{"id":33,"date":"2020-07-01T09:35:05","date_gmt":"2020-07-01T09:35:05","guid":{"rendered":"http:\/\/43.252.88.115\/~dev\/shalibhadra\/html\/blog\/?p=33"},"modified":"2021-05-16T18:15:12","modified_gmt":"2021-05-16T18:15:12","slug":"alert-simple-algebra-required-for-understanding","status":"publish","type":"post","link":"https:\/\/shalibhadra.in\/blog\/alert-simple-algebra-required-for-understanding\/","title":{"rendered":"Alert – Simple Algebra required for understanding"},"content":{"rendered":"

It has been said that \u201cChange is constant in life.\u201d It is evident in our lifecycle. Life starts as an infant, to a school going kid, than to a college going teenager, to a family person and lastly to phase of retirement.<\/p>\n

All phases comes with a change which we accept as human being.<\/p>\n

When it comes to hard earned money, we question the rule of change. One must understand the importance of outperformance and underperformance. Let me explain the simple criteria considering current market situation.<\/p>\n

\n\n\n\n\n\n\n
<\/td>\nPre Covid<\/strong><\/td>\nFall From 100<\/strong><\/td>\nHence, Value Now<\/strong><\/td>\nOnce benchmark will regain 100<\/strong><\/td>\n<\/tr>\n
Benchmark<\/td>\n100<\/td>\n20%<\/td>\n80<\/td>\n25%<\/td>\n<\/tr>\n
Non performing scheme<\/td>\n100<\/td>\n25%<\/td>\n75<\/td>\nRs.94<\/td>\n<\/tr>\n
performing scheme<\/td>\n100<\/td>\n15%<\/td>\n85<\/td>\nRs.106<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

Why Portfolio Reshuffling is important?<\/strong><\/p>\n

    \n
  • Imagine a situation of index value at 100 before Covid situation.<\/li>\n
  • Due to Covid, Index falls from 100 to 80 (-20%)<\/li>\n
  • At the same time, a performing scheme is outperforming index and falls only -15%<\/li>\n
  • While an underperforming scheme is underperforming index and falls -25%<\/li>\n
  • In an hypothetical situation, Index recovers from 80 to 100 which is 25% growth.<\/li>\n
  • As the performing scheme fell less to 85 will become 106.<\/li>\n
  • And the underperforming scheme fell more to 75 will become 94.<\/li>\n<\/ul>\n

    Case here to prove is loss can be recovered by patience but underperformance cannot be recovered.<\/p>\n

    Mutual fund investors must review and reshuffle portfolios at different time horizons.<\/p>\n","protected":false},"excerpt":{"rendered":"

    It has been said that \u201cChange is constant in life.\u201d It is evident in our lifecycle. Life starts as an infant, to a school going kid, than to a college going teenager, to a family person and lastly to phase of retirement. All phases comes with a change which we accept as human being. When […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[36,35,13,21,11,18,3,17,34,22,37,29,30,32,31,38,5,14,16,8,6,10,2,4,12,9,39,19,25,27,23,26,28,24,15,40,7,33,20],"class_list":["post-33","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-asset-allocation","tag-bear-market","tag-best-fund-manager","tag-best-fund-manager-in-2021","tag-best-mutual-fund","tag-best-mutual-fund-sip","tag-best-planning-for-young","tag-best-sip","tag-bull-market","tag-committed-to-investor","tag-dynamic-asset-allocation","tag-financial-wisdom","tag-how-to-invest","tag-how-to-invest-in-mutual-fund","tag-how-to-invest-in-mutual-funds","tag-how-to-invest-in-this-market","tag-how-to-make-financial-planning","tag-how-to-select-fund-manager","tag-how-to-start-sip","tag-invest-for-future","tag-invest-with-financial-plan","tag-investment","tag-investment-for-young","tag-investor","tag-manager","tag-mutual-fund","tag-mutual-fund-india","tag-mutual-fund-sahi-hai","tag-select-best-fund","tag-select-best-mutual-fund","tag-select-best-scheme","tag-select-top-fund","tag-select-top-mutual-fund","tag-select-top-scheme","tag-sip","tag-sip-mutual-fund","tag-spend-less-and-invest-more","tag-star-fund-manager","tag-top-mutual-funds"],"yoast_head":"\nAlert - Simple Algebra required for understanding - Shalibhadra Mutual Fund Distributors LLP.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/shalibhadra.in\/blog\/alert-simple-algebra-required-for-understanding\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Alert - Simple Algebra required for understanding - Shalibhadra Mutual Fund Distributors LLP.\" \/>\n<meta property=\"og:description\" content=\"It has been said that \u201cChange is constant in life.\u201d It is evident in our lifecycle. 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