Strong Case for Global Diversification into U.S. bellwether index – S&P 500

NFOKey Attributes:

Efficient Market | Very Low Correlation | Global Exposure | Dollar Hedge

Fund in Focus:

Motilal Oswal S&P 500 Index Fund
(NFO Period: 15th Apr’20 – 23rd Apr’20 | Min. Amount INR 500 | Exit Load: 1% if redeemed in 3 months)


Long-term investing (indicatively 5+ years of holding period); hedge against domestic currency depreciation and/or global inflation; Efficient economy diversification

Descriptive Highlights

Efficient Market

S&P 500 is the world’s largest index which is tracked and benchmarked globally. With a long track-record of over 63 years, it has developed a respectable vintage among global indices.

Very Low Correlation

Very low correlation between Indian Indices & S&P 500 offers an opportunity to benefit from true diversification – a combination on assets which don’t move in the same direction (low correlation) offers optimal risk-adjusted  returns


Global Exposure

Historically, a large component of sales of S&P 500 constituent companies were contributed by regions & economies beyond U.S. This mix of true-blue multinational corporations offer the benefit and/hedge of global diversity thus ensuring limited dependency on the state of a single economy or nation to drive business growth. The index is an efficient mode to achieve global diversity.

Global exposure

Dollar Hedge

Allocating a percentage of overall portfolio to S&P 500 also offers cushion to the overall portfolio in the form of a  Dollar hedge. By far the USD is considered a strong currency and exposure to S&P 500 adds incremental value during stressful times when INR depreciates against USD.

Dollar hedge

stock market

Get to know more about Stock Market and Index

“Patience is the key element of success.”
-Bill Gates

What are the stock indices?

A stock index is a statistical measure that shows the changes happening in the stock market. The criteria for selection of stock could be the type of industry, size of the industry, and market capitalization. The value of the stock market index is to be calculated using the values of the underlying stocks in the market. If any changes happen in the underlying stock prices it will impact the overall performance of the index. If the price of the underlying security falls the index will also fall and that could be also vice versa. In this way, a stock reflects the overall market view and direction of price movements of the financial products and commodities in the market.



Rules of Equity investing


“Ups and downs in life are very important to keep us going, because a straight line in ECG means we are not alive.”

—Ratan Tata

Rules of equity investing:

  1. While you are investing in the stock market, give the same patience you give with real estate. A good equity portfolio needs five years of patience, ten years you see consistent returns.
  2. Remember that the risk of choosing poor products will land to bad returns.
  3. Diversify across asset classes to reduce the impact of adverse market movement as all the assets class do not perform in similar fashion at a given period of time.
  4. Do not invest in any product that locks you into a particular company or asset manager.
  5. If you want to invest in managed funds, start learning to know the tactics of the market.

So investors need to remember that if they give the same respect to the equity, which they give to real estate, it would be a smoother ride with fewer costs.

Are Equity shares better than equity funds?

Investing directly into shares has a lot of complexity that an individual person has to take care of. You have to examine stock and assess if the valuation is attractive. Investing in stocks is a dynamic process because the scenario of business is changing frequently because of competition. And one should also understand how the stock exchange like Sensex and nifty functions. So one should need higher initial capital to build a well-diversified portfolio.

If we take the case of equity funds it is a more convenient way to enter stock markets. Where the fund manager would take care of your portfolio. You need not worry about the changes happening in the stock market and other decisions like portfolio management. Moreover, you can start with a systematic investment plan (SIP) in mutual funds with low as Rs 500 every month. In short, you can achieve a similar but a safer level of at a smaller amount.


Finity gives you the option to invest in Mutual funds are the best way which gives exposure to your investments. So being a smart investor, why to invest in real estate when equity gives the best returns to your investments? Being an investor you have to understand that equity does take time and you need at least seven to ten years of patience to get your returns. You have to understand that you won’t double your money overnight, but you would be surely getting your returns which is between 12-15 percent a year.

Think Smart! Think Equity!

active, passive and balanced funds

Understanding Stock Index

Stock Index is the “performance measurement” section of the stock market. Among the stocks listed in the stock exchange, some similar stock is grouped to form an “index”. And this grouping is done on the basis of certain characteristics like the size of the company, sector or the industry to which it belongs to.

