity in the portfolio, the lower is the risk involved. Below are the five ETFs that invest majorly in tech companies; these are not theme-based. The portfolio diversification of these ETFs is oriented toward tech companies Ticker NameNameTotal Assets ($ B)1 Year Return3 Year Return5 Year Return3-Year Net Flows ($ B)QQQInvesco QQQ Trust180.367.30%110.74%182.08%36.55VUGVanguard Growth ETF77.387.43%93.76%145.59%7.84IWFiShares Russell 1000 Growth ETF67.238.43%91.87%152.41%-7.70IVWiShares S&P 500 Growth ETF34.3612.54%87.50%142.75%-3.88TQQQProShares UltraPro QQQ19.178.46%361.00%721.84%18.02Source: EduFund Research TeamNote: Data as of 30th Jan’22. The above-listed funds have the highest Assets Under Management and provide investors with constant returns. Thus, these funds are ideal for investors seeking long-term capital growth. What's in it for Indian investors? There are two ways in which Indian investors can reap benefits from their investments in the US markets: From the returns that these ETFs have generated.  From the rupee depreciation, which has been depreciating at 4% approx. Annually for the past ten years. So, if the fund gives a 20% return and the rupee depreciates by 4%, the total gain will be 24% for the Indian investor. The below chart explains how the rupee is depreciating over the period. Source: EduFund Research Team.Note: The period under study is between Feb’14 to Feb’22 FAQs What is the best tech company to invest in? The best tech companies to invest in 2022 according to Forbes are: Apple Inc. ( AAPL)Microsoft Corporation (MSFT)Alphabet Inc. ( GOOGL)Meta Platforms Inc. ( FB)Taiwan Semiconductor Manufacturing Company (TSM)Tencent Holdings (TCEHY)Samsung Electronics Co. ( SSNHZ)Apple, Microsoft, Alphabet, and Meta are also part of the FAANG companies that have shown tremendous growth in the past few years. They are leading technological advancements in the USA and the world. What are the Top 5 tech stocks called? The top 5 tech stocks are called Facebook, Amazon, Apple, Microsoft, and Google. They are also known as FAAMG. An abbreviation coined by Goldman Sachs. Is tech a good investment? Yes, historically, tech has had a strong performance and has outperformed the market indices. What are some ways to invest in tech companies? You can invest in teaching companies directly by buying their listed stocks or you can purchase them indirectly by investing through mutual funds, ETFs or small cases. Before investing any money, it is advised to consult a financial expert. What is the best high-tech stock to buy now? Here are some high-tech stocks you can buy: 1. Apple inc. (AAPL)  Microsoft Corporation (MSFT)  Alphabet inc. Class A (GOOGL)  Tencent holdings  NVIDIA Corp (NVDA)  What are the top 5 stocks called? The acronym FAAMG, created by Goldman Sachs, stands for Facebook, Amazon, Apple, Microsoft, and Google, five of the best-performing tech stocks on the market. Is tech a good investment? In general, buying tech stocks during a recession can be a wise choice. Tech stocks have the potential to offer stability and profits over the long term, even if there are dangers associated with all investments. Which sector will boost in 2023? One of the finest industries to invest in going into 2023 is Internet and Information Services. With a compound annual growth rate of 13.5%, the market for IT services worldwide increased from $3,471.35 billion in 2021 to $3,938.75 billion in 2022. At a CAGR of 10.7%, the market is anticipated to reach $5,905.09 billion in 2026. Conclusion The big tech companies or tech-based ETFs have generated stable and healthy returns over the period. So, as an investor, you should consider adding US ETFs to your portfolio. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Empower Your Wealth: Proven Money Management Tips

