Tweet Buster: 10 mutual fund mistakes to avoid; Nilesh Shah's take on gold-backed cryptocurrency


NEW DELHI: As volatility remained high on Dalal Street for yet another week, all eyes are now glued to the pace of vaccination, the number of daily Covid cases and the earnings season. Investors fear that curfews and partial lockdowns in several parts of the country may derail the recovery process.

In today’s edition of ‘Tweet Buster’, we sift through the world of 280 characters to bring out investing mantras, advice on what to buy and what not to buy in this market, and asset allocation strategies in complex situations.

MF checklist
Radhika Gupta, MD and CEO, Edelweiss Asset Management Limited, listed 10 mutual fund mistakes investors should avoid. In the following thread, she warned about the perils of investing in passive funds and also argued that investors should ignore the one-year return statistics of mutual funds. Worth a bookmark!

When gold meets crypto

Nilesh Shah, managing director of Kotak Mahindra AMC, said gold-backed cryptocurrency is an idea whose time has come. “Gold ETFs will take money out of India for import of gold. Gold-backed cryptos will bring dollars into India if we can market it like Swiss Bank marketing to HNIs,” said the star fund manager.

For bookworms
Value investor and founder of Intelsense Abhishek Basumallick said: “Don’t go by what you read in foreign books on investing. Experiment for yourself to see what works for you in your own context & market. Just because a guru has said something does not make it right (or wrong!).”

The ‘No Ads’ puzzle
Zerodha CEO Nithin Kamath explained why India’s largest stock brokerage doesn’t advertise. “Unlike buying a mobile phone or ordering a pizza, you don’t invest in stocks & MFs impulsively. Most often than not, we invest because of greed or because of our friends. And regulations don’t allow you to advertise greed.”

Asset allocation tips
Illustrating the effectiveness of asset allocation, Kalpen Parekh, president, DSP Mutual Fund, said a mixture of 50:50 in Nifty and gold shows lower volatility compared with an 80:20 mixture. “Asset allocation is magical – like Alchemy. If we can mix asset classes right around a disciplined framework – it can earn same returns for lower risk,” he said.

Patience pays
“What matters is your ability to stay on the path. Pick a vehicle, a bus, that suits your need and disposition and then stay on it. Make a start. It could be with Index Funds or Active Funds or any other sensible investment vehicle. And then, just stay on,” he tweeted.

Sectoral Bets
Value investor Arun Mukherjee listed out five sectors that are likely to outperform going forward.

Multibaggers
Mukherjee said that in the last 22 years, SBI is up 13x, HDFC 100x and HDFC Bank 1,000x! “That’s the difference between ordinary and extraordinary! Only shows up in the long term!”

Covid 2.0 risk
Independent market expert Sandip Sabharwal said State Bank of India (SBI) could take the biggest hit on renewed lockdowns as it was most aggressive on retail loans over the last one year and has one of the biggest MSME portfolios where there could be significant renewed stress.

Investing gems
Microcap investor Ian Cassel said best investments are the ones that no one agrees with until after they go up 100, 200 or even 500 per cent!

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