Why Are Mutual Fund Investors Pissed?

Why Are Mutual Fund Investors Pissed?

Mutual Fund investors are vexed at the NPCI as its newly adopted system resulted in the piling up of orders. As a result, investors missed out on potential gains in the post-budget market rally. Investors are even demanding compensation for the potential gains! Let’s find out what happened.

Crux of the Matter

The Hitch

  • National Payments Corporation of India (NPCI) upgraded its system on January 31.
  • Since then, issues with the implementation of Mutual Fund orders started popping up.
  • Money is deducted through the digital gateway but units ordered by MF investors are either received late or not received at all.

What’s The Issue?
Step A
With increasing volume requirements and industry demands, NPCI updated its National Automated Clearing House (NACH) infrastructure on Jan 31. The NACH mandate deducts money from the investor’s account & then transfers it to the MF Scheme.

Step B
The planned migration was not implemented successfully. The amount was deducted without the units getting transferred to the account.

Step C
The upgradation coincided with SEBI’s new Net Asset Value (NAV) rules from February 1. SEBI’s new rules for orders above ₹2 lakh allow for the allocation of assets only when the fund leaves the bank settlement account and hits the Asset Management Company’s (MF issuer) account.

Step D
Hence with the persisting glitch, approximately 5 – 7 lakh transactions have piled up at payment gateways. Moreover, Sensex and Nifty have gained about 9 – 10% since Union Budget, making Mutual Fund investors more restless.

Who Is Accountable?
Side I:
The Mutual Fund investors are seeking compensation from fund homes on lost income for not receiving unit allotments on time.
Side II:
The fund home CEOs claim that unit allocation was not possible since the Mutual Fund never received the money.

Parties Involved

  • Investor’s Financial Institution.
  • Mutual Fund & its Payment Gateway
  • NPCI

Status Quo
NPCI released a statement that it is working with fintech companies and banks to resolve the glitch in its upgraded clearing system.

  • The first modern investment funds were established in the Dutch Republic. In response to the financial crisis of 1772–1773, Amsterdam-based businessman Abraham van Ketwich formed a trust named Eendragt Maakt Magt (“unity creates strength”).
  • At the end of 2019, mutual fund assets worldwide were $54.9 trillion, according to the Investment Company Institute.
  • The Vanguard Group, Inc. is an American registered investment advisor based in Malvern, Pennsylvania with about $6.2 trillion in global assets under management, as of January 31, 2020. It is the largest provider of mutual funds in the world.

Trading Card Games: Are Your Childhood Toys Worth Millions Today?

Trading Card Games: Are Your Childhood Toys Worth Millions Today?

Trading Card Games (TCG) have come out as an alternative investment option in recent as card games are rapidly moving online and collectibles or physical cards are becoming a rarity. Let’s see what they are and how can you value them. Go fetch your old Pokémon deck and see if it can fetch millions.

Crux of the Matter

Trading Card Games (TCG)
Trading Card Games (TCG) are types of card games that mix strategic deckbuilding elements with features of trading cards. Games are commonly played between two players with rules as per the specific TCG franchise. Due to the increasing popularity of digital versions of these games, the collectible aspect of the physical cards has grown over the years which has resulted in a new form of high-end collectibles/investment opportunity.

Methods To Collect Cards

  • The first way to collect cards is by opening booster packs that contain a limited number of cards out of a large pool and is highly based on luck for the collectors/players to pull out their desired card.
  • The second way is by trading/buying them from other players. This option has resulted in a new market. Pokemon and athlete cards are the most popular and traded amongst all.

Although the majority of these cards are made to be played with, a few of them are seen as investment opportunities by collectors around the globe.

Why Do People Invest In Them?
These cards don’t hold any actual value but have appreciated in value over the years due to their rarity and the sentimental values held by them. Just like bitcoin, such investments are part of a very niche asset bubble and will drop down to 0 value once everyone loses interest in them. Although for TCGs, it is comparatively hard to burst such bubbles because of their popularity.

How Is The Value Measured?
The value of a card is generally determined by the following factors:

  • Rarity – If fewer cards are in rotation then the value is estimated to be higher and vice versa.
  • Condition – What is the condition of the card? A card with scratches may not fetch much value.
  • GradeBeckett Grading Services and Professional Sports Authenticator (PSA) are 2 of the major grading services. These companies provide grades to specific cards if submitted to them. “Higher the grade, higher the value”
  • Recent Purchase – The value of any particular card is directly affected by the sales of the same cards in the open market.

