Thematic funds – Performance tracing with a narrative

Sure you have come across the terms sectoral fund and thematic fund, often used loosely by investors. But they are not the same. While a sectoral fund invests in a particular industry sector, thematic fund can invest in diverse sectors around a particular opportunity or a business ‘theme’. 

A thematic fund is an equity mutual fund that invests in stocks around a theme that could be infrastructure, commodity, rural India, international etc.

They tend to be attractive to retail as well as institutional investors, who often call it ‘performance tracing with a narrative’. These funds come with a great story and a bunch of stocks that generate impressive returns.

Investment approach

Consider this: A fund manager or an asset management company (AMC) identifies growth potential or consumption boost in a particular theme, say opportunities in real estate/housing. The AMC may launch, say, a ‘Housing Opportunities Fund’ that will invest in a range of sectors like housing finance, consumer electronics, cement, banks, steel, power and more.   

A thematic fund can invest across different sectors and market caps (large cap, mid cap, small cap) as long as it conforms to the housing theme. The minimum investment in equity and equity-related instruments of a particular theme should be 80% of the asset under management (AUM), mandates SEBI. 

Thematic funds use a top-down investment approach. For a particular theme, the asset manager first takes a broad view of the economy and markets, including global trends. If there is enough opportunity, the asset manager or AMC begins to investigate related sectors and individual stocks to invest.

Common thematic funds

1. IT or Digital Funds

2. Pharma Funds

3. MNC Funds

4. PSU Funds

5. Dividend Yielding Funds

6. Infrastructure Funds

Advantages

Thematic funds are all the rage, ever since the pandemic ebbed and the markets returned to high growth path. Recent news reports indicate returns of thematic funds, such as public sector undertaking (PSU), infrastructure, consumption and information technology fared well, compared to the large-cap fund category in the past one year. Analysts say, these funds are cyclical in nature and have given higher returns during the period.

High returns for each ‘theme’ have respective opportunity factors. For example, attractive valuation and hope for privatisation have led to major rerating in PSU stocks. The government’s infrastructure push has led to a rally in the sector. The technology sector, despite corrections, continued to remain one of the top performers in the past few years. Growth opportunities, as such, make thematic funds attractive to long-term investors.

Thematic funds also have some inherent advantages compared to sectoral funds and mutual funds that follow conventional investment strategies. As we already know now, a thematic fund is more diversified than a sectoral fund, having its investments diversified in several sectors and not just in one.

Most importantly, it offers an investor the opportunity to invest in theme-related sectors that have a high growth potential.

 Here’s more:

>Since thematic funds invest in stocks and sectors that are closely related in their business scope, the fund is more focused and easy to track

>Since thematic funds carry a high degree of risk, they are likely to deliver high capital appreciation in the long-term

>Since certain themes like information technology (IT), robotics, EVs, renewable energy and the sunrise sector projects significant growth potential, retail investors can take the advantage of early investment. One can increase allocation in these industries/themes by taking higher exposure in relevant themes if convinced with the improving environment for the industry.

Disadvantages

>Thematic funds are more volatile and riskier than the conventional equity funds

>Portfolio diversification is an essential part of effective investment strategy. But thematic investments can make investors put too many eggs in one basket and lose sight of portfolio diversification

>Thematic opportunities, if misinterpreted by the fund managers (who are caught up in their idea of what will be the next big trend), can lead to losses

>Yes, a lot depends on the tactical approach of fund managers. Best returns from thematic investment depend on the fund managers’ market timing. Unless stocks are bought low and sold high, thematic investment cannot offer the expected results

>Often performance-chasing by retail investors is negative for thematic funds. This is because most of the time when investors enter certain theme, valuations have already peaked and the fund has turned expensive

>Most retail investors lack the knowledge, research capability and temperament to sustain the volatility associated with thematic investments. As such, analysts suggest that novice retail investors should avoid thematic funds and stick to vanilla diversified funds

>The more exotic a fund gets, costs tend to rise, because things may not be competitive in those niches. So, an investor ends up paying more expense ratios. 

