A blog which periodically revisits evergreen investment principles!

Author: Rajeev Thakkar

Rajeev Thakkar is performing his duties as a Chief Investment Officer (CIO) and Director of PPFAS Mutual Fund.

Rajeev Thakkar possesses over 17 years of experience in various segments of the Capital Markets such as investment banking, corporate finance, securities broking and managing clients' investments in equities.

Tweaks to our investing framework

The headline first.

“There is no change to the basics of our investing approach.”

Our investing approach consists of

  • Investing only with Promoters / Managers who have the best interests of shareholders at heart and who are competent in the business that they run.
  • Investing in businesses where the underlying characteristics are good. These are, limited competition and pricing power which ultimately is shown by high return on capital employed.
  • Limited use of leverage in the non banking / financial businesses we own.
  • A good potential for growing the business is usually a positive provided it can be done in a capital efficient manner.
  • Buying at attractive valuations.

Investors who do not care for the nuances may ignore this post completely.

Investing post-retirement

Annuities vs DIY Investing post retirement

The tax on EPF has been rolled back. That does not however conclude the debate as to whether annuities make any sense from a post retirement perspective and whether there should be some nudge or compulsion to purchase annuities.

Most of the opposition to annuities comes from people who compare returns from annuities to Fixed Deposits / Tax Free Bonds etc. and point out to the fact that the returns from annuities seem to be somewhat lower.

Expense Ratios, Exit Loads and Miscellaneous Stuff

Even though most people may understand this very well, let us define some terms at the outset so that there is no confusion.

Expense Ratio

This is charged by the fund house (AMC) to the scheme (investors money). Investors want this to be the lowest. (Conversely AMCs “may” want these to be the highest).

Entry / Exit Load Type 1

Although there is no financial term like Type 1, this is my own creation for simplicity sake. In this type, the entry and exit load (fees) go to the AMCs or Distributors. This is in addition to the expense ratio above. Obviously investors hate them.

These type of loads have been ELIMINATED in India. This elimination was not without its own share of controversies. More on this later.

Powered by WordPress & Theme by Anders Norén