Empower Your Wealth: Proven Money Management Tips

Becoming wealthy is a matter of good money management. My salary dries up before the end of the month is a statement we hear very often. It happens due to multiple reasons like lifestyle inflation, expenses racing ahead of income, and also uncontrolled (or untracked) spending habits. It constrains us from saving up for our future as well.  Our spending habits affect our future spending capacity. There is a practical rule that helps people channel what they earn to balance both their current and future spending capacity. The name of the rule is the ‘50/30/20 budget rule’.  1. Realistic monthly budget Elizabeth Warren (US Senator from Massachusetts since 2013) stated this rule in her book All Your Worth: The Ultimate Lifetime Money Plan. It serves as a benchmark for most people by providing a well-defined optimum mix of needs, wants, and savings. A rule is a powerful tool for emergency money management, achieving long-term goals, and retirement planning. According to the ‘50/30/20’ split, every monthly income (post-tax) must be divided into three categories of spending: Needs, wants, and savings. What exactly is the 50/30/20 rule? Needs, wants, and savings can be broken down into fragments as follows: NEEDS: 50% of income - This category consists of expenditures on the basic requirements of daily life, for example, food, school fees (considering that the person is a parent), utility bills such as grocery and electricity, life and health insurance premiums, and debt payments too.  WANTS: 30% of income - These include facets of life that are not important for dear life but serve as amusement. Some good examples are purchasing items in the shopping cart like mobile phones, non-essential clothing, etc.  Also, the OTT subscriptions that people buy belong to this category. Dining is an essential part of this category of expenses.  SAVINGS: 20% of income - This component of the 50/30/20 rule tells us to put aside some money into return-generating assets like stocks, bonds, ETFs, and more.  Assume we figure out how to produce a sound return (an abstract figure) over an extensive stretch with a steady increase in contribution (with an expansion in pay) to this category. All things considered, we will then be sitting on a decent corpus of wealth 20-30 years down the line, given the power of compounding. The savings component also allows us to plan for particular future expenses like children’s higher education and retirement.   Begin investment money management Strategy However, it's worth noting that the 50/30/20 split might be altered for a different ratio, based on a person's stage of life. For example, a student earning Rs. 25000, is bound to have a break which is highly skewed towards the savings component of the rule, whereas an adult earning Rs. 25000, might not devote a very high percentage of income to savings because of the expenses to be borne.  One thing might go unnoticed – the fact that the ‘needs’ part of expenditure will saturate at some point, which then allows for higher spending toward the other two categories.  The rule does not seem to work for people with very high and very low income levels. The former group faces the crunch to accommodate even the necessities, and the very high-income people have the liberty not to divide their income into stringent ratios.  Why money management is important?   Following this rule will help people empower themselves to deploy their due diligence in money matters. Once people gain insight into their monetary inflows and outflows, they will be able to exercise better command over the way they spend their salary, and thus, consequently, become mindful of their spending habits and balance all facets and take maximum benefit from this. The most essential grasp of the rule is not the exact proportion as stated earlier, but the framework that the rule provides. The category split is subjective in nature, depending on the size of the income and the age of the individual.  FAQs What is the 50/30/20 rule? Ans. You are required to divide your in-hand money into three equal portions. 30% of income is spent on wants, 50% on needs, and 20% is set aside for savings and investments. By doing this, you will have established buckets for everything and be operating inside each bucket's allowable limits. What are the 3 most important rules of money? Ans. The first and most important rule is to save a set amount of money—no less than 10% of your income—before you do anything else with it. Keep this number as high as you can, I assure you. 90% of my wages are saved (my parents support my living expenses). Start at 20% and monitor your progress over the next three months. The remaining money may be spent, but exercise caution as to how, when, and where you do it.  Keep a record of your spending, both total and by item. You'll be able to make wiser financial decisions as a result of this.  You can begin creating a monthly budget that specifies how much you can spend on each item once you have a handle on your spending. Create a thorough budget using the data gathered from the tracking app. All expenses, including those for food, rent, bills, and travel, should be included in the budget. Once one has been established, follow it.  What are the 5 simple steps to save money? Ans. 1. Set one distinct objective.  2. Plan for savings.  3. Set up automatic saving.  4. Maintain distinct accounts.  5. Invest  What’s the golden rule of money? Ans. Don't spend more than you make is the basic rule; instead, concentrate on what you can keep. Although it might seem apparent, you'd be astonished at how many people don't comprehend or adhere to this rule, which leads to debt. Take credit card usage as an illustration.  TALK TO AN EXPERT
Maximize Your Wealth: Learn How to Choose Right ETFs

