Best way to invest in India, how to rebalance your portfolio, and does anyone care about the new iPhone?

Bryce: [00:00:14] Welcome to another. Episode of Equity Mates, or should I say. Hee hee salmon? Welcome to another thrilling episode of Equity Mates where we're all about don't stop til you get enough investment wisdom. Whether you're bad to the bone in finance or just a smooth criminal. Starting out, we're here to get you off the wall and moonwalking your way to some serious dividends. As always, I'm joined by my equity buddy, Ren. And who am I? 

Alec: [00:00:42] You're Michael Jackson, correct? You're also quickly losing us listeners. 

Bryce: [00:00:49] That was a tough start. My voice is not warmed up this morning. 

Alec: [00:00:52] I imagine it was even tougher for the people that have to. 

Bryce: [00:00:55] Listen to apologies..

Alec: [00:00:57] I think you always want to start with a JPT Rey written introduction. And you know, you can't begrudge you for what Chuck JPT spits out. So I think let's just move on from that.

Bryce: [00:01:08] How about this, though, quickly? If you have an idea.

Bryce: [00:01:11] Just. 

Alec: [00:01:12] If people are watching on YouTube, they'll say that Bryce is trying to drink his protein shake and speak at the same time. 

Bryce: [00:01:18] It's also falling onto the desks. I'm trying to. 

Bryce: [00:01:21] Claim there's an. 

Alec: [00:01:21] Argument. You could have just done that before we started recording. 

Bryce: [00:01:25] If you have a recommendation for or if you'd like to hear me give a persona or a crack, send it through contact with equity. Right. 

Alec: [00:01:32] Start calling nice. Well, with that said, let's get to today's episode because there's a lot to cover. We've got a listener call from Patrick talking about building a portfolio and rebalancing a portfolio. We're going to talk about investing in India and compare the two ASX listed India ETFs and pick our favourite. We're not going to sit on the fence there. So a lot to cover. But Bryce, as always, let's start with what we've been doing, what we've been learning and what's been happening and the biggest news of the past week, the biggest company in the world, the leading technologist in the world, announced the latest and greatest products and the world collectively shrugged. 

Bryce: [00:02:15] Yeah. Apple iPhone 15. That's it. 

Bryce: [00:02:17] Let's move on. 

Alec: [00:02:19] Are you buying? 

Bryce: [00:02:20] I actually probably will, but that's just because I am four years into a phone. My plans are done. I've maxed out my memory. I think it's time for an upgrade. Yeah. So I generally just fall into that sort of cycle. Anything in between? I don't. 

Alec: [00:02:34] Yeah. Yeah. Shares fell 2%, but it was more to do with rumours at that stage. Now, I think policy that Chinese government employees were going to be banned from using Apple products. I think that's telling that even on the day that Apple announces their latest and greatest, it's not even the biggest news about Apple. Like that's how much the world and the markets shrug at new product launches. 

Bryce: [00:02:57] Well, even if you watched the one and a half hour preside that they do that they do. 

Alec: [00:03:02] And let's be honest, we didn't. 

Bryce: [00:03:03] I did. 

Bryce: [00:03:05] Yeah. 

Bryce: [00:03:06] I didn't watch it all. I skipped a fair chunk on YouTube, but I probably watched 50%. 

Bryce: [00:03:11] Really? Yeah. 

Bryce: [00:03:11] I just wanted to see what it was. Interesting. 

Alec: [00:03:13] Not busy. 

Bryce: [00:03:13] Interestingly, this is a not interesting, a lot of it was all sort of premade video, but the first half of it was actually the watch. That's what they were really pushing. The new ultra. 

Alec: [00:03:25] Apple Watch nine and Ultra watch two. Yeah. Crazy that we're already up to nine generations of the watch. 

Bryce: [00:03:31] Yeah. And now there's a 1300 dollar watch. 

Bryce: [00:03:34] Yeah. The ultra. 

Bryce: [00:03:35] What about makes us stupid? 

Bryce: [00:03:37] Really? 

Bryce: [00:03:37] Yeah, right. 

Alec: [00:03:38] Oh, my gosh. 

Bryce: [00:03:41] It's like an adventure. 

Bryce: [00:03:42] People like Mountain is not to see diving. 

Alec: [00:03:45] There's also the naming of the event one day. 

Bryce: [00:03:49] Lost. Yeah, Yeah. Come on. 

