Picture this: You’re at your favourite bakery, and you overhear that a celebrity is about to place a massive order for your favourite pastries. You rush to buy them all up before the celeb can, hoping to sell them back at a premium. That, in essence, is front running in the financial world.

We discuss how people pull off this trick and, more importantly, how they get caught.

(Spoiler alert: it’s not as glamorous as a Hollywood heist)

Axis Mutual Fund had their share of front running drama not too long ago. Traders making big bucks, splurging on luxury pads and flashy cars—sounds like a plot from "The Wolf of Wall Street”. We’ll break down the fallout and the lessons learned.

Currently, Quant Mutual Fund is going through allegations about front running.

How do you, as an investor, make sense of these allegations and decide on your next move?

Should you hold onto your Quant Mutual Fund investments or start thinking about an exit strategy?

We talk about all this and more in our latest episode of Capitalmind Podcast.

Recently, the mere hint of an inheritance tax proposal sparked a mini-political crisis? Thanks to a quick government rebuttal, it’s off the table—at least for now. But that’s not where the story ends.

As always, Deepak and Shray go head-to-head, weighing the merits and pitfalls of this hot-button issue.

We’re not just looking at the problem from 30,000 feet; we’re getting into the weeds, examining real-life scenarios and potential solutions that could impact you and your future.

Government Finances: Can an inheritance tax significantly boost government coffers? Or is it just another drop in the ocean of fiscal needs?

Societal Impact: Will taxing inheritances create a more industrious society, or will it just penalise those who’ve worked hard to create wealth for their children?

Implementation: What if we set the bar high, say at 100 crores or even 1000 crores? Would this make the tax more palatable and targeted?

Practical Hurdles: Imagine inheriting a house or a business. Sounds dreamy until you hit the wall of unrealised gains and logistical nightmares. We’re peeling back the layers on these challenges.

Future Planning: If you’re expecting a windfall 5 or 10 years down the road, how should you plan your finances today? Spoiler alert: It’s not as straightforward as you might think.

So, grab your headphones and tune in. Whether you’re a financial novice or a seasoned investor, this episode promises to challenge your thinking and maybe even make you laugh along the way.

Timestamps:

00:00 Introduction and Disclaimer

01:25 Should we have an inheritance tax?

07:36 What if inheritance tax is imposed solely on the wealthy?

15:42 Creating a Trust to offset tax

25:04 Are there significant practical difficulties associated with inheritance tax?

35:08 Doesn't implementing an inheritance or wealth tax help reduce asset prices or control inflation?

42:58 How should one prepare for potential inheritance taxes in the future?

In this comprehensive discussion, Fund Manager and Head of Research Anoop Vijaykumar and Shray Chandra distil the key lessons from over five years of managing the Capitalmind Adaptive Momentum portfolio.

Get a concise overview of the principles of momentum investing driving the portfolio’s success.

Learn from our real-world lessons on why momentum investing works for long-term wealth creation

00:36 Introduction

01:54 Momentum strategy in the last 5 years

03:30 Difference between the fundamental and quantitive styles

08:00 Random correlations when backtesting a quantitive strategy

10:30 Capitalmind Adaptive Momentum strategy

15:05 Why does momentum investing work?

18:54 Lessons learned from 5 years of managing momentum strategy

26:00 Will momentum stop working

29:30 How can we get more out of the momentum strategy?

Have you ever wondered why finance seems to have a forgiving nature?

From the sins of the past being easily forgotten to the belief in second chances, we'll explore the nuances of forgiveness in the financial realm.

We'll dissect the tactics some "for education purposes only" players use to enrich themselves at the expense of their students. It's a sobering reminder to always question the motives behind the message.

We uncover the darker side of startup culture, where founders blur the lines between innovation and exploitation. It’s a cautionary tale for aspiring entrepreneurs and investors alike.

Deepak & Shray, in their quintessential style, discuss nuances of investing and finance in this latest episode of Capitalmind Podcast.

Show Notes & References

Ever wondered why circuits are in place?

It all started on Black Monday in 1987, where a 25% market correction prompted the introduction of market-wide circuit breakers in the US. These limits aimed to ensure market maker solvency and prevent panic-induced trading.

Fast forward to 2001, and India also introduced circuits to handle intraday market volatility. From the Nifty's inception to the imposition of index-level circuit filters, the Indian market landscape has witnessed a steady evolution in its approach to market regulation.