Maximize Your Wealth: Learn How to Choose Right ETFs

What is an ETF? How to choose the right ETF in India? Let's answer these questions in this short blog! ETFs had come a long way since 1993 when the United States launched the first ETF. Since then, ETFs have been a vehicle to grow investor wealth manifold. However, it is paramount that the investor should know how to choose the right ETF. He should base his choice upon various underlying qualities of the ETF.  Selection criteria for how to choose the right ETF 1. Fund size   Any investor must bear the fund size before investing in the ETF. Fund size means the Assets Under Management (AUM). A large AUM implies that many investors are interested in this ETF. The AUM can be a proxy of a soundly-managed fund. They also have higher liquidity, enabling the investor to offload his ETFs with comparative ease as and when the need arises. With a larger fund size, the fund is most likely profitable and is safe from liquidation danger.   2. Age of the ETF The age of the fund is usable as a proxy for the reliability of the fund. A fund that has been around for a considerable amount of time must have a proven track record. Newly launched ETFs generally have a lower trade volume, with no definite reason. There can be two reasons why an ETF has a low trade volume. The trade volume could be lower because it is relatively new or low because of weak demand. New and novice investors should stay vary of such ETFs. The test of time is the safest bet for a beginner.   3. Volume  The higher the ETF volume, the lower the bid price spread, and more is more demand for that ETF. This line sums up the entire game of the book. An investor must look at the volume of the ETF before investing. Analyzing and carefully studying the declining trend and then picking up the ETF is the way to march ahead.  4. Expenses The greatest thing about ETFs is that they cost less than traditional mutual funds. Minimizing costs is the best way to maximize returns. These are the costs that eat up an investor’s profit. The lower the costs, the better. An ETF charges an expense ratio for management; thus, this has to be minimal. So, comparing the expense ratio is a must. The broker charges the transaction cost; this also is a cost whilst trading in ETFs, and this also needs to be minimized.  5. Tracking difference  An ETF tracks the underlying index to the best of its capability. Some ETFs replicate the index entirely by adding all the securities in the exact proportion present in the index. For instance, if an ETF replicates the Sensex, it will have all the guards in the same ratio as the Sensex in its basket. On the other hand, some ETFs will sample some securities from the index and make an ETF. The aforementioned basketing is called a sampled strategy. Both these ETFs may either underperform or overperform their underlying index. The deviation in performance can be due to faulty replication or the expense ratio that eats into your potential gains.   For example: An ETF that has an expense ratio of 0.2% and tracks an index growing at 10%, your profits are automatically reduced to 10-0.2=9.8% compared to the index. Thus, tracking difference plays a crucial role in ETF selection. 6. Benchmark  Studying the underlying assets of an ETF helps gauge its performance of the ETF. Thus, the underlying benchmark is a gauge of its performance. From the diversification point of view, having a broad-based ETF is preferable. Taking a closer look at the underlying assets and their weights is also essential, as it will ensure that the ETF you have invested in suits your goal and investment strategy.   7. Structure of the ETF  Check whether the ETF is a physical ETF or a synthetic ETF.   Physical ETF: It holds the underlying assets or securities of the index, which the ETF tracks in similar or representative proportion according to the fund’s strategy.  Synthetic ETF: These ETFs seek to replicate the index using complex derivatives. For instance, an ETF tracking crude oil prices will not hold barrels of oil but will invest in oil futures. A counterparty would be responsible for delivering the return if oil reaches a specified price level.   A physical ETF is more transparent and accessible to understand than these synthetic ETFs but will protect from counterparty risks. However, synthetic ETFs provide better access to specific markets than physical ETFs. Choose wisely!  FAQs How to choose the best ETF in India? Here are some checkpoints to complete before choosing the best ETF in India: Liquidity: How easy is it to withdraw your money from any given ETF Expense Ratio: What is the cost of managing the ETF and how much percentage would you have to pay? Tracking errors in any ETFs Check past performances and returns of the ETFs you will be investing in Is ETFs worth investing? A fantastic way to vary your investment portfolio is with an ETF. Whenever you participate in the stock market, you have a finite amount of equity options. What are some advantages of ETFs? Some of the biggest advantages of ETFs are: Diversification and global stock exposure Trading flexibility Low costs Transparency Tax efficiency Risk management Professional management What are some disadvantages of ETFs? Some of the biggest disadvantages of ETFs are: Additional charges like Hidden fees, trading fees, and operating fees Lack of liquidity Tracking errors lower interest yields. Following the above steps and keeping in mind your investment strategy and goals is the way to go forward.  Consult an expert advisor to get the right plan TALK TO AN EXPERT
ETF
Russia-Ukraine crisis – Should you buy gold? 

Russia-Ukraine crisis – Should you buy gold? 