Should You Invest?
Nowadays items like sneakers, merch/collectibles autographed by celebrities, and iconic products in factory sealed packaging – For example, the first iPhone or Classic Nintendo Consoles like NES, etc. have great potential for increment in its value in future.

Now one should only invest TCG if you are genuinely interested in the commodity and it won’t affect you financially if it drops down in value. If you are looking at these just as an investment and not actual collectibles then such markets are never suggested as an investment opportunity over traditional and safer options.

  • The famous American reality television series, Pawn Stars, declined to buy a set of Pokemon TCG cards collection in 2017 for $500,000. The same collection is worth more than $5 million today. The video posted by the show on the internet went viral and is often credited for appreciating the card collection market in the subsequent years.
  • T206 Honus Wagner baseball card is worth millions today because Wagner refused to allow the production of his baseball card to continue, either because he did not want children to buy cigarette packs to get his card, or because he wanted more compensation from the ATC. The ATC ended production of the Wagner card and a total of only 50 to 200 cards were ever distributed to the public, as compared to the “tens or hundreds of thousands” of other T206 cards.
  • A media franchise is a collection of related media in which several derivative works have been produced from an original creative work of fiction, such as a film, a work of literature, a television program, or a video game. With revenues over $100 Billion since its inception, Pokemon is the world’s most valuable media franchise ever.

How To Invest In Google, Amazon, Facebook, Tesla, Netflix?

How To Invest In Google, Amazon, Facebook, Tesla, Netflix?

Indian citizens have now been provided with the prospect of investing in the US stock market at affordable prices, with platforms also emerging from the Indian market. Let us understand how to invest in US giants like Google, Amazon, Facebook, etc.

Crux of the Matter

Limitations On Investing In US
Several limitations exist for Indians desiring to invest in the US stock market. Besides high commission fees, the major limitation occurs in the prices of the stocks, which seem high rates when converting the US Dollar into Indian Rupees.

Emerging Platforms
Several platforms for investing in the US market like Stockal and Vested Finance have emerged in India in recent times. Because stocks in dollar prices are expensive, these companies offer investment in Fractals – fractional units of expensive stocks. Indian investor can invest in parts in American stocks. Just as you buy 1/25th of a Bitcoin, you can now buy 1/10th or any fraction of American stocks.

Several platforms have also initiated the “zero-commission” trading. These firms levy only 1 time charge while opening the account, and make the rest of the trading free of cost.

Indian Platforms Stepping Up
Zerodha, India’s largest stock trading firm, recently announced its plan to offer Indian customers the facility to invest in the US stock market. One of the major defining features of Zerodha would be that it will not implement any minimum limit on the investment.

Steps To Invest In Google, Amazon, etc.
The emerging platforms have eased up the process of investment and registration. Following are the major steps involved:

  • Completing KYC (Know Your Customer) requirements to open a trading a/c.
  • Submit Liberalised Remittance Scheme (LRS is a route that allows Indians to invest up to $250,000 in foreign assets) which is generally available on the Trading platform form to your bank.
  • After bank approval, transfer funds from your bank a/c to trading a/c.
  • Use the fund in trading a/c to buy US shares.
  • Amount after selling shares is credited in your trading a/c – this amount can be transferred to your bank a/c in 2-4 days.
  • As of 2019, Zerodha is the largest retail stock broker in India by active client base, and contributes upwards of 2% of daily retail volumes across Indian stock exchanges. In June 2020, Zerodha entered the unicorn club with a self-assessed valuation of about $1 Billion.
  • Ashton Kutcher is an American actor, producer, and entrepreneur. Although known for his acting career, Kutcher is also a venture capitalist. He is a co-founder of the venture capital firm A-Grade Investments. Kutcher has investments in over 60 companies, the most prominent of which include Skype, Foursquare, Airbnb, Path and Fab.com.
  • Andy Bechtolsheim is a German electrical engineer, entrepreneur, investor, and self-made billionaire. He later became an investor, providing Sergey Brin and Larry Page with their first round of funding, a $100,000 investment in 1998 before the two had even incorporated their company, Google.