Alec: [00:03:52] And I don't know if you've noticed, but I've seen a lot of the outdoor advertising, and it's all about. It's like a black background silhouette of the phone with big in big letters. Titanium? 

Bryce: [00:04:04] Yeah. Is that meant to get us excited? Like, it looks cool. 

Alec: [00:04:08] I just. I it just has no meaning for me. Like, is titanium better than the metals that you're using now? 

Bryce: [00:04:16] Yeah, Like.

Bryce: [00:04:16] Well, compared to my phone, it definitely.

Bryce: [00:04:18] I feel like there's. 

Alec: [00:04:19] A level of consumer education that needs to happen about, like, why we should care about titanium. 

Bryce: [00:04:24] Looks cool. I look at it. 

Alec: [00:04:26] On the on the dive. Sasha and I unpacked. Well, at least my theory about why the shrug is the point now with Apple, why they don't want us scrutinising it too quickly, but they still want to make a big song and dance so you can go over and listen to that. But yeah, I don't think this changes. The taste is for Apple. I don't own Apple outside of ETFs, but they're just going to keep on keeping on. The services. Revenue story is the story. It's now not. 

Bryce: [00:04:51] Even a story anymore. Well, you know what I mean. Like, okay. 

Alec: [00:04:55] It's the services revenue is the key part of the. 

Bryce: [00:04:58] Basis.

Alec: [00:04:59] 19% of revenue last year selling iPhones was 52% of revenues. So the services revenue is still the biggest, but it's selling iPhones. It's still the biggest service. Revenue is the biggest growth driver. 900 million individual people had at least one Apple subscription last year. Five years ago, I think it was about 450 mil. Five years before that was like 30 mil, something like that. Those numbers are off the top of my head, but 900 mil last year, that's more than 10% of the world pay apple for some form of subscription. Um, then obviously. Yeah. Anyway, it's a fascinating story. Um, but I think it's been well told. So let's move on. 

Bryce: [00:05:39] Just a little tidbit that I found interesting. We are going through pretty much first times with inflation and as we know.

Alec: [00:05:47] Is that hinted that you found.

Bryce: [00:05:48] Interesting Yeah. Next. 

Bryce: [00:05:50] But a French supermarket chain is always keeping our finger on the pulse with what's going on in retail supermarkets. A French supermarket chain is slapping shrinkflation labels on products that it says have gotten smaller and pricier. The supermarket is Carrefour. They've marked 26 items, including Lipton Iced tea and Lindt chocolates ahead of price negotiations with suppliers. Now, if you're wondering what Shrinkflation is, it's where suppliers will reduce the product size or what they offer, but keep the price the same. The classic example that when I was in Woollies that drove me nuts because I loved this product was Tim Tams. They went from 10 to 9 but kept at the same price at 550 a pack or whatever it was.

Alec: [00:06:34] Right. Okay. 

Bryce: [00:06:35] And I'm just. 

Bryce: [00:06:36] Kidding. 

Alec: [00:06:37] So your price per Tim Tam. 

Bryce: [00:06:38] Price per Tim Tam goes up, you're getting less. For other examples, think about all the ice creams, magnums, anything in the ice cream space on a like individual stick that they've reduced considerably in size? Rice crackers have. 

Bryce: [00:06:52] Reduced. 

Bryce: [00:06:53] Yeah, considerably. Rice crackers have reduced an entire row. [

Bryce: [00:06:56] Really? 

Bryce: [00:06:57] Yeah. Yeah. Same price. So be wary. Like if you know a product well. Kate Canning. 

Bryce: [00:07:05] Okay, that's. 

Alec: [00:07:05] Fascinating. Yeah. And I don't mind the name and shame tactic, like supermarkets calling out their suppliers, putting themselves on the side of the consumer. It's a good branding piece. I would bet you all of the money in the world that any of Carrefour's home brand products like the Carrefour brand products. 

Bryce: [00:07:25] Won't get a slap. 

Alec: [00:07:26] Didn't get it that. 

Bryce: [00:07:27] I just to clarify, the reason that suppliers do this in times of inflation is because their input costs are going up. So they have two options, which is either increase the price of the product which they don't want to do, or the supermarkets just won't essentially push through the price increases. So therefore, to make sure they maintain their margins, they reduce how much they're actually giving to customers. 

Bryce: [00:07:47] Yeah, yeah. There is a third option. 

Alec: [00:07:50] Accept a hit to the gross margin.

Bryce: [00:07:53] Yeah, but. 

Alec: [00:07:55] Like accept that you're going to be a little less profitable for a little while yet, but that's never an option that they.

