Index Funds Discussions

[Vicky78]

For Index fund, the best is UTI Master Index. Check that fund out.

[invest101]

Friends,

What is the latest status with NiftyBEES? Is this liquid enough for retail investor? Is there any good reason why one should not invest in NiftyBEES? I personally like ETFs - have invested in ETFs overseas but not sure why products like NiftyBEES are not popular in India - I thought it makes lot of sense for retail investors to do index investing... Any thoughts?

[Vicky78]

Welcome aboard invest01

I do not follow Nifty BEES.

But the major reason why most indian investors do not invest in index funds is that unlike in developed markets most diversified indian funds have consistantly beaten the index. The only exception being the year 2006 where many failed to do so.

So in the the long term well managed equity funds seem like a better option than passively managed index funds.

[invest101]

Hi Vicky78,

Thanks - happy to be part of the forum.

I saw a report at Rediff (http://inhome.rediff.com/money/2007/dec/20perfin.htm) which basically mention same as what you suggest - i.e. active investing in India is better than Index investing.

However, I am not 100% convinced that Active investing is better than Index investing:

1. I don't think there is any fund that has consistently outperformed Nifty every year over 5 years.

2. The study doesn't include Nifty Bees but since Nifty Bees performance is same as Nifty - if you look at performance numbers, the Nifty bees performance is very comparable.

3. What is the guarantee that active fund performance would be same after the fund manager leave the fund and join another fund?

4. The risk adjusted returns of index funds is very close to those of active funds.

I personally feel that it is very difficult for any MF Manager to beat market on consistent basis year after year but I am willing to find out if there is a single MF that has yielded better return than Nifty over last five years every year on consistent basis.

I am actually surprised that why people even bother selecting individual stocks and mutual funds - just invest on index and let the market take care of your investment... isn't it better for hundreds of mutual fund managers to work for you (which is represented by index) rather than a single fund manager?

Regards.

Originally Posted by Vicky78

Welcome aboard invest01

I do not follow Nifty BEES.

But the major reason why most indian investors do not invest in index funds is that unlike in developed markets most diversified indian funds have consistantly beaten the index. The only exception being the year 2006 where many failed to do so.

So in the the long term well managed equity funds seem like a better option than passively managed index funds.

[swama694]

hi i have a view

how about having a portfolio with
Nifty Bees 60% (largecap)
Birla Midcap or Junior bees(midcap)25%
Standard Chartered Premier Equity or JM emerging leaders(small cap)15%

will this portfolio work in Indian situation where we people find it difficult to rely on fund managers who are moving from AMC to AMC?

[Vicky78]

Originally Posted by invest101

Hi Vicky78,

Thanks - happy to be part of the forum.

I saw a report at Rediff (http://inhome.rediff.com/money/2007/dec/20perfin.htm) which basically mention same as what you suggest - i.e. active investing in India is better than Index investing.

However, I am not 100% convinced that Active investing is better than Index investing:

1. I don't think there is any fund that has consistently outperformed Nifty every year over 5 years.

2. The study doesn't include Nifty Bees but since Nifty Bees performance is same as Nifty - if you look at performance numbers, the Nifty bees performance is very comparable.

3. What is the guarantee that active fund performance would be same after the fund manager leave the fund and join another fund?

4. The risk adjusted returns of index funds is very close to those of active funds.

I personally feel that it is very difficult for any MF Manager to beat market on consistent basis year after year but I am willing to find out if there is a single MF that has yielded better return than Nifty over last five years every year on consistent basis.

I am actually surprised that why people even bother selecting individual stocks and mutual funds - just invest on index and let the market take care of your investment... isn't it better for hundreds of mutual fund managers to work for you (which is represented by index) rather than a single fund manager?

Regards.

There are many funds that have beaten the nifty consistantly year on year for the past 5 years... a few from the top of my head

Birla Sunlife Equity
Reliance Growth
Birla Sunlife Fronline Equity

Funds that have beaten both the sensex and nifty year on year for five years are. This list is short as many funds failes to beat the sensex in 2006. If that year was excluded there will be many more funds in this list.

Magnum Contra
Franklin Prima plus
DSP ML Top 100
Reliance Vision
Magnum Multiplier plus
Sundaram Pariba Select Midcap
DSP ML Equity

If you would consider nifty alone, about(approx) 45 out of a total of 60 funds have consistantly beaten the index year on year for past 5 years. Many of these funds have had many fund managers come and go. The figures are available at www.valueresearchonline.com.Click on the fund and check the performance tab.