Gold, often referred to as a safe haven, acts as a diversification product against the stock market. Currently, the Ukraine-Russia conflict has quite an impact on the market. This geopolitical issue has had a significant negative effect on the stock market, whereas gold prices increased tremendously.  Gold crossed ₹51,500 per 10 gm on February 24, 2022 – the highest in 13 months, as Russia declared war on Ukraine. Over the past twelve months, gold prices have been inching north due to the global market's heightened volatility considering Covid-19, Omicron, and rising geopolitical tensions and factors such as rising inflation.   Gold vs Capital market  The correlation between gold and the stock market cannot be established directly. Gold has an inverse relationship with the stock market. Gold has a negative correlation to the stock market movement. The chart below shows how the market panned out over the past 12 months. One thing is evident the market witnessed high volatility owing to multiple economic and global factors.  The above graph shows the monthly gold price movement over one year.  Also, going by the VIX chart, it is evident that the volatility in the market has increased, and in some small-cap and mid-cap segments, the price corrections have been very steep. On February 24, the market fell massively by nearly 4.7% - the single largest fall in the last two years.  Should you consider investing in gold?  Investors commonly perceive gold as a haven in a severe stock market downturn. Historically it has been proved that whenever the stock market plummets, gold performs very well. The sale of gold coins, gold bars, and gold ETFs is maximum when the stock market performs poorly.   Similarly, gold demand picks up fast when a country's GDP is faltering. This is because when the economy is unstable, investors prefer to park their money in hard assets.  Value is held for ages - Unlike other currencies or assets, gold has maintained its value throughout the ages. While people see it as a means of transferring wealth from one generation to other, we believe gold is one of the best instruments that have sustained value for centuries now.  Helps beat inflation – Gold has always been an excellent hedge against inflation. Its price tends to increase with the rising cost of living. Typically, while stock tends to plunge during the high-inflation period, gold, on the contrary, results in a direct correlation with the price increase. Thus, it provides a natural hedge against inflation.  Geopolitical Uncertainty – Gold as a universal investment instrument holds its value in times of uncertainty – be it financial uncertainty or geopolitical uncertainty. Often referred to as the "crisis commodity", the yellow metal seems to see a high demand from people when world tensions rise. For example, in response to the crisis in the European Union, gold prices started to inch north.    Portfolio Diversification – One of the basic concepts of diversification is finding investments that are not closely correlated to one another. Historically, it has been found that gold has had a negative correlation with other financial instruments such as stocks. This can be vetted with the following example:  During 1970, while the stock prices were terrible, it was great for gold.  Between the 1980s and 1990s, while the era was good for stocks, gold prices crashed significantly.  In 2008, the stock market saw a significant correction and many investors migrated to gold.  We believe a well-diversified portfolio with the right combination of stocks, bonds (both standalone and in the form of mutual funds), gold, and liquid cash in a portfolio will help reduce the overall risk of the portfolio while maximizing returns.  Weakness in global currency – US Dollar is regarded as one of the most important currencies in the world and constitutes to be a part of every treasury reserve held by economies globally. During times when the value of the dollar falls against other currencies, as it happened in 2008, it is likely that people flock to the security of gold.  Demand-Supply mismatch – The supply of gold in the market has been falling since the 1990s, and much of the gold sales are made from the vaults of central banks, given the production of new gold from mines has been declining. On the other hand, rising wealth in emerging markets has boosted the demand for gold over the past couple of decades. Thus, as a general rule, reducing supply coupled with rising demand results in increasing gold prices.  How much allocation is ideal for the gold  Investment in gold, as discussed above, should only be considered as a protection against macroeconomic shocks. Thus, it should form a part of your portfolio based on your risk appetite. We believe people in India generally act too extreme. They tend to either invest a 100% portfolio in gold or don't invest at all. Based on the risk-return profile of gold and other asset class, it should not account for more than 10% of the total portfolio.  How to invest in gold?  Once an investor has determined the allocation of gold to the overall portfolio, an investor should look at the ways by which an investor can invest in gold:  Physical Gold - Can be bought as coins or bars  Jewelry - It is another option, but the cost of converting gold into jewelry is high.   Gold Funds and ETFs - Passive investment in gold. An investor can invest in units of gold funds or gold exchange-traded funds (ETFs) that are managed by asset-managed companies.  E-gold - It can be bought on a commodity exchange through any broker. Re-materialization of e-gold allows conversion into physical gold as per the requirement of the investor.  Sovereign Gold Bonds - Bonds offer similar returns that are offered by physical gold. It also provides tax benefits.  Why digital gold and the benefits of investing in digital gold  Digital Gold is issued by MMTC (Metals and Minerals Trading Corporation of India) or Augmont. Investing in digital gold is just like buying physical gold. The only exception is that there is no physical possession of gold. This offers a clear advantage over issues like purity, storage, making charges, wastage, and liquidity.     Gold mutual funds and ETFs are also alternatives to physical gold. However, their efficiency doesn't match that of digital gold. This is mainly because of their expense ratios and other relevant charges that are paid to the fund house.   Here are some benefits of investing in digital gold -   Can be started with as low as Rs. 10/- No charges such as expense ratio  Holdings can be exchanged against physical gold with the option of door delivery.  Thus, digital gold is increasingly becoming one of the best ways to invest in gold.  Exchange-traded funds (ETFs) that invest in gold and other precious metals have seen massive inflows as investors rush to shield themselves. Investors are mainly panic selling their stock investments under the current conflict situation and investing in gold, gold ETFs or digital gold to hedge against their massive losses in stocks.  With the situation worsening, having Russia started its invasion of Ukraine, the markets are likely to correct until the tension between the two countries eases. This is like shooting the gold prices north. It is advisable for an investor looking to protect the portfolio from short-term volatility to take a position in gold.  FAQs Why do people buy gold in crisis?   The sale of gold coins, gold bars, and gold ETFs is maximum when the stock market performs poorly. Similarly, gold demand picks up fast when a country’s GDP falters. This is because when the economy is unstable, investors prefer to park their money in hard assets. People invest in gold during a crisis because:   Gold maintains its value for a long period   It helps beat inflation   Gold holds its value during geopolitical uncertainty   It offers portfolio diversification  Should we buy gold during the war?   Investors commonly perceive gold as a haven in a severe stock market downturn. Historically it has been proved that whenever the stock market plummets, gold performs very well, which is the case when two countries are at war.   The sale of gold coins, gold bars, and gold ETFs is maximum when the stock market performs poorly. Similarly, gold demand picks up fast when a country’s GDP falters. This is because when the economy is unstable, investors prefer to park their money in hard assets.   Will gold go up because of Ukraine?   When Russia declared war on Ukraine several months back, the gold crossed ₹51,500 per 10 gm on February 24, 2022, which was the highest in 13 months. From 2021 to 2022, gold prices continued to rise because of Omicron spread and rising geopolitical tensions.   Will Russia's war affect gold?   Gold, often referred to as a safe haven, acts as a diversification product against the stock market. The Ukraine-Russia conflict has had quite an impact on the market. This geopolitical issue has had a significant adverse effect on the stock market, whereas gold prices increased tremendously.   Also, keep in mind that gold prices will always keep growing due to the never-ending demand for gold. 
How to choose abroad education loans?

How to choose abroad education loans?