In this episode, we delve deeper into the concept of circuits, with real life stories and understand how they help the market.

We also discuss, should circuits continue to exist in their current form? or is it time to explore alternatives that foster greater transparency and resilience?

Show Notes & References

00:00 Introduction and Disclaimer

01:24 Background on limits or circuit breakers.

06:38 When did India implement the circuit breaker?

09:20 What are the current rules for circuits in India?

15:58 Why are circuits interesting in the first place?

19:07 What would happen if circuits weren’t there?

24:38 Some interesting stories on circuits in the stock market

36:34 What is a better way to manage circuits?

40:47 Will circuits continue to exit?

In today's episode, we delve deep into the recent actions taken by the Reserve Bank of India (RBI) towards the end of 2023 and the ensuing ripple effects they've set off.

The RBI, often the silent architect of our financial landscape, has made strategic manoeuvres that reshape the terrain for banks, non-banking financial companies (NBFCs), and borrowers.

Discover how these regulatory shifts could impact financial decisions and the broader economic landscape. From the nuances of risk weights to the implications for personal loan growth, this episode promises to demystify the complex world of financial regulations in a digestible and engaging format.

Here is a quick overview of what we talk about:

• We unpack the RBI's directives regarding risk weights and the restrictions placed on simultaneous lending and investing activities by financial institutions.
• Dive into how startups offering digital lending products, like CRED and Paytm, are affected and the challenges they face under the new regulations.
• Explore why your credit card limits might be scrutinised and how conflict of interest rules reshape lending dynamics.
• Understand why the RBI's focus on Alternative Investment Funds (AIFs) matters and how it impacts investors' portfolios.
• Debate whether these measures reflect a proportionate response from the RBI and what they suggest about the current state of our economy.

00:00 Introduction and Disclaimer
01:34 Deepak demystifies the two new regulations by RBI on Banks and NBFC
05:37 What’s the impact of these new regulations? Why should we care?
16:05 Why is RBI more concerned about personal loans?
24:54 Why aren’t you positive about the RBI action here? What’s wrong with the slowing loan growth?
32:20 If Startups are ready to take the risk, why is RBI stopping them?
45:14 Even after this bull run, why isn’t there lending against securities?
52:11 RBI has a new rule prohibiting Banks and NBFCs from evergreening loans through AIFs.
01:03:51 Is this a warning, a sign that the economy is over-heating?

Join us on Capitalmind Podcast, where we demystify the world of finance without the jargon. In today’s episode, talk about the asset management industry in India and what’s in store for the future.

Now get this - Mutual Funds own only 8% of Indian companies, while retail investors own 9%.

Let’s rewind. In 2005, despite impressive returns, MFs didn’t gain much attention due to high fees and the lack of tax advantages. Fast forward to 2018, capital gains and dividend tax changes sparked a surge in MF investments, increasing their ownership to 8%.

Explore the shift in India’s financial landscape – changing disposable incomes and tax adjustments have made MFs more attractive. The “MF Sahi Hai” mantra and the success of Systematic Investment Plans (SIPs) further contribute to their rise.

Regulatory improvements play a role, but we also discuss other investment vehicles – MFs, Portfolio Management Services (PMS), Alternative Investment Funds (AIFs), and more. Understand the evolving dynamics and where your money might fit best.

We dive into comparing investment vehicles and their equivalents in the US. Spoiler alert: India’s investment culture is rising, embracing the expertise needed to manage money with relatively low costs and instant liquidity.

Is passive investing becoming the norm? Not quite yet. We need more institutional capital for that shift.

We end the episode trying to connect the dots and see what the future of this industry may look like.

References

00:00 Introduction and Disclaimer
01:15 How is the money divided among different vehicles in the asset management industry?
06:36 Why do Mutual Funds have a lower ownership in Indian companies (8%) compared to retail investors who own 9%?
20:21 What are the downsides of investing in Gold and Real Estate?
27:40 Are we just one crash away from everyone turning away from equity?
34:38 Given that we have a savings culture, will investing grow faster in the future?
40:42 Which type of investment is good for whom?
44:53 Mutual Fund Vs Direct Stock Investing: How are things different in India and the US?
01:02:46 The future of the Asset Management industry in India.