Digital marketing: Driving sales while sailing through turbulence

As the world today is pushed into extended lockdown and social distancing to combat the Covid-19 pandemic, digital media has assumed a central position in the marketing mix of companies. While companies today are not new to the digital space, digital marketing is the most effective tool at the moment to garner brand recognition, customer attention and support online sales when brick-and-mortar touchpoints are shut. It has now moved beyond handling a few sales channels to connect marketing to the business goals of a company. As the internet became integral to our lives, here’s how digital marketing has proved to be helpful for a range of businesses:

 

Retail and supermarket chains

Despite the surge in e-commerce, according to an estimate, in-store sale accounted for 90 per cent of all retail sales in the US in 2017. But it all changed with Covid-19 pushing traditional stores and marketing efforts out of the picture.

Retail giants have redesigned their product catalog for online-only sales while also working with hyper-local delivery services to stay cost-efficient and cut down on delivery turn-around time. Their mobile apps are updated quickly to interact with customers virtually as well as driving sales. The applications include product information, launch announcement, real-time status of delivery and more. 

For example, in the absence of brick-and-mortar stores, Indian retail giants Big Bazaar and Spencer stuck to their omnichannel marketing during the pandemic to ensure an effortless buying experience for consumers. Others added grocery delivery to their service and leveraged insight from the Pandora’s Box of their consumer data to deliver a personalised shopping experience online.

 

Food delivery service

With people stuck indoors, food delivery services have witnessed a surge like never before. Since restaurants and food-courts are not an option anymore, people are turning to delivery to treat themselves at home. On-demand food delivery services like UberEats in the USA and Swiggy in India have been using the social media platforms to reach out to customers about new offerings, reduced delivery turn-around time and contactless delivery options.

Others in this category are also leveraging the prospects of emerging cloud kitchen businesses with digital advertising and interactive content to monetise their last-mile reach.

When it comes to digital campaigns, it’s possibly the best time to tell a story with an emotional trigger. Indian food delivery service Zomato celebrated Mother’s Day amid the lockdown this year with a digital campaign focused on mothers who dedicate so much time cooking delicious food for their kids. It was aimed to strike a chord with customers by emphasising on realisation of a mother’s love for her children with #OrderForMom.

Ed-tech

Akin to food-tech companies, ed-tech majors also witnessed a significant increase in the number of new students enrolling on their platforms since March 2020 — students are now more dependent on online learning than ever before.  

Ed-tech players like BYJU’S, Unacademy, UpGrad in India know what the Gen-Z and their parents want and tweaked their digital marketing strategy on this two-pronged approach. Not surprisingly, their digital campaigns, social media marketing and market research paid off better than other intrusive channels (like SMS and emails) to expand the student base.

As most schools and universities are likely to be closed for the remainder of the academic year, the new-age platforms are allowing students to take up from a range of courses like university-certified MBA to diploma programs at a competitive cost. In fact, most ed-tech players are now offering free access to their platforms, content and live classes for students as a part of their user acquisition strategy.

 

Healthcare

Be it a solo practice, small clinic or a multi-specialty chain, services are the product for healthcare players. But a responsive website, Google Adwords campaigns and SEO tactics may not be adequate during an uncertain time like this. Healthcare companies and start-ups are turning to social media to share professional knowledge regarding healthcare — the aim is to attract customers, build trust and drive awareness as a part of their digital marketing strategy.    

Beyond localised organic marketing (SEO), players in the healthcare industry are also using their Covid-capabilities as lead generators for other specialised service lines, create digital access-points for elective procedures and specialty care, as well as catering to the increasing demand for online medical content. Multi-channel initiatives like engaging with chatbots can be preferable to some customers, while others may choose Twitter or Facebook page to interact with the brand. Digital marketing tools like information blogs, educative video contents and interactive touch-points for customers can also overshadow traditional marketing in these uncertain times.