261,406 Indian students studied abroad in 2022, according to the Ministry of External Affairs, and more students are anticipated to enroll in top-notch programs next year.  The best way to pay for studying abroad is often thought to be through student loans. Loans for studying abroad come in a variety of forms. Let's learn about them and help you choose your best option. Types of education loans  Let's first explore the two major forms of education loans accessible to international students who want to study abroad through collateral-free education loans: 1. Collateral education loan  To get the required loan amount for a collateral education loan, the borrower must pledge collateral (such as a house, property, gold, insurance policies, land, fixed deposits, etc.) as security. Collateral loans can further be divided into three categories; Immovable property: This comprises buildings, flat surfaces, uncultivated land, and areas with well-defined borders. Liquid security: This covers LICs, government bonds, fixed deposits, etc. Third-party collateral: Only government and public banks are covered by this law. In this situation, if a candidate lacks the necessary assets listed above or is unable to provide the value to match the necessary loan amount, they may pledge the asset of a third party as collateral. In essence, the term "third party" refers to those who are not members of the candidate's close family. For instance, the candidate's uncle, aunt, pals, or the major co-applicant, etc. 2. Non-collateral education loan  The borrower of an education loan for international studies without collateral is not required to provide collateral as security, in contrast to an education loan with collateral. In the case of an education loan without collateral for abroad, borrowers are required to submit documentation and fulfill relevant requirements and eligibility criteria. Types of education loans based on lenders The following are the different types of education loans based on lenders:  1. Loans from Public-Sector Banks In India, public-sector banks or government banks give education loans to those who want to study abroad mostly based on collateral that is given as security. Government banks offer unsecured loans to students for INR 7.5 lakh. Applicants must offer collateral as security for sums more than this. Compared to commercial lenders, public sector banks provide lower interest rates. Section 80E offers tax advantages for government bank student loans. Major public-sector banks that provide loans for international schooling include: State Bank of India Bank of Baroda Punjab National Bank Union Bank of India 2. Loans from Private Banks Both secured and unsecured loans for study abroad are available from private Indian banks to students. The amount that may be approved depends on several variables, including the applicant's profile, the co-applicants financial situation, the nation, the course, etc. Private-sector banks provide better interest rates than NBFCs and foreign lenders, but they are higher than government banks. ROI generally begins around 11% annually. Private bank student loans are also eligible for Section 80E tax advantages. Compared to government banks, private banks require less time to approve an education loan. Several of the largest private sector banks providing loans for international schooling are: ICICI Bank Axis Bank 3. Loans from Non-Banking Financial Companies (NBFCs) NBFCs provide unsecured and secured student loans for international studies. The maximum loan amount that can be approved varies depending on several variables, including the applicant's profile and the financial status of any co-applicants. When compared to commercial banks and government banks, the interest rates on loans from NBFCs are on the higher side. The interest rate for NBFC education loans normally ranges from 11.5% to 16% per annum. NBFC education loans do not qualify for Section 80E tax advantages. Compared to government banks and commercial banks, NBFCs require less time to complete an education loan. Some of the largest NBFCs providing loans for international schooling include: HDFC Credila Avanse  InCred Auxilo How to choose the right abroad education loans for higher education?  Research and thorough comparison are necessary while selecting the best education loan for higher education. Before choosing an education loan, compare the interest rates and repayment options offered by several institutions. You may also get in touch with an expert. They can assist you in negotiating a lower interest rate and in organizing your repayment plan to help you save money. Before choosing to take out an education loan, ascertain how much money you require to fund your higher education. Our College Cost Calculator will help you determine how much additional money you'll need to live comfortably in your college city by providing you with information on the tuition and living costs there. In the modern, dynamic world, a good education is crucial because it gives students more self-confidence and gives them the tools they need to live their best lives. Therefore, although taking out a loan first seems scary, as long as the student is dedicated and makes the most of the opportunity, it will ultimately pay off. Consult an expert advisor to get the right plan TALK TO AN EXPERT
UTI India Consumer Fund

