Mutual funds performance

Greenvissage explains, Why should mutual funds shift to performance-based fees?

As India’s mutual fund industry continues to grow, investors have become increasingly aware of the risks associated with investing in mutual funds. The Securities and Exchange Board of India (SEBI) has already made some changes to mutual fund regulations, including a new framework for categorizing funds based on their investment objectives and risk profiles. However, some experts argue that more needs to be done. One issue that has been raised is the lack of transparency in mutual fund fees. Currently, mutual fund houses are allowed to charge a variety of fees, including management fees, exit loads, and expense ratios. However, investors often find it difficult to understand the true cost of investing in a particular fund. To address this issue, some experts have suggested that mutual fund houses should be required to disclose all fees in a standardized format, making it easier for investors to compare funds and make informed investment decisions. Another issue that has been raised is the conflict of interest that can arise when mutual fund houses also have their asset management businesses. In these cases, the mutual fund house may prioritize its funds over others, potentially leading to biased investment recommendations. To address this conflict of interest, some experts have suggested that mutual fund houses should be required to separate their mutual fund and asset management businesses. Additionally, some experts have called for greater transparency in mutual fund portfolio disclosures. Currently, mutual fund houses are only required to disclose their top 10 holdings. However, investors may want more detailed information about the securities in which their funds are invested. To address this issue, some experts have suggested that mutual fund houses should be required to disclose their entire portfolio quarterly, in addition to their top 10 holdings. Furthermore, some experts have called for the implementation of a fiduciary standard for mutual fund managers. This would require managers to act in the best interests of their clients, rather than their interests or those of their firm. To ensure compliance with this standard, some experts have suggested that mutual fund houses should be required to establish independent boards of directors or trustees to oversee their operations and protect the interests of investors. Despite these potential changes, some experts argue that the mutual fund industry in India is still in its infancy and that it may be premature to implement sweeping reforms. However, many agree that greater transparency and accountability are needed to ensure that investors are protected and that the industry continues to grow sustainably. In conclusion, while the mutual fund industry in India has seen significant growth in recent years, there is still room for improvement. By implementing changes to improve transparency, minimize conflicts of interest, and protect the interests of investors, the industry can continue to grow and evolve responsibly.

Greenvissage explains, What is Dedollarisation and why is everyone seeking it?

De-dollarization refers to the process of reducing dependence on the US dollar in international transactions, reserves, and financial markets. It is the result of several factors, including concerns about the stability of the US economy, geopolitical tensions, and the desire to diversify investments. Historically, the US dollar has been the dominant global reserve currency, with countries holding it as a means of payment for international trade and investments. This has given the United States considerable power and influence over the global financial system. However, as other countries have grown in economic strength, they have sought to reduce their reliance on the US dollar, which they see as vulnerable to economic and political risks. One of the primary drivers of de-dollarization is the perception that the US economy is not as stable as it once was. Since the global financial crisis of 2008, the US has faced significant economic challenges, including a large national debt, low-interest rates, and an increasing trade deficit. These challenges have led some countries to question the long-term viability of the US dollar as a reserve currency. Geopolitical tensions are also a factor in de-dollarization. Some countries have sought to reduce their reliance on the US dollar as a way of exerting their influence in the global financial system. For example, China has been promoting the use of the renminbi as a reserve currency and has been trying to establish its international payment system as an alternative to the US-dominated SWIFT network. Another factor driving de-dollarization is the desire to diversify investments. Many countries are looking to reduce their exposure to the US dollar and invest in other currencies or assets. This can help reduce the risks associated with holding a single currency and provide greater stability to their financial systems. De-dollarization can have significant implications for the global financial system. If more countries reduce their reliance on the US dollar, it could weaken the currency’s dominance in global trade and reduce the United States’ influence in international affairs. It could also lead to increased volatility in currency markets and make it more difficult for countries to manage their economies. However, de-dollarization is not an easy process. It requires significant investment in infrastructure and new financial systems, and it can take many years to achieve. Some countries may also face resistance from the United States, which has a vested interest in maintaining the dominance of the US dollar. Despite these challenges, many countries are continuing to pursue de-dollarization as a way of reducing their exposure to economic and political risks. As the global financial system continues to evolve, it will be interesting to see how this trend develops and what impact it has on the global economy.

Greenvissage explains, Why did Tupperware fail after becoming a household name?

Tupperware, a famous plastic container brand founded by chemist Earl Tupper in the 1930s, has experienced a 90% decrease in its stock price over the last year and is struggling to survive. Earl Tupper founded Tupperware in the 1930s to create better plastic. He developed polyethylene, a strong, translucent plastic with airtight lids, as a byproduct from refining crude oil. Brownie Wise, a key figure in Tupperware’s success, pioneered the sales strategy of Tupperware parties. At these parties, she demonstrated the product’s strength to groups of women which proved to be a highly successful sales tactic. The network of sales consultants grew, and Tupperware expanded its product line and entered 80 countries worldwide. Despite Tupperware’s early success, the company is now struggling due to several factors. Firstly, people are now more concerned about plastic pollution and the potential for chemicals in plastic to leak into food, so they are moving towards glass containers. The shift towards glass containers is a major issue for Tupperware. Consumers are becoming increasingly aware of the environmental impact of plastic, and glass containers are seen as a more eco-friendly option. Secondly, the company has failed to adapt to the shift from direct sales to online shopping and social media platforms. Tupperware continues to rely on direct sales for 80% of its sales, but most people prefer to shop in retail stores or online. As a result of these changes, Tupperware’s sales have fallen by 40% over the past decade, and many of its sellers have left the business. Tupperware attempted to enter the e-commerce market in 2019, but it has struggled to compete with other established online retailers. The company’s failure to adapt to changing consumer preferences and behaviours has led to a decline in its stock price, leaving the future of the 77-year-old company uncertain.

Greenvissage explains, How did Zara establish itself without spending on advertising?

Zara is a dominant player in the fashion industry and has become a USD 13 billion empire without investing in advertising. This fast-fashion retail clothing brand was founded by Amancio Ortega in 1975 and has over 2,000 stores in approximately 96 countries. The company’s success can be attributed to its ability to address the market discrepancy by introducing new collections based on the latest trends quickly. The company changed the fashion industry forever by working on the most important aspects of its business. Its production system is based on the Just-in-time production system of Toyota. This means that the company does not need to store large inventories as the fresh garments are delivered straight to the stores. This saves the company money on inventory management costs. Additionally, the company creates artificial scarcity to be exclusive, as it does not manufacture huge quantities of a particular design. The company also skips the storage part from its supply chain, which helps to keep its inventory management cost low. It introduces 12,000 new designs every year, in contrast to the industry average of 2000. By understanding the target customer, the company provides stylish and affordable products. Zara’s design team and agents visit clubs, social gatherings, and universities to scout new fashion trends and designs. They track influencers rather than attending red-carpet events. It also invests heavily in the location and appearance of its stores around the world, rather than on traditional advertising methods like TV commercials and billboards. The company pays high rent to be in the most luxurious buildings, next to big brands like Armani, Gucci, and Louis Vuitton. This creates the Halo effect, which is when a company or its products become successful due to its association with another successful company. Zara carefully designs its big glass windows with the help of neuro marketers to present the collection for window shopping, which unconsciously takes consumers inside the store. It focuses on the customer experience because it matters more than the product itself in this fast-moving world. The interior of Zara stores is strategically planned, minimal, and artistically subtle. Thus, the company has become successful because it understands that no one is a better trendsetter than the customer itself, and they just have to be careful and observant.