Future of personal transport will be fuelled by thrill

Your ride to the office or even a pleasure trip will be faster, higher and more energy efficient

CityAirbus

It is a multi-passenger, autonomously piloted electric flying car concept that can take-off and land vertically (VTOL). CityAirbus is designed to carry up to four passengers over congested megacities to places like airports or train stations in a fast and environment-friendly way. Its integrated drivetrain includes eight propellers that deliver exceptional torque-to-weight ratio. Its first flight is scheduled for the end of 2018.

 
Malloy Hoverbike helicopter

Hoverbikes are coming to take motorbikes off the roads. You can ride the Malloy Hoverbike or make it fly autonomously, deliver aid, transport people and equipment over buildings, rivers and mountains. It has a payload capacity of 130 kg, can reach an altitude of 9,000 feet and can fly at a speed of more than 100 knots, or about 185 kmph.

Jetman wing

Get ready to fly off like a superhero in a new breed of solo flying machines. If the jet-powered carbon fibre wings invented by Swiss aviator Yves Rossy go commercial, you will soon be able to fly through the skies. Powered by four miniature jet engines, this wing unit can hit speeds of up to 300 kmph.

Plimp airship

The passenger version of Egan Airships’s Plimp (Model J) can carry up to eight passengers and cruise at a speed of 100 kmph. The unmanned aircraft systems (UAS) can manoeuvre and move quickly like fixed-wing aircraft, hover and vertically take off and land like a helicopter. It uses partial lift by helium, which is not flammable, and partial lift by its rotational wings. Turn the engines off and the Plimp gently floats back to the ground.

Tesla Roadster

Autonomous cars are on the horizon, but none can beat the 2020 Tesla Roadster, which can go from zero to 96.5 kmph in 1.9 seconds. Apart from its record-setting acceleration, the Roadster has a range of 997 km with one charge and a maximum speed of 420 kmph. It stores a removable glass roof in the trunk for an open air, convertible driving experience.

Silent 55

The future of sailing is not going to be dependent on wind or fossil fuels. An e-power catamaran, Silent 55, promises an unlimited range on the high seas. It is powered by solar energy and can cruise up to 100 nautical miles a day. Inside, you can watch TV, run air-conditioning and produce up to 2,000 lts of drinking water per day.

All that’s fake on the internet

Fake news is just the tip of the iceberg. The truth is, the internet is full of lies and you need a keen eye to segregate the bogus from the bona fide

Job offers

Fraudulent job emails usually don’t have detailed information about the role, company and package. Also, if an offer asks you to pay for an appointment or interview, it’s fake. No employer asks for money in the name of security deposits in advance.

Social profiles

Social media influencers often grumble about fake profiles. But they are not difficult to identify — a fake profile will have a stock image or no image, not many friends, lack of activity in the platform and too many or too few followers. Then there are bot accounts that are fake voters with loud opinions or obsessive re-tweeters.

Products

Do you know one among four products in your shopping wishlist at an e-commerce site can be counterfeit? Irrespective of what you intend to buy, compare the product with the one listed on the brand’s official website, and look for the assurance tag on the product to ensure it’s genuine. Also, avoid products offering heavy discounts.

Reviews

Fake reviews are nothing new on hotel, restaurant, book and e-commerce sites. But they can be damaging. Unlike genuine reviews that contain words specifically relating to the place or product in question, the fake ones are vague and include repeated use of same words or marketing terms. Questionable grammar and the use of superlatives are also signs of suspicious reviews. 

Apps

Fake mobile apps mimic the look of legitimate applications to trick you to install them. Once installed, they tend to perform malicious actions. Such apps are usually hosted on third-party app stores. If you come across apps in the App Store and Play Store that are crowded with ads, then stay away. You should also check all app permissions carefully.

Scareware

Unlike malware or spyware, scareware pretends to be real security protection and then tricks you into paying to clean up infections it claims to have detected. To avoid falling into the trap, install a decent anti-virus, avoid visiting dubious web locations, and if a fake ransom demand popup refuses to leave your screen, call its bluff by killing the browser using Task Manager.  