UTI India Consumer Fund

UTI is one of the pioneers of the Indian Mutual Fund Industry. With over Rs 2.4 lakh crore, the AMC is one of the most trusted names in the mutual fund space. The AMF offers products across asset classes.   Let us talk about the consumer product – UTI India Consumer Fund.  https://www.youtube.com/shorts/2kO9_PCtunA About the UTI India Consumer Fund  Investment objective The objective of the scheme is to generate long-term capital appreciation by investing predominantly in companies that are expected to benefit from the growth of consumption, changing demographics, consumer aspirants, and lifestyle. However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.  Investment process   The fund follows the following investment strategy –   Universe of companies with B2C focus across sectors.  Companies are likely to benefit from the growth of consumption through bottom-up stock picking.  Emphasis on companies with the longevity of growth while generating sustainable cash flows.  High active weights with a market cap agnostic approach Portfolio composition  The portfolio holds the major exposure in large-cap stocks at 75% and sectoral major exposure is Fast Moving Consumer Goods which accounts for roughly one-fourth of the portfolio. The top 4 sectors hold nearly 75% of the portfolio.  Note: Data as of 31st Dec 2022. Source: UTIMF  Top 5 holdings for UTI India Consumer Fund  Name Weightage % Maruti Suzuki India Ltd. 7.79 Bharti Airtel Ltd. 7.44 Asian Paints Ltd. 5.46 Titan Company Ltd. 5.16 Nestle India Ltd. 4.55 Note: Data as of 31st Dec 2022. Source: UTIMF  Performance  Note: Data as of 31st Dec 2022. Source: UTIMF  The fund has generated a CAGR (Compounded Annual Growth Rate) of 9.16% since inception. Invest Now Fund manager  Mr. Vishal Chopda is a Vice President and Fund Manager in the domestic Equity Division of UTI Asset Management Company Ltd. Vishal joined UTI AMC in January 2011. In UTI he has worked for the past 7 years in the Department of Fund Management as Research Analyst.  Who should invest in UTI India Consumer Fund?  Investors looking to supplement their core equity portfolio with a differentiated portfolio strategy and invest in the theme of growing consumerism and changing the lifestyle of the Indian consumer.  Why invest in this fund?  The fund endeavors to invest in companies that are predominantly consumer-facing.  Invests in sectors that benefit directly or indirectly from rising consumption, changing demographics, consumer aspirations, and lifestyles.  In stock, picking funds emphasize earnings growth prospects, management, valuation, macro trends, etc.  The Fund would be agnostic to the market capitalization spectrum.  Horizon  One should look at investing for a minimum of 5 years or more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The UTI India Consumer Fund is one of the oldest funds with a track record of 15 years and has delivered ~10% CAGR consistently. Thus, it is best for investors who are willing to take some additional risk for good returns over a long-term spectrum.  DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only. 
UTI Mid Cap Fund Growth

UTI Mid Cap Fund Growth

UTI is one of the pioneers of the Indian Mutual Fund Industry. With over Rs 2.4 lakh crore, the AMC is one of the most trusted names in the mutual fund space. The AMF offers products across asset classes.   Let us talk about the flagship product – UTI Mid Cap Fund UTI Mid Cap Fund  Investment objective The objective of the scheme is to generate long-term capital appreciation by investing predominantly in equity and equity-related securities of mid-cap companies.  Investment strategy   The fund follows the following investment strategy –   Focus on companies with scalable business models and long growth runway  Open to investing in good companies whose business is going through a transitory phase of weakness OR undergoing a transformational change.  Bottom-up approach for stock picking with sector agnostic allocation approach.  65% of the corpus is invested in mid-cap companies, with the balance distributed in small caps.  Flexibility to stay invested in mid-caps that graduate to the large-cap status Portfolio composition  The portfolio holds the major exposure in mid-cap stocks at 68% and the sectoral major exposure is Financial Services which accounts for roughly 17.60% of the portfolio. The top 4 sectors hold nearly 55% of the portfolio. Note: Data as of 31st Dec 2022. Source: UTIMF  Top 5 Holdings for UTI Mid Cap Fund  Name Weightage % Tube Investments of India Ltd 4.37% Cholamandalam Investment & Finance Company Ltd 3.14% Federal Bank Ltd. 3.05% Shriram Finance Ltd 2.42% PI Industries Ltd 2.38% Note: Data as of 31st Dec 2022. Source: UTIMF Performance  Note: Data as of 31st Dec 2022. Source: UTIMF  The fund has given healthy returns by generating a CAGR (Compounded Annual Growth Rate) of 17.55% since inception.  Fund manager at UTI Midcap fund growth  The fund manager, Mr. Ankit Agarwal, joined UTI in August 2019. Presently, he has been designated as Fund Manager for managing UTI Mid Cap Fund. He has more than 12 years of experience. Prior to joining UTI, he was working with Lehman Brothers, and Barclays Wealth and had been associated with Centrum Broking Ltd. also in the capacity of Sr. Vice President. He has done his graduation from the National Institute of Technology (B.Tech.) and holds a postgraduate degree in Management (PGDM) from IIM, Bangalore.  Who should invest in the UTI Mid Cap Fund?  Investors looking to invest in a portfolio that invests in the high growth potential of medium-sized companies.  Why invest in this UTI Mid Cap Direct Fund?  A true-to-label mid-cap fund with a focus on scalable business models and a long growth runway.  A portfolio of mid-caps tends to offer higher growth potential than large-cap stocks, however, this is accompanied by potentially higher volatility. The strategy endeavors to manage this through prudent diversification and risk management.  The Fund pursues a bottom-up process for stock selection and has a blended approach for both value and growth-style investing with a growth bias.  The Fund maintains a well-diversified portfolio and follows a patient approach toward companies in the portfolio.  Horizon  One should look at investing for a minimum of 5 years or more.  Investment through a Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The UTI Mid Cap Fund is one of the oldest funds with a track record of 18 years and has delivered ~17.5% CAGR consistently. Thus, it is best for investors who are willing to take some additional risk for good returns over a long-term spectrum. DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only.
Are ETFs a good investment?

Are ETFs a good investment?