Bryce: [00:08:00] Choose. No. 

Alec: [00:08:01] Anyway and investing in a podcast. I guess that's not an option we should advocate. No, but we're also consumers, so I wouldn't mind it sometimes. All right. Now on Google, Doc, you've just written CBA. 

Bryce: [00:08:13] Yes, CBA. Now you write the AFL. 

Alec: [00:08:15] Collective bargaining agreement. Yes, I have. I thought, sorry. [00:08:18][2.8]

Bryce: [00:08:19] Yeah, I emailed. I think I was going to talk about Commonwealth Bank, but obviously not. I am talking about the collective. 

Alec: [00:08:24] Oh really? Okay. Which one? 

Bryce: [00:08:25] NRL. They did. 

Bryce: [00:08:26] Okay, finally it's been closed out. Not to bore everyone with the AFL chat, but if you, if you have been following along, it's been a saga going on for a couple of years now. Gil McLachlan's final piece of the puzzle before he leaves. It's been signed off over the next three years. I think by the end of 2026 or 2027, guess what the average salary is going to be for men's AFL player. Based off his CBA, 250 grand. 

Bryce: [00:08:50] 600 grand. No way. Average. Average. Unfortunately for females, 40 to 70. So still a huge gap to me.  

Alec: [00:09:00] I mean, the big thing in AFL is to get the salaries to a level where they can be full time like that because most AFL w salaries now require you to have another job. 

Bryce: [00:09:13] Yes. Yeah. 

Alec: [00:09:14] So I get that 40 to 70, like 70 to 100 is like unless. [00:09:17][3.4]

Bryce: [00:09:18] Yeah. Yeah. Well what I, what the bargaining agreement did say was that they're going to hopefully get an additional something like an additional 14 games over the next like four or five years. So a full season which should then lead to, which should then later I guess, a more full time salary. 

Alec: [00:09:35] Yeah. I mean, like there's the obvious question with small sportsmen and women's is do you invest in the game and then expect it to pay back over time, which is what like women's soccer has done and women's cricket has done? Or do you say from day dot you only get paid and you only can invest what you make? And that's a recipe for not really growing the game. But anyway, that's a whole other conversation. I don't know. Anyway, okay, this isn't the AFL podcast. Well, let's stop myself there. Will save the AFL chat for the AFL podcast coming 2024. But last week you questioned whether NRL teams have songs. It's a big thing in AFL, even at local park footy. I was explaining it to Alice and she was very surprised that we sang songs. After winning.

Bryce: [00:10:25] You could still sing my song.

Alec: [00:10:28] And Souths in the rugby league, I know they have a song, but we weren't sure if other teams did. I pretty much listen to Who's quite close to you called to set you straight. 

Doug: [00:10:37] You have one message. Hey, Bryce, it's you, Bill speaking. Glad to hear that you've backed the Panthers in for a three peat and Ren, I'm sorry about AFL grand final last year. It's clearly blinded you to picking winners take on the Bronx. But that's okay. However, I'm a bit surprised Bryce, that you don't know the Panthers song Super famous. I think everyone outside and inside of NRL knows it. I believe we're going to play it now so you can get an idea of the lyrics so you can be ready to belted out with me over the phone on grand final day. All right. 

Bryce: [00:11:18] Well, Ren there you go. I stand to be corrected. The Panthers do have a song. And thank you to Doug that a massive Panthers fan is actually my brother in law, listening closely and appreciate it. Good luck to you, Doug. The three peat for the Panthers is coming up. 

Alec: [00:11:33] I don't know why I need it to get the Drive by on this one's There. Anyway. Let's keep moving back to stocks and back to a company that you came across last week who I had never heard of.

Bryce: [00:11:46] Me, either. And when I did hear of it, I was like, Oh, this is just why you love investing. Now, no original ideas here. This just came across in my. 

Alec: [00:11:56] No points. For original points for getting more. Money. Having an original thought. 

Bryce: [00:12:00] I heard this on a podcast, so I'll I'll tell you about that afterwards. But here's the company. It's called Kingspan Group and it is listed over on the Irish Stock Exchange. The ticker is K-R-X listed over on the Irish Stock Exchange. Now it's a global leader in insulation products for buildings. The bulk of their business comes from insulating some of the biggest commercial buildings in the world. All of the Tesla Gigafactories, all of Apple's headquarter, Emirates Stadium in London, even the MCGthey are involved in insulating. Where you'll find these massive builds, you will find Kingspan products. But here's what's just the numbers behind this Ren, is fascinating. 80% of its revenue comes from the insulation panels. It does 8 billion in sales, 600 million in net income has a market cap of €13 billion. Last week, though, you did, you spoke about ResMed and they they compound annual growth on their revenue over the last five years or so. 

