Shivani Saraogi, CFA, FRM

Which ratios to look at while picking a mutual fund? 1) Sharp/Sortino/Treynor for risk adjusted return 2) Alpha/Information Ratio for fund manager skill 3) Expense Ratio/Turnover for portfolio efficiency Story by Dnyanesh Mugurdekar https://lnkd.in/gnGzFhiD

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#PrivateEquityBasics How General Partner (GP) make money from private equity funds? General Partner (GP) in Private Equity (PE) funds earn money through several key mechanisms associated with their roles in managing and growing the fund’s assets. Here’s a detailed breakdown of how GPs generate income: 1. Management Fees Management fees are the primary and most predictable source of income for GPs, providing a steady revenue stream regardless of the fund’s performance. These fees are typically: • Percentage of Committed Capital: Usually around 1.5% to 2% per annum of the total capital committed by the Limited Partners (LPs) • Usage: These fees cover the operational costs of managing the fund, such as salaries, administrative expenses, and overhead Example: If a PE fund raises $1 billion and charges a 2% management fee, the GP earns $20 million annually as a management fee. 2. Carried Interest (Performance Fees) Carried interest, or “carry,” is a share of the profits generated from the fund’s investments, and it constitutes the most significant and potentially lucrative part of a GP’s compensation. Key aspects include: • Profit Sharing: Typically, GPs receive 20% of the profits after returning the initial invested capital and often achieving a preferred return (hurdle rate), commonly around 8% • Alignment of Interests: This performance-based compensation aligns the GPs’ interests with those of the LPs, incentivizing the GPs to maximize the fund’s returns Example: A PE fund generates $500 million in profits after returning the original capital and the preferred return to the LPs. The GP’s 20% share of these profits would be $100 million. 3. Portfolio Company Fees GPs may charge additional fees to the portfolio companies for various services provided during the investment period. These fees can include: • Monitoring Fees: Compensation for ongoing oversight and advisory services • Transaction Fees: Fees for services related to mergers, acquisitions, or other transactions • Director Fees: Fees paid for serving on the board of portfolio companies • Consulting Fees: Fees for providing specialized expertise or consulting services Example: A PE firm might charge a portfolio company $1 million annually for monitoring services and additional fees for consulting or board services. 4. GP Commitments and Capital Gains GPs typically invest their own money into the funds they manage, known as the GP commitment. This can range from 1% to 5% of the fund’s total capital. They earn returns on this invested capital, just like the LPs, which can be significant if the fund performs well. • Capital Gains: The returns on their own capital investment in the fund, often reinvested in the same manner as the LPs’ investments, but sometimes on more favorable terms Example: If a GP commits $10 million to a fund and the fund returns 2x the invested capital, the GP’s commitment would yield $20 million, resulting in a $10 million profit for the GP

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Equity Research | Investment Banking | PE/VC Do you aspire for a career in these? We have something for you! I looked at what all skills are needed in these roles. Also spoke to various firms and teams where we train, to understand core skills firms seek. I found that while there are many resources that teach the concepts very well, few link all the major concepts together in a practical manner. Speaking to 100s of aspiring professionals, I found 3 common challenges. "I know the concepts but have not seen the practical applications" "I understand parts of the process, like Excel, or Financial Modeling, or Analysis, but am unable to link it all together" "I have joined online programs in past, but had difficulty in completing them" We decided to create a program to address the above challenges The FinShiksha Analyst Program So what is so different about this? Based on my experience of about 21 years in financial markets, 3 aspects have been differentiated here 1) Valuation is not just Financial modelling! - FSA, Industry Research, Reading Annual Reports, Earnings Transcripts, Business Projections and Valuations are all part of the exercise. - We need all of them in a structured manner to value a company. - So we created a learning experience covering all these for you. 2) The program is a Cohort based program, where peers motivate each other to complete it! - Everything is broken into small assignments, projects, and continuous interaction - to ensure that we are on track, and make the most out of our effort 3) Most of all, we built the practice into the program! - By the time you finish the program, you would have built valuation models on 4 different listed companies from different sectors. Add to that continuous mentorship, bunch of assignments for practical learning, closed group interaction with your peers, and we have a solid 10 week learning ready! The ONLY thing needed from your end is effort and commitment. To explain the program details, and answer some of the most common questions, I am conducting a webinar on Tuesday September 9th, at 9 pm IST. -- Register for the webinar here -- https://lnkd.in/gKcrabWZ A video explaining the program outline is also available here https://lnkd.in/dcr_jmxx Apply for the program here https://lnkd.in/gHqTT-Q3 Please tag any of your friends who may find this relevant Do share this with your network Thanks in advance 🙏 You can find more details about the program on my profile Peeyush Chitlangia, CFA Do reach out if you have any queries!