Nathan, widely known as ‘Nate,’ is often called the Father of Exchange Traded Funds(ETFs). He was the inventor of the first Exchange Traded Fund, thus leaving an indelible mark on the industry.   Nathan successfully developed an ETF after six years of hard work and toil. He launched the most successful ETF in 1993, i.e., the Standard & Poor’s Depository Receipt, better known as the Spider or SPY.   The number of ETFs has grown significantly since then. As of 2020, more than 700 exchange-traded funds are available globally.  Let’s now look at how the industry has grown over a while.   The total ETF assets grew almost ten times in 2010. ETFs have galloped the psychologically significant $10 trillion Assets Under Management (AUM) mark.   Assets Under Management is the total market value of investments that a person or an entity manages for the investors. To visualize this figure- India is a $3.1 trillion economy.   Thus, the AUM of ETFs worldwide is approximately more than thrice the size of the economy of India! According to BlackRock, Global Business Intelligence, the ETFs are slated to grow to a potential of $14 trillion by 2024.  The biggest ETF companies control most AUM in the ETF world. The biggest companies, according to the size of their AUMs, are as follows:   iShares: iShares is a subsidiary of BlackRock Inc., the global leader in assets management.  Vanguard  State Street Global Advisors, the asset management business of State Street Corp., issues State Street SPDR- ETFs.   Invesco: Invesco Ltd manages it.  Charles Schwab: The Charles Schwab Corp issues ETFs. ParameteriSharesVanguard  State Street SPDRInvescoCharles SchwabAssets Under Management$1.8 trillion$1.3 trillion$771.7 billion$260.2 billion$170.2 billionNumber of ETFs Offered37280  13921825Revenue$3.5 billion$45.0 billion$1.3 billion $764.4 million$125.3 million According to the 2021 Global ETF Investor Survey of the global ETF market, the United States of America represents over 70% of the Assets Under Management, followed by the European Union and Greater China (The Greater China area includes Taiwan, Hong Kong, Macau, and mainland China). Source - EduFund research team, 2021 Global ETF Investor Survey. The Assets Under Management of the Exchange-traded funds in the USA crossed $5 trillion in 2020 compared to a measly $102 billion in 2002. In India, Exchange Traded Funds have also gained popularity amongst investors. Even though the Indian market is small compared to the heavyweight Americas and Europe, it’s still gaining traction and has a promising future.   ETF assets under management have doubled from 1.54 lakh crore at the start of FY21 to 2.9 lakh crore at the end of FY21, according to SEBI reports. India has a long way to go before it can be considered a mature ETF market.  The majority of ETFs invest in stocks; however, investors have several options, including exposure to debt instruments, commodity derivatives, real estate, currencies, etc.   The ETFs can also have a combination of several asset classes. According to ETF Database, most ETFs have underlying asset exposure. Thus, ETFs have a bright future, have grown manifold, and continue to grow. Some factors that will make this instrument a promising proposition are that its investors are pretty active in the market and are very sensitive to cost.   According to the 2021 Global ETF Investor survey, ETF allocations continue to rise and shine despite the ongoing pandemic. The majority of the respondents in the research had exposure to active ETFs (An actively managed ETF is one that has a benchmark index), also, thematic ETFs are going mainstream. FAQs What is an ETF? An ETF stands for exchange-traded fund (ETF). One single ETF is a basket of securities that can be bought and sold like mutual funds through a brokerage firm. ETFs track a specific index such as S&P, sector, commodity, or other assets. Much like stocks, ETFs can be traded on the market. Is an ETF better than a stock? Investing in an ETF is less risky than investing in a stock, as ETFs are diversified. In the case of ETFs, investors do not control what happens to the portions of the ETFs. ETFs have a diversified profile of assets, and the risk associated with the investment reduces significantly. In stocks, the risk attached is higher as the stock price depends entirely upon the company’s performance and other exogenous factors of the world.    Are ETFs good for beginners? ETFs are generally suitable for beginners as they are inexpensive compared to a few other investment tools. ETFs have a diversified asset profile, reducing the risk associated with the investment significantly.    TALK TO AN EXPERT
Maximize Your Gains: Advantages of ETFs Revealed

