Amongst other performance details, what we miss out while selecting an actively managed mutual fund is the AUM.

In equity, moderate the better. In debt, higher the better.

#investing

In a business where the buying & selling price is fixed by the government, how is that the sugar stocks are rallying so much?

A thread 🧵 to learn how the sugar sector works. Do re-tweet and hence us educate more investors (1/n)

- Sugar is made out of Sugarcane
- The government fixes buying price (FRP – Fair & Remunerative price) for the mill from the farmers at 2.850/Kg
- Selling price is also fixed at Rs. 31/Kg (MSP – Minimum selling price) (2/n)

Lets understand the sector,

- Sugarcane purchased by the mill is crushed to remove the juice (exactly like you have sugarcane juice at a hotel)
- Juice is heated & boiled to remove sugar (3/n)

- The juice can be boiled upto 3 times to remove sugar. Each time it is boiled, sugar is removed, than some water is added and boiled again to remove more sugar (4/n)

- There are 2 by-products as well. The residue left behind after the boiling process is over is like a gum/paste called molasses & the fiber/stem of the sugarcane after juice is extracted (5/n)

(Thread) With Kotak launching its International REIT Fund of Fund NFO, it is worth revisiting our old thread on Real Estate Investment Trust (#REIT). The Idea is to educate readers on REIT & share our view on the Kotak #NFO

Do ‘re-tweet’ & help us educate more investors (1/n)

What’s a REIT?

Lets say I am a RE developer, K Raheja. I like a land in Mumbai & Hyderabad 4 some commercial development. I decide to buy it. Where will I get the monies 2 buy & construct it?
1. Self
2. Bank, NBFC, MF - Debt
3. Partner – someone else investing as Equity (2/n)

So I invest some monies, got some 4m banks & MF’s & I also got Blackrock to invest 2 buy the land & make the business park called 'Mindspace'. I constructed around 23-mn sq ft with multiple building & I started leasing them out to companies who wanted rented office premises (3/n)

There comes a point where I needed more monies to build new building, pay off the loans etc., where do I get the monies? So I decide to do an #IPO. Not of the entire company K Raheja but only this project called Mindspace. So I formed a trust or corporation (4/n)

I commit to payout 90% of my rent income to the shareholders proportionately as dividends & I will use this IPO money to invest a minimum 80% in completed real estate, which is generating rent & will use 20% in constructing new Real Estate or lend to some other developer (5/n)

A basic premier on the banking sector, demystifying commonly used terms,
CASA
Wholesale Banking
Net Interest Income (NII)
Cost of Liability
Advances Growth
Gross v/s Net NPA
Provisions
SLR/CRR
Capital Adequacy Ratio
Net Interest Margin (NIM)

Do hit the 're-tweet' (1/n)

Banking, as a business is simple to understand, you borrow money (liability for the bank as the bank needs to pay back) and lend (asset for the bank as the bank is expected to receive it bank), the difference between the borrowings & lending is banks income (2/n)

Where all can they borrow from?

(a) Savings Account (SA)
(b) Current Account (CA)
(c) Fixed Deposit (FD)
(d) Recurring Deposit (RD)
(e) Certificate of Deposits (CD)
(f) Bonds etc. (3/n)

Whom do they lend?
(a) Retail - Housing loan, auto loan, personal loan etc.
(b) Wholesale (Institutional Lending) – Commercial Papers (CP) & other Corporate Loans

P.S. – “HDFC Bank is now increasing focus on wholesale lending”, hope you now understand what that means (4/n)

How does the bank profit?

So lets say the average borrowing cost of the bank (also know as the cost of liabilities) is 4.54% & average lending cost is 8.54%, the difference 8.54% - 4.54% = 4% is called the Net Interest Income (NII). HDFC Banks Cost of Liability is 4.54% (5/n)

1 Page Transcript from 1997 Berkshire-Hathaway-Annual-Meeting, when Warren Buffett boldly claimed, Mutual Fund Managers have “gotten a lot for nothing”.

Important: He is not just talking about US Mutual Fund Industry.

Must Read For Mutual Fund Investors 👇

#KnowledgeZarooriHai

Soon startups like Zerodha, Groww & PhonePe will soon launch their own Mutual Funds!

Why is every Investment App trying to become a Mutual fund company?🤔

Let's understand👇

A Thread🧵

FinTechs like Zerodha and Groww have already disrupted the stockbroking & mutual funds distribution space and have become the largest player in their industr, they own the distribution.

What's next?

They want to make their own Mutual Funds & control the manufacturing as well.

Why now?

In Dec 2020, SEBI made it easy to apply for a Mutual Fund license. Earlier, they needed to be profitable for the 3 out of the previous 5 years including the most recent one - and no startups were profitable. But now, they just needed to show a net worth of Rs. 100 Cr.

This is also the perfect time to enter the Mutual Fund market. India is still way under-penetrated with a lot of first-time investors coming. And as per Nithin Kamath, Mutual funds will be one of the key products to push more people into investing.

Who all are in the race?

Largest stockbroker (Zerodha), Largest mutual fund distributor (Groww), one of the biggest NBFC (Bajaj Finserv), several star investors like Deepak Shenoy, Rakesh Jhunjhunwala are strong in the race, apart from FinTechs like Paytm Money, PhonePe & Niyo.

Debt funds are generally good but still you need to understand this fine difference:

If you lend to banks, the risk is on banks.

If you lend to mutual funds, the risk is on you.

@deepvaluepubs He's got people skills

For a sales type job, this is what really matters