The markets seem to be in no mood to reward investors who are unable to read the present trend accurately. Actually, they broadly never do. Understanding market trends has always been crucial when it comes to creating sustainable and consistent wealth from the markets. Experienced investors who have been active in the market for long will tend to conclude that markets move in themes. Different themes and sectors outperform in different market conditions.
It becomes essential that the underlying themes are ‘well understood’, and most importantly, ‘grasped timely’ by the investors to outperform market returns. PSU stocks as a theme seem to be promising currently in a seemingly wobbly broader market scenario. The recent rally in PSU stocks is heartening for investors as these stocks as a group has been disappointing investors for quite a long time. The below table highlights the underperformance of the NSE PSE index vis a vis the Nifty over the past one year.
The underperformance of the PSU stocks goes far beyond the past one-year period. The past 5-year returns of the S&P BSE PSU TRI index are flat, ie a meagre 0.07 per cent on an annualised basis. The returns over the past 3-year period (annualised) have been actually negative (-0.32 per cent)/flat while over the past one-year period, the index has generated a 4.94 per cent return. The Sensex returns over these time frames have been far superior. If one were to take the mutual fund route to PSU stocks, the performance still is not impressive. The below table highlights the relative performance of the SBI PSU Fund, the Sensex, and the S&P BSE PSU Index, which clearly reflects the stark underperformance of the fund to the indices over the past 3 and 5 year time frames.
This story is from the November 25 - December 8, 2019 edition of Dalal Street Investment Journal.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the November 25 - December 8, 2019 edition of Dalal Street Investment Journal.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Does AUM Size Matter?
Investors generally focus on a fund's past returns. They think that a larger fund is better. On the flip side, some investors raise concerns about whether a fund can sustain its strong performance after growing to a substantial size. What is the reality? Rakesh Deshmukh takes a closer look at the scenario
Base Rate Investing: The Smart Investor's Secret
Base rate investing offers a distinct advantage to investors encouraging them to look beyond the noise and focus on underlying fundamentals and longterm trends. The article explains how by understanding and applying this strategy effectively, you can make informed investment decisions and potentially outperform the market over time
Back To The 'All is Well' Feeling
Domestic indices hit record highs on the back of robust performance in real estate, power, metals and automotive sectors
Should Commodity Funds Be Part Of Your Portfolio?
Commodities serve as tangible assets that offer investors a means to engage with the real economy and provide a degree of insulation from financial system disruptions. In this scenario, multi-asset allocation funds represent a more efficient vehicle for commodity exposure compared to hybrid schemes. Here are the details
Asset Allocation & Diversification
Remember, when you diversify your investments, you minimise the chances of suffering from what is known as 'single security risk', or the risk that your investment will fluctuate widely in value with the price of one holding.
Ten Commandments of Wealth Creation
Financial Planning
Gold Glitters Amid a Narrow Range Trading
Over the last two weeks, the commodities market displayed cautious activity with investors trading within narrow margins, eagerly awaiting pivotal economic data and insights from Federal Reserve officials.
Can Global Equities Sustain the February Momentum?
Even though the markets touched new highs in February, they did experience some challenges, notably in the bond sector, which faced difficulties due to an uptick in interest rates.
"Future outlook of railways and railway wagons industry appears promising"
Umesh Chowdhary Vice Chairman & Managing Director Titagarh Rail Systems Limited
Metals and Mining: Poised For A Steely Performance
While investors were drawn to the impressive rally in metal stocks, the recent interim budget indirectly bolstered the metals industry with substantial announcements in infrastructure, real estate, defence and railway sectors, which are known for their extensive use of metals. Mandar Wagh explores the future prospects of the industry, analysing financial performance, risks and growth triggers