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Don't let the no rate cut from RBI today fool you ! Lots of important regulatoy stuff.. all aimed at easing.. 10 quick things. 1. Banks can finance M&A - basically lend more freely against shares/REITs/InvITs 2. "Overlap" bar removed in bank–group business rules - Gives bank boards/NOFHCs room to structure group entities better 3. Basel III capital charge update – Draft norms coming & aim is to capital rules more risk-sensitive 4 . Shift to Expected Credit Loss (ECL) provisioning - move away from incurred-loss model 5. Deposit insurance premium - Stronger banks pay less 6. NFBCs - Risk weights - To be better aligned with project stage (lower for operational projs) 7. Withdrawal of 2016 large borrower guidelines 8. Discussion paper for granting new UCB (urban co-operative banks) licences 9. 250 master directions to replace scattered circulars 10. Easing restrictions on transaction accounts – Current, OD, & cash credit account rules to be relaxed

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Now lets go for the first topic are as follows 1. CFA (Chartered Financial Analyst) Best For: Investment banking, portfolio management, equity research, hedge funds, asset management. Duration: 2–3 years (3 levels, if cleared in first attempt). Cost: Around ₹2.5–3.5 lakhs in India for all levels. Skills Gained: Equity, fixed income, derivatives, alternative investments. Portfolio construction, asset allocation. Deep knowledge of valuation, ethics, and global markets. Outcome: Opens doors to global investment firms, AMCs, Big 4 advisory, MNC banks. 2. CMT (Chartered Market Technician) Best For: Trading, technical analysis, stock market strategies, hedge funds, research desks. Duration: 1.5–2 years (3 levels). Cost: Around ₹2–2.5 lakhs. Skills Gained: Technical charting, price patterns, market psychology. Risk management for trading portfolios. Quantitative and algorithmic strategies (advanced levels). Outcome: Roles in proprietary trading, portfolio hedging, technical research, wealth management. 3. Financial Modeling & Valuation (FMVA or self-paced courses) Best For: Practical job readiness in investment banking, FP&A, corporate finance. Duration: Short-term (3–6 months). Cost: ₹30,000 – ₹80,000 depending on institute (CFA Institute, CFI, NSE Academy, Wall Street Prep, etc.). Skills Gained: Excel-based modeling (DCF, LBO, M&A models). Company valuations & forecasting. Real-world case studies for IB interviews. Outcome: Makes you job-ready faster; often paired with CFA for maximum impact. Majorly it depends on the faculty where you are going to take a course

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*RBI proposes market-linked framework for external commercial borrowings* https://lnkd.in/dy5xHXqT The Reserve Bank of India (RBI) has proposed major changes to the framework for external commercial borrowings (ECBs), linking borrowing limits to the financial strength of companies and allowing funds to be raised at market-determined interest rates. The draft norms, issued on Friday, seek to simplify end-use restrictions and minimum average maturity (MAM) requirements while broadening the pool of eligible borrowers and lenders to facilitate greater credit flow. Reporting requirements will be streamlined to further ease compliance. Under the proposals, eligible borrowers may raise funds up to the higher of either outstanding ECB of $1 billion, or total external and domestic borrowings up to 300 per cent of net worth, based on the latest audited balance sheet. “The borrowing limits are proposed to be linked to a borrower’s financial strength and ECBs are proposed to be raised at market-determined interest rates,” the RBI said. Currently, borrowing costs are capped at 450 basis points over the benchmark. For foreign currency loans, this is linked to the six-month LIBOR (London interbank offered rate) or its equivalent, while rupee-denominated borrowings are tied to government security yields. “The shift to market-determined rates could lower borrowing costs for well-rated corporates, while the expansion of eligible borrowers and lenders would open access to a wider pool of participants,” said Venkatakrishnan Srinivasan, founder and managing partner of Rockfort Fincap LLP. Simplified end-use rules and lighter compliance are also expected to reduce friction. Experts said the proposals would particularly benefit large corporations in infrastructure and capital-intensive sectors. “Overall, it brings India closer to global practice, reduces hurdles in raising foreign capital, and improves pricing efficiency while keeping safeguards in place,” Srinivasan added. Anjali Kumari

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Investing in REITs is, at its heart, an equity play. SEBI’s recent move to officially classify REITs as equity is as much regulatory housekeeping as a dose of clarity. Analysts can now cover them without squinting, and asset allocators can finally stop treating them like exotic animals. They are mainstream! Yes, REITs often pay out handsome dividends, but don’t confuse them with debt. The cash distributed (a slice of the net distributable cash flow, or NDCF) is dynamic (sometimes generous, sometimes lean). Unlike bonds, REITs don’t come with a ceiling that smothers your returns. That’s why REIT investors should be called what they really are: shareholders, not the less glamorous “unitholders.” The distributions they receive are "dividends" though they come with components that demands a bit of attention in tax treatments: some portions have already been taxed at the REIT or subsidiary level. REITs avoid double taxation. Despite their trust structure, REITs behave far more like listed corporates, complete with management strategies, boardroom decisions, and growth ambitions. Mutual funds they are not. https://lnkd.in/dSVQXhsu

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