ETFs are funds that track a particular index. Unlike mutual funds, ETFs have lower expense ratios & trade on the exchange
We have selected low-cost ETFs, so the total expense ratio of All Weather Investing is ~0.6%, compared to the average mutual fund expense ratio of 1.5%
Frequently Asked Questions
What is the All Weather Investing smallcase?
The All Weather Investing smallcase is a recession proof way of building long term wealth, consisting of equities, gold and fixed income ETFs.
What are ETFs?
ETFs (Exchange Traded Funds) are baskets of securities that track an underlying index (Nifty, Gold, etc) and can be bought and sold on the exchange. ETFs are ideal for passive investing since they are cost-efficient (lower expense ratios than mutual funds) and liquid (trade during market hours, so you buy/sell your smallcases quickly)
How is All Weather Investing recession proof?
The allocation of your investment to each asset class in the All Weather Investing smallcase is determined by the prevailing market conditions. When the markets are volatile, the exposure to equity ETFs within the smallcase is decreased and vice versa.
Fixed Income consistently gives you positive returns and equities help you generate high returns in a bullish market. Gold provides much needed protection against the decrease in value of equities in a down market
How is the All Weather Investing smallcase different from mutual funds?
Unlike mutual funds, the All Weather Investing smallcase is
Cost Efficient - ETFs are low-cost funds (The 4 ETFs in the smallcase have an expense ratio of ~0.6% vs avg mutual fund expense ratio of 1.5%)
Transparency - You can view the ETFs, their weights in the smallcase
Diversified - Exposure to equity, fixed income & gold asset classes in one instrument
How long should I stay invested in the All Weather Investing smallcase?
The All Weather Investing smallcase's strategy is aimed at generating stable returns at lower risks to build long-term wealth. Hence, the strategy works best when you stay invested for the long-term (our definition of long term is at least 3 years)
How often is the All Weather Investing smallcase rebalanced?
The All Weather Investing smallcase is rebalanced only quarterly to prevent active churn. The next rebalance date can be viewed on the smallcase page under ETFs & Weights. During the event of a market crash, there will be no unscheduled rebalance updates for All Weather Investing because the gold ETF provides a cushion
What happens when I exit the All Weather Investing smallcase?
Units of Nifty, NiftyJunior & Gold ETFs are sold via your broker. For the Reliance LiquidBEES ETF which provides fixed income exposure, dividends earned are credited as fractional units which cannot be sold on the exchange
So when you exit your smallcase, the system will place the sell order for the whole units of the ETF on the exchange through your broker and for the fractional units directly with the Depository Participant. This hassle free paperless experience of investing in Reliance Liquid Bees is exclusive to smallcases
What are the tax implications here?
Each ETF also has its own expense ratio, the total blended expense ratio for the smallcase being ~0.6%, embedded into your investment
Individual ETFs in the All Weather Investing smallcase have their own tax implications:
Equity ETFs (NIFTYBEES, JUNIORBEES) will be taxed like other equity instruments - 15% tax on short-term gains & 10% tax on long-term gains over Rs 1 lakh
Fixed Income ETF (LIQUIDBEES) does not attract any tax liability, as it only issues dividends
Gold ETF (GOLDBEES) is also taxed like debt funds or bond ETFs - short-term gains added to income (<3 year holding period) and long-term gains (>3 year holding period) taxed at 20% after indexation