Emails

We are all introduced to fake or phishing emails where the sender is ‘fishing’ for our personal information. And they are not difficult to identify as well — just ‘report spam’ if you receive an email with impersonal greetings like ‘Dear user’ or ‘Dear [your email address]’, or if the email asks you to click on links that take you to a fake website, contains unknown attachments or conveys a false sense of urgency.

Online surveys

The internet has hundreds of legitimate survey sites. Then there are the fake ones that invite people to take surveys. If a site offers outrageous incentives such as free vacations, expensive products or a lot of cash, it’s fake. Stay away from platforms that ask for your family or bank details or asks you to download software. And never share your frequently used email IDs.

Putting a price to ultra-rich family feuds

Mega-mansions, business jets, stake in companies and globe-toting — wealth is wow! But it can also drive in distrust and ugly litigations within the family. And sometimes, we can just put a price-tag to it. Here are some of the recent big bad family fall outs that left corporate India guessing...

Ambanis’ great divide

At stake: Rs 90,000 crore empire

Nothing can be bigger than the property feud between the India’s richest — Mukesh Ambani and his brother Anil Ambani. The dispute was settled after their mother intervened and arranged a de-merger. In 2005, following the split, Mukesh got Reliance Industries and the petrochemicals business, while Anil got Reliance Infocomm, Reliance Energy and Reliance Capital. While business feud continued and suits stretching to Rs 10,000 crore filed between the duo, the brothers are rarely seen speaking to each other.

Towering trouble for Raheja heirs

At stake: Rs 11,000 crore

Three months after real estate tycoon Gopal Raheja’s demise, the battle for his Rs 11,000 crore estate reached the Bombay High Court, with his two daughters and estranged son citing two different Wills, one drawn up in 2012 and the other five years earlier. In a revised will, Gopal Raheja had divided his stake in K Raheja Group equally between daughters Sonali and Sabita, leaving nothing for son Sandeep.

Hiranandani’s sibling rivalry

At stake: Rs 1,400 crore

Construction magnate Niranjan Hiranandani’s  daughter Priya Hirandanis-Vandrevala sought arbitration in 2009, claiming that her father and brother violated a business association agreement involving commercial rights to real estate projects. She asked for compensation of approximately Rs 1,400 crore, thereby raising business split speculations. The father and brother made a counter claim that the fight caused them to lose out on business opportunities.

Elder Pharma’s bitter pill

At stake: Rs 1,800 crore

The family of Elder Pharmaceuticals founder Jagdish Saxena, who died in 2013, has been embroiled in a battle for control of his personal and business assets. The dispute has pitched Anuj Saxena, the younger son who heads Elder Healthcare against the rest of the family — Alok Saxena, the older son, who is chairman and MD of Elder Pharmaceuticals, their mother Sneh and their sister Shalini.

Painting trouble for Mafatlals

At stake: Paintings worth Rs 50 crore

The Mafatlal family is no strangers to the courtroom. Sheetal Mafatlal, estranged wife of industrialist Atulya Mafatlal, had a theft complaint lodged against her (in 2011) by the Mafatlal family for several missing paintings, then valued at Rs 50 crore. After the dispute was resolved, the Bombay High Court allowed Sheetal to retain the paintings she was accused of stealing.

Singhania’s inheritance of loss

At stake: Unassessed

The four children of Vijaypath Singhania’s (chairman emeritus of Raymond Ltd) elder son Madhupati Singhania recently filed a case in the Bombay High Court challenging a ‘family settlement’ their parents and grandfather entered into in 1998, whereby their parents had given up theirs as well as their children’s rights over the ancestral properties. Singhania’s grand children sought their claim on the Raymond brand, ancestral properties, real estate and other movable and immovable assets of the group. 

# 'At stake' figures are estimated approximations, may not be accurate.