Alec: [00:13:02] Yeah, 13%. 

Bryce: [00:13:03] 13% over five years KINGSPAN has compounded annual growth for revenue of 15% for the last 30 years. 

Bryce: [00:13:14] So impressive. 

Bryce: [00:13:15] Incredibly impressive. So Ren, since they IPO'd in 1989, they have 100 times the return well, and it is family run. So you think about what Andrew Brown talks about and a lot of what about a lot of experts come on the show and talk about the the value in having family run. It's run by a guy called the founder was Eugene Mutunga. He's in his eighties and his son Eugene Junior has been running it since 2006. So that's the company. But it was pitched by a very well known expert here on the show, Nick Griffin from Munro Partners. 

Alec: [00:13:53] He should've pitched it here. 

Bryce: [00:13:54] I know is pitched on the podcast Business Breakdowns by the Colossus Guys. 

Alec: [00:13:59] We are responsible for that connection?

Bryce: [00:14:00] Yes. Which we. Introduce. Yeah. Since I thought this is a match made in heaven. So we introduced Nick to the Colossus guys, and subsequently this episode has come about. 

Alec: [00:14:11] You could have given us. A bit of a stock tip before. 

Bryce: [00:14:13] I know. But how about this? It's 2023 no news there. Nick has been watching this stock since 2009. 

Alec: [00:14:21] Has he invested? 

Bryce: [00:14:22] Yeah. Yeah, very much. And the biggest growth driver. We know that Nick loves the sustainability play and the biggest growth driver is the net zero targets that both governments and organisations are putting on themselves. And one of the biggest, I guess, ways to get to net zero for a company or to drive those net zero emissions is to have a green building, so to speak. And so a lot of the products that are going into these new buildings is Kingspan. And you might be thinking insulation, which is the insulation that goes between like the studs in walls, the sort of padding. I guess this is not what that is. The key differentiator and competitive advantage here is that they actually build panelling that double as walls, so they're actually weight bearing and so the insulation goes between insulated panelling, they fill it with a whole bunch of sort of material and then they can be built into walls. So think about the Tesla Gigafactories, all those big wide panel things. You see these Kingspan products and so they sell direct into architects, they sell directly into manufacturing businesses. And yeah, they're a world leader in this space. So if you're interested, all I'll say is we'll put a link to the full episode in in our shownotes because it is worth a listen. Nick does a much better job than I did, but.

Alec: [00:15:44] You did a great job.

Bryce: [00:15:45] Love coming across businesses like this and love saying that we've set up a great match between the Colossus guys. 

Alec: [00:15:52] Yeah, I don't. I think it's just another reminder that, like, some of the most exciting investment returns come from the most boring companies, just like brilliant companies doing something where they have an advantage, executing well over a long period of time, selling insulation to building sites like to construction. Yeah. It's like it's just. It's not. I'd driven. It's not lithium, it's not sexy, but it's great. 

Bryce: [00:16:19] Yeah. So there's a whole acquisition play behind it. They're great acquirers of businesses as well. Obviously, Nick and Munro Partners have been looking at this since 2009, but they're very bullish on it from from here. So yeah, check it out, Kingspan Group. All right Ren, let's move on. We've got a listener question that has come through from Paul, so let's give it a listen. 

Bryce: [00:16:39] You have one new message.

Paul: [00:16:42] Hey, Bryce and Ren. My name's Paul. I medium time listener, first time question. Oscar. I had a question about my investment journey, I guess, and the bits and pieces that I've learnt along the way and just want to get your opinion, your thoughts. The really where I'm at from an investment perspective is pre-COVID. I probably went a little bit too hard on some speculative type investment which were doing really well probably I think 24 months ago, but have probably dropped off a fair way in recent times. And I guess my question probably comes down to sort of, you know, as as long as I continue to go through my investment journey and learn new things and want to pivot into probably more sustainable and sensible investment path, what to do with the equities that I'm holding at the moment that are sort of sitting in a locked position. So not ideal, but, you know, sort of balance that view of hanging on to see if something will bounce back versus cutting my losses and moving in a different direction. Thanks, guys. Love the show. I love what you're doing and appreciate the advice. Thank you. 