There are many reasons attributed towards funds beating the index in an emerging market. Fast growing economies have many small companies which show visible earnings.Many companies are under researched. So a fund house with good research skill are able to spot out multibaggers. Better fund managers. These are from the "experts" in the media... so i am not sure on how accurate they are.

[invest101]

Hi Vicky78,

Thanks for your input.

Two points:

1. I would love to find out if any bluechip / large cap MF has outperformed Nifty consistently. Comparing fund that has small companies in its portfolio with Nifty is, I think, comparing apple with oranges.

2. Even with those funds that you mentioned below, in addition to absolute performance comparison, I think it is more meaningful to compare risk adjusted return comparison. The rediff article seem to suggest that Index funds (not Nifty) risk adjusted return was only slightly lower than actively managed funds.

Thanks for reminding about valueresearchonline.com - I will check it out.

Originally Posted by Vicky78

There are many funds that have beaten the nifty consistantly year on year for the past 5 years... a few from the top of my head

Birla Sunlife Equity
Reliance Growth
Birla Sunlife Fronline Equity

Funds that have beaten both the sensex and nifty year on year for five years are. This list is short as many funds failes to beat the sensex in 2006. If that year was excluded there will be many more funds in this list.

Magnum Contra
Franklin Prima plus
DSP ML Top 100
Reliance Vision
Magnum Multiplier plus
Sundaram Pariba Select Midcap
DSP ML Equity

If you would consider nifty alone, about(approx) 45 out of a total of 60 funds have consistantly beaten the index year on year for past 5 years. Many of these funds have had many fund managers come and go. The figures are available at www.valueresearchonline.com.Click on the fund and check the performance tab.

There are many reasons attributed towards funds beating the index in an emerging market. Fast growing economies have many small companies which show visible earnings.Many companies are under researched. So a fund house with good research skill are able to spot out multibaggers. Better fund managers. These are from the "experts" in the media... so i am not sure on how accurate they are.

[Vicky78]

Originally Posted by invest101

Hi Vicky78,

Thanks for your input.

Two points:

1. I would love to find out if any bluechip / large cap MF has outperformed Nifty consistently. Comparing fund that has small companies in its portfolio with Nifty is, I think, comparing apple with oranges.

3 large cap funds that have beaten the nifty year on year which come to mind right away are

Franklin Prima Plus
Reliance Vision
Birla Sunlife Frontline Equity

I am sure there are other funds though. They are available in that website

2. Even with those funds that you mentioned below, in addition to absolute performance comparison, I think it is more meaningful to compare risk adjusted return comparison. The rediff article seem to suggest that Index funds (not Nifty) risk adjusted return was only slightly lower than actively managed funds.

Thanks for reminding about valueresearchonline.com - I will check it out.

Check out valueresearchonline.com you will get the risk adjusted return there. Not sure, but i think Franklin Prima Plus and Birla Sunlife Frontline Equity would most likely beat an index fund in terms of risk adjusted returns.

Please do let us know what you find in valueresearchonline.com when you check it out. It has the sharpe ratio when you select risk and volatility section in the dropdown on the top right side.

Cheers

[ankitj]

I am looking for index funds for SIP. Looking for fund with no load and low expense ratio.

I am looking for

1) Fund that follows Nifty
2) Fund that follows a Midcap Index
3) Fund that follows a Small Cap Index

would really appreciate recommendations.

I am new to Indian investments. So a still confused with entry load. I heard that if one buys funds directly from fund houses, there is no entry load. However some people have reported in other forums that fund houses still charge the load even investing directly. Can somebody clarify this.

Thanks

[Vicky78]

Originally Posted by ankitj

I am looking for index funds for SIP. Looking for fund with no load and low expense ratio.

I am looking for

1) Fund that follows Nifty

ETF - Nifty BEEs, UT Sunder
regular- Franklin India Index NIFTy

2) Fund that follows a Midcap Index
3) Fund that follows a Small Cap Index

There are no funds that track these indices, you can consider Benchmark Nifty Junior BEEs which tracks Nifty Junior. Nifty Junior has some exposure to mid caps.

I am new to Indian investments. So a still confused with entry load. I heard that if one buys funds directly from fund houses, there is no entry load. However some people have reported in other forums that fund houses still charge the load even investing directly. Can somebody clarify this.

Thanks

All the details with respect to Direct Investment in mutual funds are in http://www.traderji.com/mutual-funds...ual-funds.html