Editor ’ s Letter
Making the most of disruptions
It ’ s all about costs
High charges can eat into returns , so it is important to evaluate what you are paying for
Malini Bhupta malini @ outlookindia . com
For nearly two decades , Outlook Money has brought you best-in-class personal finance coverage and we will continue to do that , but we will look at it through the prism of disruption that the financial services industry faces and implications for investors and customers . We will bring you features and analysis that will help you take informed decisions — and this , we will do fearlessly .
Given that existing business models are being challenged at every level , we will look at these shifts closely . For example , new-age fintech companies and their offerings are challenging lenders like never before , while some low-cost products are set to impact existing distribution models . In the current issue , we have endeavoured to put the spotlight on such trends . In this issue , we look at fintech companies that offer quick and easy loans to Millennials against their salaries , so that they can deal with the month-end cash crunch .
While some disruptions are driven by technological changes , others are driven by regulators and market maturity . Our Cover Story on Exchange Traded Funds / Index Funds is about one such disruption that is going to take the asset management industry by storm in times to come . For the first time equity investor , low-cost exchange traded funds ( ETFs ) are an ideal vehicle to enter the markets . These funds have always been around in India but they have gained traction only after the Labour Ministry allowed the Employees Provident Fund Organisation to invest a part of incremental flows in the market through ETFs . Given that equity ETFs simply track indices like the Sensex or Nifty , investors have to pay less than 50 basis points as management fee . Chances are your mutual fund distributor will never recommend an
ETF to you because there is little incentive for him to do so . But we put the spotlight on ETFs this time .
Globally , passive investment funds are bigger than actively managed mutual funds . Back in 2007 , Warren Buffett publicly wagered a bet that the S & P 500 Index would outperform the hedge funds over a 10-year period . In his letter to investors he wrote , “ I then sat back and waited expectantly for a parade of fund managers to come forth and defend their occupation .” Buffet won the bet ahead of schedule . ETFs are the new game in town for Indian investors too .
Talking of the big shifts , the equity cult is truly spreading far and wide after last year ’ s move to demonetise `500 and `1000 currency notes . OLM ’ s Preeti Kulkarni has delved deep into this trend . The rush of money into equity MFs is coming from small towns where first-time equity investors are betting big . Kulkarni says : “ Even as first-time investors claim to have the appetite to stomach risks in the short-term and stay invested , their faith will be truly tested in volatile market conditions .”
We are also introducing Morningstar ’ s Fund Review from this issue to help you select the best mutual funds . We have also brought back our ‘ Stock Pick ’ section on readers ’ demand . And in our Smart Money section , we get you money lessons from celebrities . This time actor Vidya Balan shared with OLM her money mantras and mistakes .
Last , but not the least , we have introduced new design elements to make OLM more reader-friendly . Here ’ s hoping you all like the new design elements and info-graphics . Watch this space for more !
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Outlook Money December 2017 www . outlookmoney . com