Alec: [00:17:52] Well, we should be clear from the outset that this is not personal advice. It's just general advice. And we should just be clear. More generally, the Paul giving some information on his investment goals, but certainly not enough for us to give you personal advice. But let's speak generally about the dilemma of you've got a portfolio of individual companies and then you want to rebalance into, I guess, more of a core and satellite approach. And if you were in that situation, would you be selling some of your individual investments to balance out the portfolio or would you just be building with new investments over time? 

Bryce: [00:18:26] I'd probably be doing both. And we've spoken about this multiple times on the show, but the way that I would be approaching the smallcap part of it or your individual stocks is if your thesis is broken, that's a time to consider selling and reallocating that money in. And I spoke about that a couple of weeks ago with my portfolio or some of the individual stocks I own. Thesis is broken. I've gotten rid of them and I'm going to be allocating into core. And I think the second part to that is if it was an emotional buy and and it ripped up and now you're in a loss be conscious of loss of Virgin, which we spoke about on our get started investing show last week which is hanging on to something because you don't want to have the feeling of solidifying a loss. So I think for me it just comes down to do you genuinely still have conviction in those investments? If you do, you know, that Smallcaps particularly are volatile. And so the you know, you need to be prepared to it to weather those storms. If you have no conviction in your thesis is broken, then why? Why hold onto them? 

Alec: [00:19:31] Yeah, makes sense. A couple of other considerations for me. Two more. There's certainly a tax benefit. Like if you're underwater on some of these individual stock positions, you can claim the capital loss, You can offset that capital loss against any capital gains that you make in this year or future years. So that's something to consider. You've just got to be careful. You can't do a wash sale where you sell these stocks that you've lost money on to claim the tax benefit and then buy back in and just have a lower entry price. How tax benefits? So if you're going to sell them for the tax benefit, don't then just turn around and buy back in. But there's like what you were saying, like if your thesis is broken, if you're not convinced of them, that is a consideration. My other thought around this is just opportunity cost. So I am sympathetic to the idea of like, I still believe in these stocks, I'm going to hold them. And then new money that I'm taking from my paycheque every fortnight. I'm going to then build out more of a core investment portfolio. That's probably how I would approach it, with the caveat that if you're then taking the money that you're putting aside for investment and just building out the core, if you come across any other great opportunities, you know, like Bryce comes on the show and pitches, what was it, Kingfisher Group or. 

Bryce: [00:20:54] Kingspan. 

Alec: [00:20:55] Kingspan group or, you know, last week I was speaking about ResMed and, you know, I thought it was an opportunity there, if you like. I'm just building my core. You might miss out on having a bit of dry powder on the sideline to take advantage of those opportunities. So I think, you know, like as with all things in life, it's a balance and it's what works for your individual investment goals. But I think, in broad strokes, selling any dogs that you don't think a good investment anymore that that faces is broken. Claiming the capital loss on those. Having that as a start up for your core portfolio and then building your core portfolio with new investment money but with with the idea that you'll also keep a little bit of dry powder on the side in case any good opportunities pop up that you're interested in. I feel like that's probably the the approach I would take. 

Bryce: [00:21:47] Yeah, I've had this dilemma for years, I reckon with just dog stock sitting there and it still can emotionally be like, you know what I mean? Difficult to actually be like, Let's just pull the trigger. 

Alec: [00:21:59] Yeah. And I think like, you know, if you are speaking to like a high call financial planner, they would be like, you know, portfolio weightings is the most important thing for like risk tolerance and goals. And that would be like, you know, overweight stocks, you know, overweight small cap stocks. This is too risky. You should be selling that and you should be rebalancing. But for me, like the beauty of being a young, small dollar retail investor is that you're not constrained. You can let your winners run. You can let a portfolio get out of balance. You can rebalance over time rather than having to rebalance immediately. There's transaction cost benefits, there's tax benefits. We don't have a lot of advantages as a retail investor. So like. It will use. 

Bryce: [00:22:43] Then to maximise the ones you have. 

Alec: [00:22:45] But it's at the end of the day, it's a risk tolerance. Like if you're going to freak out if your portfolio halves again from here, don't be so exposed to risky small caps like go in your eyes wide open that like you could get cut in half again just because you've been cut in half before, you could get cut in half again. What's the what's the saying? What do they call a stock that's fallen 90%? 

Bryce: [00:23:09] Something and then double. Whatever it is. 

