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Zerodha

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Episodes

Asset Allocation: Building your own asset allocation model
17-01-2024
Asset Allocation: Building your own asset allocation model
Asset allocation is one of those fancy-sounding terms. We all keep hearing about it non-stop everywhere, but very few investors think about it, and even fewer have a sensible asset allocation that works for them. At its simplest, asset allocation is not putting all your eggs in the same basket. In other words, it’s about spreading your money across different asset classes like equity, debt, gold, and real estate. This naturally leads to the question: how do I figure out a good asset allocation. Asset allocation is as much a science as it is an art. The objective of asset allocation is to help you reach your financial goals. Coming back to the question of how you figure out a good asset allocation, there’s no perfect asset allocation that’s objectively good for everyone. There are multiple approaches, and each has its own pros and cons. For example, a naive asset allocation that has equal allocation to different asset classes is a perfectly sensible strategy in the right context and for the right type of investor. In this episode, we caught up with Ashutosh Bhargava, fund manager and head of research at Nippon India Mutual Fund. Ashutosh manages the Nippon India Balanced Advantage Fund, among other funds. Given the nature of the fund, he’s thought deeply about the concept of asset allocation and its various dimensions. In this conversation, we talk about: His background and how he stumbled on asset allocationVarious approaches to asset allocationStatic asset allocation vs. dynamic asset allocationSelecting the right parameters to guide asset allocation decisions and their trade-offs
Macroeconomics for dummies
03-02-2023
Macroeconomics for dummies
Thomas Carlyle, the Scottish writer and philosopher, called economics the dismal science. I don’t know if you’ll agree but having read economics textbooks, I certainly think they’re dismal. They’re filled with unnecessary complexity, pointless jargon and theories that have been dead and buried for decades. While economics as a discipline has progressed, the textbooks used today are stuck in the dark ages.     Then I came across Macroeconomics: An Introduction by Alex M Thomas and I regretted not having this as my textbook when I was studying. Though it’s meant to be a textbook, it doesn't read like one. It’s a brilliant book that weaves classical economic theories with excerpts from wide-ranging Indian literature to highlight the structural, social and cultural complexities of the Indian economy. It’s one of the very few books to do so.  Apart from just making macroeconomics more relatable Alex introduces an alternative approach to understanding macroeconomics, which questions the dominant (marginalist) approach. This alternate approach is inspired by the works of the old masters like Adam Smith, David Ricardo, Karl Marx, John Maynard Keynes, and Piero Sraffa.   I learnt a lot while recording the podcast. I hope you enjoy listening to the conversation as much as I enjoyed recording it.    Link to the book: https://www.amazon.in/Macroeconomics-Introduction-Alex-M-Thomas/dp/1108731996  1:27 - About Alex M Thomas  4:51 - What is political economy?  6:35 - Theory of interest rates  10:11- Why should you read this book?  11:29 - The problem with economic teaching  14:41 - How is this book different?  15:41 - The dominant (marginalist) approach  18:57 - How to approach economics  22:32 - The economy as an embedded system  26:10 - Theory of wages  29:52 - Marginalist theory in policymaking   34:15 - Theory of money 44:15 - Modern monetary theory You can read the full episode transcript here. If you have any questions or thoughts about the topics in the conversation, post them on TradingQnA. If you enjoyed listening to this episode, do let us know @zerodhaonline on Twitter.
Money, war and a changing world order with Debashish Bose
11-01-2023
Money, war and a changing world order with Debashish Bose
We are at an important crossroads in history. The pandemic might seem like it’s behind us but we have a raging war in Europe, unprecedented sanctions, currency crises, inflationary pressures, and volatile markets. There are early signs of a shift away from the dollar and uncertainty about the US led global order. So what does all this mean for India and the world? We caught up with Debashish Bose, Managing Director—Public Equities at Oaks Asset Management, to make sense of it all. In this conversation, Debashish talks about:   1. How money is created in the modern world  2. The geopolitical divide  3. Fall of Yen and Japan’s currency conflict  4. Limited power of central banks   5. Cracks in the current dollar-dominated system  6. Advice for investors and much more Debashish had come on the show previously and we had talked about making sense of the macroeconomic developments in the world. You can check out that conversation here: You can follow Debashish on Twitter for more. We hope you enjoy this insightful conversation as much as we did, recording it 😀   Timestamps  0 - Introduction   1:34 - Creation of money   10:14 - Financial repression   11:50 - The geopolitical divide   16:33 - Japan’s currency conflict   27:43 - Do central banks have enough power?   32:34 - Is the dollar system breaking?   40:10 - China, Russia and deglobalisation   47:46 - Bretton woods III?  55:00 - What to do as an Indian investor   1:08:30 - What about gold? If you have any questions or thoughts about the topics discussed, post them on TradingQnA. If you enjoyed listening to this episode, do let us know at @zerodhaonline on Twitter.
