@ChaitanyaC ,
The worry that I had about DIY momentum stratgey to generate sufficient alpha over Momentum Mutual funds, given the STCG tax scenario…I gave it a thought…And I feel we are ignoring the larger picture here.
In last 3-4 years, market has been in momentum and hence momentum mutual funds appear superior tax wise compared to DIY, but that is so because their 6 month re-balancing and DIY’s weekly rebalancing is currently in same direction. Once market starts going down, then the real value of weekly rebalancing and going into cash will be seen. That time momentum mutual funds who rebalance after 6 months and cannot go into cash will become inferior. That time has not come yet. Momentum mutual funds will appear helpless then, when all their momentum stocks are going down, and they are unable to do anything as rebalance day is 6 months far away or they have to stay invested. That will give edge to DIY momentum PFs.
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