Alec: [00:23:11] What do they call the stuff that's full in 90%? A stock that has fallen 80% and then halved? 

Bryce: [00:23:16] Yeah, that's it.

Alec: [00:23:17] Yeah. So it's like stocks could fall 50% infinitely. Until they're fractions of a cent and then they could still fall 50% a day and just getting smaller, smaller increments. So just because it has fallen, don't think it what, like it's at a natural low, like going eyes wide open about your risk tolerance and how much risk you're exposed to in your portfolio. But with that said, if you're comfortable, if you believe in the stories of the stocks, if you think they're trading at good prices and you don't want to sell. It's okay to build up your portfolio balance over time. You don't. There's no rush. 

Bryce: [00:23:55] Yeah. The rebalancing stuff is one that I feel like we've been, you know, we had a conversation with, Glen James and, and Kyra a couple of weeks ago, which will be released soonish on his show. And they were talking about, you know, if you stock's run, you need to sell out and put it back in. And we're just like.

Alec: [00:24:12] Yeah, that's exactly what I was thinking. Yeah. I mean, Sculley was like, yeah, you got to cut your winners and. 

Bryce: [00:24:17] Yeah, and I mean, they have incredible experience and there is, there is merit in doing that at particular times in your life. But I think for you and I, that doesn't either. Either I'm too inexperienced to really know that that term effects. 

Alec: [00:24:30] That's certainly true. 

Bryce: [00:24:31] Yes and no. The effects of not doing that. And maybe one day I'll find out. But if my stocks are running, I'm not I'm not trimming them to deploy into something else. 

Alec: [00:24:41] Yeah. Yeah. It's, you know, like, if you still believe in the company, if it's if it's going well, there's no reason to sell because it has gone well. And for something as arbitrary as like portfolio weights people are going to hate that. I just said that like it is in a sense arbitrary because it's not about like optimising financial return, it's about optimising for risk tolerance. And when we talk about risk, it's not the permanent impairment of capital risk here is volatility, and volatility is. Yeah. I like, you know, volatility is not good. It can be risky as you get older, but volatility is a fact of life. And as a young like embrace the volatility. Let your winnings run. Double down on your best ideas. Try and grow capital. 

Bryce: [00:25:32] Well, when we introduce our new segment either this year or early next year. So apologies if we do next year. The pimp my portfolio. I would love to put my portfolio down for an expert to see how they think about the weightings and get their view on it.

Alec: [00:25:49] Yeah, Yeah. And I think this is a sentiment that we're going to echo in a lot of these answers, like the intention, the goal that you want to get to a well-balanced corn satellite portfolio is a good goal. There's a number of different routes to get there and none of those routes are the wrong route. People will have really strong opinions on like which way to go, but let's just keep heading towards the goal. Whatever feels right to you with your risk tolerance and your time horizon and goals and all that stuff. But like, you're doing well.

Bryce: [00:26:17] Nice. Well, thank you, Paul. Keep the questions coming in. Contact@Equitymates.com. If you have one, you can leave a voice message as well via our website Equitymates.com. We'd love to hear from you. Get you on the show. Well Ren, we're going to take a break. And then on the other side, last week we had an interview with Saurabh Mukherjea. All about India and it got us thinking about investing in India. So we're going to go through two ETFs that give us access to India right after this. Welcome back to Equity Mates. We are discussing all things India. We've had an inspiring interview last week that really got us. No, it's not like we didn't know what was going on in India, but it just re-enthused us. I think about the opportunity that that that country has.

Alec: [00:27:12] Yeah, people should go and listen to it if you haven't already. It was we love all of our interviews and we learned something every time we spoke to an expert. But there are few interviews that you walk out part. You walk out inspired, and that was certainly one of them. And just the the level of the amount of change going on in India and the rate of that change and the rate of development is really interesting. And I think it challenged a lot of my preconceived ideas about where India was in its sort of development timeline. 

Bryce: [00:27:44] This is the flip side that when a lot of when you get the really bullish people and then the bearish people are like it's a basket case. So it's hard to know. But he was certainly super bullish and some of the companies that are coming out of there and the tech that's coming out of there is phenomenal. 