Maximize Your Gains: Advantages of ETFs Revealed

Before talking about the advantages of ETFs. Let's talk a bit about Mutual Funds. For several years, traditional Mutual Funds have provided investors with the ease of building a diversified portfolio without choosing single security at a time.  These funds have provided retail investors like you and me far-reaching diversification and these funds have provided retail (non-professional) investors with far-reaching diversification and specialized management at a relatively lower cost. Exchange-traded funds (ETFs) take these benefits to a whole new level. ETFs have several advantages associated with them. Let’s see how each of them pans out for our use. Advantages of ETFs ETFs on similar lines to Mutual Funds offer a wide range of diversification. The general tendency of investors is to get concentrated in any particular sector without having any requisite knowledge of that sector, which results in lesser realized gains than actual potential.   This psychological problem can be countered by investing in ETFs, managed professionally and diversified to minimize risk and maximize growth. Nowadays, ETFs are available in a variety of types and orientations covering all major asset classes and sectors.   Global ETFs, local market ETFs, Industry-specific ETFs, and market niches provide investors access to industries where it may be cumbersome to buy and sell individual stocks and bonds.  Diversification also leads to risk management as the concentration in a given sector without expertise is avoided. ETFs can be a great tool to hedge your portfolio against any untoward market runs.  ETFs typically are low-cost instruments compared to traditional mutual funds because of their very nature. While trading ETFs, fewer hands and minimal paperwork are required; naturally, the costs fall compared to selling mutual funds. Thus, the expense ratio for ETFs is lower than other such securities, hence leaving you with a more significant amount of total capital in return compared to others.   For instance, the Vanguard REIT Index Fund Investor Shares (VGSIX) has a redemption fee of 1% if held for less than one year compared to Vanguard REIT ETF (VNQ), which has the same portfolio and has no redemption fees.  ETFs are traded openly in the stock market and hence are liquid compared to mutual funds, which aren’t. Redeeming a mutual fund is a very tedious process and requires a lot of time, whereas ETF selling is easy at any point of the day.  Mutual fund settlement takes place only once a day after the market timings, and this delay can prove costly. Most ETFs are very transparent in their operations and disclose their holding almost daily, which helps the investor make sound decisions about holding the ETFs in their portfolio.   Active semi-transparent ETFs reveal their complete portfolio holdings monthly or quarterly with a lag. Moreover, ETFs are simple products that can be easily understood by a layman investor, unlike some complex financial products except some specialized ETFs like inverse and leveraged ETFs.   With the help of a single transaction, the investor can buy or sell a bunch of underlying securities without the hassle of purchasing each stake individually.  A commodity derivative market is a place where there is restricted access to a few people and institutional investors due to the high costs of owning them.   On the other hand, ETFs have enabled retail investors to be a part of this segment at low prices. Thus, your portfolio gets new exposures with the help of such ETFs.  ETFs also come with an added advantage of tax benefits compared to mutual funds. The tax benefits in the ETFs are due to the very working of the ETFs. The swap agreements between the fund and AP reduce the tax liability for the investors.   The capital gains tax on ETFs is due to selling the ETF, whereas, in a mutual fund, the tax liability is on the investor during the entire life of the holding.  There are several advantages to making ETFs a part of your investment portfolio. Besides rock-solid investments like equities, mutual funds, and derivatives, ETFs are a financial tool that should be part of your investing arsenal, which increases the firepower of your portfolio manifold! Disadvantages of ETFs Long-term venture capital firms may only have a time horizon of 10 to fifteen years, thus daily price fluctuations may not be beneficial to them. Some venture capitalists could trade often as a result of these hourly pricing delays. A transaction that costs at the end of each day might avoid irrational fears of damaging an investment goal that may be inspired by a substantial movement over a short period of time.  Diversity is less crucial because fewer shares make up the market index, which may cause investors to concentrate on big businesses in certain industries or foreign equities. Future growth prospects may be out of reach for ETF owners due to a lack of exposure to mid-and small-cap companies.  Expenses can be higher. Although many people compare trading ETFs to trading other types of funds, the costs are greater when comparing ETFs to buying a single stock. Although the actual commission paid to that broker may have been identical, the stock has no management fee. Additionally, specialty ETFs are considerably more likely to follow a lower traffic index as more of them are introduced. This might result in a significant bid/ask spread. If you invest in real stocks, you could receive a better offer.  Some ETFs provide lower interest yields. Some ETFs are ETFs that pay a dividend, but their yields might not be as high as those of owning a company or group of equities with a high yield. ETFs often come with reduced risks, but stocks can offer much higher dividend yields if a buyer is willing to assume the risk. Even if you can choose the company with the highest dividend yield, ETFs follow a wider range of securities, so the average return will be lower.  A leverage ETF is a type of fund that boosts the returns of an underlying index using debt and financial products. Some double- or triple-leveraged ETFs have the possibility of losing more than twice as much as the underlying index. These speculative investments kinds require careful consideration. The overall loss could increase quickly if the ETF is held for a long time.  FAQs Why ETF is not popular in India? Costs are affordable yet insufficient. Although ETFs have minimal prices worldwide, they are marginally greater in India. The charges increase even more when brokerage fees are included. Due to poor margins, not enough has been done to increase investor awareness of ETFs in India. Is ETF as a long-term plan good for India? ETFs are incredibly secure and a great choice for long-term investment. Experts believe that just because ETFs are balanced and combine the investments of several investors, they are less unstable than stocks and indexes and only slightly move in price. Is ETFs worth investing? A fantastic way to vary your investment portfolio is with an ETF. Whenever you participate in the stock market, you have a finite amount of equity options. What are some advantages of ETFs? Some of the biggest advantages of ETFs are: Diversification and global stock exposure Trading flexibility Low costs Transparency Tax efficiency Risk management Professional management What are some disadvantages of ETFs? Some of the biggest disadvantages of ETFs are: Additional charges like Hidden fees, trading fees and operating fees Lack of liquidity Tracking errors lower interest yields. Consult an expert advisor to get the right plan TALK TO AN EXPERT
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