The value of an index is calculated by using the value of the grouped stock ( weighted index method). Thus, any changes in the price of the stock will lead to a change in the index prices. The index is “an indicator” of price change in the stock market which will help “traders” to track the market and calculate the returns on a specific instrument.

When will the Index raise?

In the stock market, prices of some items in an index will go up and down- these ups and downs in the prices will get canceled, whereas price rise on an average is more than the price fall, then the index will rise and we say inflation is rising and vice-versa.
For example, you may buy something in the market which may not reflect the trend of inflation. You go buy milk and find that the price has gone up. But, the index may be down because the price fall in fuel and other things have canceled out the price rise in the milk.

Most of the trading of Indian stock takes place in BSE (Bombay Stock Exchange) and the National Stock Exchange (NSE). In India, the BSE Sensex and NSE Nifty are considered as benchmark indices to evaluate the overall performance of the market.

What is Sensex?

For a better understanding of what is Sensex, let’s take an example of the Indian hockey team. If someone says “Indian hockey is in great form and expected to win against England”. Does it mean that every Indian can perform better than England players?
No, what actually means is that Indian players who are representing our country are performing well and there are expected to win over the other country.
Now taking this as a basis, there are the top best 30 countries that are listed in BSE (Bombay Stock Exchange) that are representing the country’s economy. The index is formed taking the stock prices of these 30 companies on a pre-defined basis and it is called “SENSitive indEX”(SENSEX) which means that they are so sensitive to price change. When we say Sensex went up, it means that the prices of these 30 companies are gone up rather than fall and vice versa.
The same happens with Nifty. Nifty is a market indicator of NSE. It has a collection of 50 stocks, but presently it has 51 listed in.

What is Market Capitalization?

Now, let’s learn about market capitalization. Market capitalization (market cap) is calculated by multiplying the outstanding shares of the company to its current market price per share. Companies that are traded in the stock market are grouped into different categories. For example:

     Index Companies
Large-cap index This index will keep track of the prices of large-cap companies.
Mid-cap index The index tracks only the representatives of mid-cap companies.
Small-cap index This index will track the firms which are even smaller than the mid-cap companies.
Bankex index Tracks the stocks which are traded in the banking sector.
PSU index Tracks the prices of PSU(Public Sector Undertakings).
Technology index It will map the prices of tech-related firms.
Infra index Tracks the prices of infrastructure-related stocks.
FMCG index Tracks the prices of Fast Moving Consumer Goods (FMCG).

Why stock prices go up?

Stock prices go up in the long run because as you know that the firms which are listed in the stock exchange trade their goods and services to make good profits and those companies will see good growth. Thus, rising prices reflect the growth and performance of the company.     

Are stocks are the best route to get inflation-adjusted returns?

When inflation rises, the input cost of the firms will also rise. But, the company will not bear the entire cost. Instead,  this cost will be passed on to the customers in the form of prices. So rise in the input cost will not affect the companies profit. Thus, we can say that stock gets protection from the effect of input price inflation.

Is investing in stock is complex?

Before investing in stock, you have various factors to consider such as size, sector, structure, etc.

All these factors are compared with the macroeconomic conditions in order to assess the capability of fund performance. So, there are speculators who will do this. As an investor, your only job is to invest your hard-earned money into the stocks and you have speculators, whose job is to track the market moves.

Thus, investing in stocks through Mutual funds is more advisable. You can get a wide range of benefits by investing in mutual funds.

Finity is one such platform where you can get access to a variety of funds in just one app.“Finity”, which helps you select the right Mutual Fund according to your investment horizon, risk appetite, and financial necessities.


Start your investments with Finity- the best platform for investments.

Build your wealth through Finity.

Image: Stock Markets

What’s NOT wrong with the markets today!

The Great Indian Markets: Are we turning it into a game of smoke & mirrors?

It intriguing to look at how media today has the power to sensationalise an otherwise regular event. Like it always does, media has continued to amplify the current situation (with pink newspapers buzzing with headlines with keywords like “crash”, “bear-grip” and “meltdown”).