Alec: [00:28:00] Yeah, he spoke about two companies. GMM Pfaudler, was one the Indian company that got so big that it bought out its German parent company? Yeah, I think it was Germany, yeah. And then the other one was Bajaj Finserv. I was having a look at the Indian companies after the interview, and confusingly, although not uncommonly in India, there's Bajaj Finserv and then Bajaj Financial. And I was like, Are these two companies that are just basically the same name? Turns out Financial is a subsidiary of Finserv, but they're listed separately. And you see that a little bit in India, like the Adani Group of companies, is a big group of companies, all with like separate listings. The Reliance Group, the massive industrial conglomerate, also has like a whole lot of different listed companies that are all sort of owned. So it's like an interesting corporate structure that you say. You say it a bit in the West, like my mind goes to the company that owns Formula One, Liberty Media. They have that thing where they've got like multiple listed vehicles and subsidiaries all separately listed. But you see it a bit in India as well, just like the parent company might be listed and then the subsidiaries might be separately listed as well. That's a long way of saying we heard about some very interesting companies. 

Bryce: [00:29:15] Yes, great companies, Ren, but hard to access. 

Alec: [00:29:18] That's the unfortunate thing is that none of the brokers that we use give access to Indian markets directly, and none of the most commonly used brokers in Australia do. But the good news is there are ETFs, there are do give us access to the Indian stock market. 

Bryce: [00:29:35] Love it. Great thing about ETFs, Ren. Global investing. So Ren, there are 14 India related ETFs listed in the U.S. You've got you've vanilus like the iShares, MSCI India ETF, then you've got your thematics. So the Van Eck Digital India ETF and the India Internet and E-commerce ETF. And then as always, there's some weird and wonderful. You've got the WisdomTree India Ex State owned Enterprises Fund. 

Alec: [00:30:04] Yeah. Now most people's brokers do give them access to American ETFs. So you can have a look at all those over in the US. But you know, there's currency risk. The Aussie dollar is pretty weak against the US dollar at the moment. It's a bit of a headache. It's not really a headache for stocks, but there's a formula you fill out online right then. But really like when we're talking ETFs, there's a comfort in investing at home. And so I had a look at the ASX. There are two India themed ETFs the Betashares India Quality ETF, the ticker is I-I-N-D and the Global X India Nifty 50 ETF. The ASX ticker is N-D-I-A. So Bryce, let's go through them, talk about how they're different and then pick one general advice. 

Bryce: [00:30:53] So let's start with the Betashares India Quality ETF. The ASX ticker is IIND. 

Alec: [00:30:59] Which I think is the more popular one. I get the vibe. 

Bryce: [00:31:02] I don't know when they released first, but I always go to the Nifty 50. 

Alec: [00:31:05] Really? You might be giving us a hint which way you're going to lay it at the end there. 

Bryce: [00:31:10] Probably. But anyway, the Betashares India Quality ETF, it's an index which tracks know which. It's an index which selects the 30 highest quality Indian companies based on a combined ranking of the following key factors high profitability, low leverage and high earnings stability. So that's the three key characteristics that they look for to choose the three companies that go into that. 

Alec: [00:31:42] Pretty good. Making profit, not a lot of debt and profits pretty stable. That's a that seems to be good. 

Bryce: [00:31:50] That's Quality. 

Alec: [00:31:50] Largest holdings Tata consultancy 7% of the fund. Infosys, also, 7% of the fund, a company that is close to your heart. As your Stock of the Year pick. Yeah. Although I don't think you own it personally. 

Bryce: [00:32:04] No, too big, too boring. 

Alec: [00:32:09] And then ICICI Bank 5% rounds out the top 3. 

Bryce: [00:32:13] .8% management fee. 

Alec: [00:32:16] Oh, yeah, that's okay. 

Bryce: [00:32:19] It's okay.

Alec: [00:32:19] It's not great, but it's okay. It's a foreign market. There's a bit of active management in selecting the stocks, so it's probably what you'd expect. The two biggest companies in India, Reliance Industries and HDFC Bank, because this is actively managed, it's not just an index, it's not just like biggest to smallest. So how to look at where those two companies were. Reliance Industries is 10th in the weighting in this Betashares ETF, HDFC Bank, not in the 30 companies in the ETF at all. It's not there, which surprised me because we've had a few experts on the show over the years that have spoken about it as a high quality company. Mary Manning, a couple of years ago is the expert that comes to mind. So it was surprising that HDFC Bank wasn't in there, but that's the Betashares India Quality ETF. Picking 30 of the highest quality Indian companies, rolling them into an ETF, changing those 30 companies over time. And then let's move to the Global India Nifty 50 ETF. ASX ticker N-D-I-A. 

Bryce: [00:33:25] Yes, so the Global X Nifty 50 is investing in 50 of the largest companies in India. That's it. Top 50 market cap. 