Masterclass on factor investing (smart beta) with Sankaranarayanan Krishnan
15-10-2022
Masterclass on factor investing (smart beta) with Sankaranarayanan Krishnan
Up until the 1990s, the Capital asset pricing model (CAPM) was the dominant model used to explain market returns. But in 1992 Nobel Laureate Eugene Fama and his partner, Ken French said that market returns can be explained by three factors namely: 1. Value: the tendency of cheap stocks to outperform costly stocks 2. Size: the tendency of small cap stocks to outperform large cap stocks 3. Market factor: the risk premium of the market over the risk-free rate, like a government bond. Over a period of time, other factors like quality, momentum, and low volatility were added. Institutions were the first to adopt factor investing but with the popularity of ETFs, around 2010, factor ETFs also known as smart beta ETFs started becoming popular in the United States. Given that Indian markets are still very young compared to the US, we just had our first wave of factor or smart beta funds around 2017. But in the last 3 years, there has been an explosion in factor ETFs and mutual funds. But investors often think of factor investing as a guaranteed way to generate higher returns than the market. They often look at the historical returns of factors like value, momentum, quality, and low volatility and think that these factor funds will always outperform Nifty, which isn’t true. Having said that, factor investing can play a very important role in your portfolio, and it’s important to know how to use these funds in your asset allocation. This week on the show, we caught up with Sankaranarayanan Krishnan, a quant fund manager at Motilal who has rich experience designing factor models and managing factor funds. In this conversation, we start with the absolute basics of factors investing and talk about two major factors — low volatility (low vol) and momentum. We talk about why these factors exist and the explanations, return expectations, and how to use them in an asset allocation framework. In this conversation, Sankar talks about:  How did he become a quantitative fund managerWhat are factorsWhat drives the returns of factorsWill factors continue working forward?Factor performance in IndiaAre factors free lunch?Introduction to low volatility and momentumWhy do low volatility and momentum anomalies existDoes the macroeconomic environment matter for factors?What would make low volatility and momentum stop working?Various approaches to implement low volatility and momentum strategies and what investors should knowAre factors replacement for active funds?Factors funds, diversification and asset allocationWill factors always outperform marketcap-weighted indices?His personal investing philosophyCareer advice for someone who wants to pursue opportunities in quantitative financeBook recommendations.  This was an absolute masterclass on factor investing, and we hope you enjoy listening to this conversation as much as we did recording it. We have an upcoming episode on the other two factors—value and quality. We also have an introductory note on smart beta funds on Varsity, do check it out.  If you have any questions about anything discussed in the episode or thoughts in general, do post them here on TradingQnA. If you enjoyed listening to this episode, do let us know by tweeting, we are @zerodhaonline
What's your retirement plan?
15-12-2021
What's your retirement plan?
Retirement is the ultimate goal for everyone. We work, save, and invest so that we can kick back and retire comfortably, but a vast majority of Indians aren't ready for their retirement. This is due to structural economic issues, lack of awareness about the need for retirement planning, the lack of quality advice, among other reasons. PGIM India Mutual releases an annual survey of retirement readiness among Indians, and the last one was in 2020. Given that we're living through this mega COVID shock that has disrupted the personal finances of pretty much everybody, we thought it would be the perfect time to talk about the importance of retirement. So Sahil caught up with Ajit Menon, the CEO of PGIM India Mutual.  In this conversation, Ajit talks about: What does retirement meanThe good, bad, and the ugly from the PGIM India Mutual Fund Retirement Readiness Survey 2020Why are Indians saving less?How has COVID changed retirement planningWhy should you think about retirement?Thinking about how to structure various aspects of your retirementHow to build that mindset to think about retirement readinessRetirement readiness around the worldAdvice for someone starting to think about retirement today And a whole lot more. This conversation was absolutely brilliant and full of insights. We hope you enjoy it as much as we did recording it.  If you have any questions about anything discussed in the episode or thoughts in general, do post them here on TradingQnA.
Navigating the madness in the markets with Kalpen and Sahil
01-11-2021
Navigating the madness in the markets with Kalpen and Sahil
The way the markets have run up post the March 2020 crash have equally surprised and perplexed investors. Given the pace of the recent bull run, that's understandable. A lot of smart people are wondering what's happening in the markets. But that's how the markets work—they don't have to make sense and they rarely do. So, we caught up with Kalpen Parekh (MD & CEO, DSP Mutual Fund) and Sahil Kapoor (Head of Products & Market Strategist, DSP Mutual Fund) to get a sense of the madness in the markets and what you should do as investors:  In this conversation, Kalpen and Sahil talk about: Some key takeaways over the last 1-1.5 yearsHow to make sense of inflationThe disconnect between the real economy and the marketsA bird's-eye view of the Indian and the global economyAre the markets in a bubble?Investing in the age of markets where central bank actions have a massive impactWhy do investors stop investing in equities early? What can be done to get people to stick with their investmentsHow not to get carried away by all the madness aroundAsset allocationHow to think about fixed income in a low-interest rate environmentKeeping your behaviour in control and avoiding mistakesCan you pick the best fund or best fund manager in advance? Discussing Sahil's article on this. International investing and the role of global funds in a portfolioThe role of gold in a portfolioHow the Indian mutual fund industry looks in the next 5-10 yearsSahil and Kalpen's investment philosophiesBook recommendations You can follow Sahil and Kalpen on Twitter for more of their perspectives.  If you have any questions about anything discussed in the episode or thoughts in general, do post them here on TradingQnA.
Taking the long view with Prashant Jain
30-08-2021
Taking the long view with Prashant Jain
In this episode, we have a really really special guest. We caught up with Prashant Jain, the chief investment officer (CIO) of HDFC Mutual Fund. Prashanth is a market veteran and the first India fund manager to manage a single mutual fund scheme for over 25 years. He manages some of the largest active mutual fund schemes in India. Over his nearly 25+ year career in the investment management industry, Prashant has pretty much seen all the cycles of the Indian markets. The experience and insights he shared in the conversation are all the more relevant to us given the euphoric mood in the Indian markets currently.  In this wide-ranging conversation, Prashant spoke about:  His journey into the marketsThe evolution of our economy and the Indian marketsWhat does a good business look like to himHis research processHis thoughts on portfolio constructionWhat does being wrong look likeHis thought on using macro inputs in an investing frameworkWhether the opportunity set of stocks in Indian markets is limitedThe road ahead for IndiaHis thoughts on quality at any priceActive investing vs passive investingIndian valuations, global valuations, rates and inflationAdvice for aspiring analysts and portfolio managersHow he invests If you have any questions about this episode, you can post your queries here and we'll answer them. Disclaimer: Mutual fund investments are subject to market risks. Please read all scheme related documents carefully before investing. This show is for informational and educational purposes only and should not be construed as investment advice or a solicitation to invest. Please consult your financial advisor before making any investment decisions.
Does gold have a place in your portfolio?
03-08-2021
Does gold have a place in your portfolio?
Gold is probably one of the most controversial and perplexing asset classes. Some well-known investors like Warren Buffett call it useless while other investors take the middle path and recommend small allocations. As for investors, they often struggle to think about it in a portfolio construct. So we caught up with Chirag Mehta, senior fund manager at Quantum Asset Management who also manages the Quantum Gold Fund.  In this conversation, Chirag talks about:  His journey into the marketsHis perspective of what happened in the markets last yearWhat moves gold pricesWhy do Indians love gold so much?Historical performance of gold in India vs equities and bondsPros and cons of various gold options like physical gold, gold ETFs, Sovereign Gold Bonds, Gold Mutual Funds etcWhat roles gold plays in a portfolioHow much to invest in goldHis thoughts on some popular arguments against investing goldCentral banks actions and their impact on gold going forwardHow do Indian gold ETFs and Mutual Funds manage their gold, where do they store it, safety measures etcThings to keep in mind when picking gold fundsHis personal investment philosophySome unique stories from his careerSome reading recommendations You can explore gold mutual funds on Coin and gold ETFs on Kite.  If you have any questions about investing in gold, you can post your queries here and we'll answer them.  Disclaimer: Mutual fund investments are subject to market risks. Please read all scheme related documents carefully before investing. This show is for informational and educational purposes only and should not be construed as investment advice or a solicitation to invest. Please consult your financial advisor before making any investment decisions.
Introduction to personal finance with Rishad Manekia
25-06-2021
Introduction to personal finance with Rishad Manekia
Millions of new investors have started investing post-pandemic, and this is a good thing. But given that the returns in the past year have been spectacular, many new investors continue to make the same old mistakes and have wrong expectations. They tend to take the basics for granted. While pretty much anything investors do will work out in a bull market, these mistakes can come back to haunt them when the markets take a turn for the worse. We've spoken about how to think about investing, how to pick mutual funds and build a portfolio (part 1, part 2) in previous episodes but not much about personal finance. So we caught up with Rishad Manekia of Kairos Capital. Rishad is a Registered Investment Advisor and helps people simplify their personal finances. In this first of a 2 part series, Rishad gives you a blueprint of sorts on the basics of personal finance so that you can start your investing journey on the right foot.  In this conversation, Rishad talks about: The right mindset for investorsThe first step in personal financeHow to budgetHow to set goalsHow to invest for short term and long term goalsFiguring out the right asset allocation for various goalsBasics of insuranceHow to manage your behaviour during bad market phasesHow to review and maintain your personal finance planThe most common mistakes he sees investors make Do check out the personal finance chapter on Varsity, and If you have any questions about personal finance, please do post them here.