Alec: [00:33:35] This is an index product. There's no active selection over, you know, what companies are going to put in and what weighting they will get. It's just.

Bryce: [00:33:44] Indexes lost Forever. 

Alec: [00:33:45] The companies die. Index is lost forever. That's a chapter in our latest book, Don't Stress Just Invest. But the Nifty 50 is India's top 50. Yeah, well name, also unfortunately named because the Nifty 50 was a group of 50 American stocks in the sixties or seventies that everyone just bought. It was kind of like the big tech stocks of the past where just everyone piled into them. You didn't get fired for buying IBM, and then the Nifty 50 fell. 

Bryce: [00:34:13] There you go. I do not know that. 

Alec: [00:34:14] Yeah, but India, their top 50, is called the Nifty 50, and that's what Global X Investing. So, unsurprisingly, the largest holdings of the largest companies in India. HDFC Bank. 14% of the index. 14% of the fund. Reliance Industries 9%. ICICI Bank. 8%. 

Bryce: [00:34:34] 0.69%. Management fee. So slightly cheaper than BETASHARES. 

Alec: [00:34:39] But it is an index. An index. So you'd expect it to be cheaper. 

Bryce: [00:34:42] Yeah, exactly

Alec: [00:34:45] So the question Bryce, of those two ETFs, we're excited about the opportunity in India. Which one are we buying?

Bryce: [00:34:52] I'm buying the Nifty 50. 

Alec: [00:34:54] And why is that? 

Bryce: [00:34:55] Firstly, I have a I'm frustrated that there aren't actually ETFs out there that give you access to the smaller end of India, which I would I would like opportunity. I would like to be getting not the micro caps are anything way too volatile, but like you can't get access to anything below the 50 here.

Alec: [00:35:12] I think this is a classic example where active management plays a role. Foreign market. Deep knowledge. Yeah. Like the regulatory, you know, like the, the level of like compliance and accounting and stuff like that is a little bit it's a little bit murkier than like the US or Australia. Like, this is where active management plays a role to do the due diligence, to do the work and to find its. 

Bryce: [00:35:35] Sort upside at something like 40% of companies in India have been done for. Dodgy, dodgy books. What did I suspect? 

Bryce: [00:35:43] Let's just say allegedly that because. Allegedly. 

Bryce: [00:35:47] Anyway, anyway, the reason I like the Nifty 50, aside from it being cheaper, is the way that indexes operate. You're going to get the best companies that are coming up and through and being in that portfolio. And whilst, you know, I'm sure a lot of the ones that go into the India quality would also mirror a lot of the ones that go in the Nifty 50, it's still an actively managed one. But you're letting in the nifty50 just the index do the work, so you're always just going to get the top 50 companies as they grow. 

Alec: [00:36:18] Yeah. I feel I'm the same like the, in a market like India, which is growing and all you want to do is capture that growth. It's just hard to to determine where that growth is going to come from. Like, I don't think anyone, you know, like, I don't think anyone at the end of 2022 would have said the best performing stock of 2023 is going to be in NVIDIA. Or if I looked at Europe, I don't think they would have said the best performing stock is going to be Novo Nordisk. It's just like the market is unpredictable and the power of an index is you capture the unpredictable company that runs. And so when you just want to, like passively have exposure to a theme or a market, the less decision making in there is often better. And so, yeah, I would lean towards NDII as well. It's worth saying Saurabh talked about two companies, GMM Pfaudler, not in either of the ETFs, so probably not big enough. Bajaj Finserv is in the Global X one, and then Bajaj Financial, which is the subsidiary of Bajaj finserv is in both. FYI 

Bryce: [00:37:29] I love it. I'm actually just looking. I've this has prompted me to look at Infosys because I think last time we did a check in, it had bombed. It's having a resurgence. It's having a resurgence out of I need to do a bit of work day on this to understand what's going on. But yeah, anyway. But it's not. 

Alec: [00:37:49] It's just what is it, year to date.

Bryce: [00:37:51] By year to date it's still down, but I think down 2% since we checked since May, it's up 20 or 21%. 

Alec: [00:37:56] Okay, Well, Axon enterprises. My stock of the Year is up 21% year to date. 

Bryce: [00:38:00] Okay. But still good. Last time we had about a 40% gap. So I've closed the gap. Closed the gap. If I end in the positive here, I'll take a win. 

Alec: [00:38:09] I was saying that I'd never win. 

Bryce: [00:38:11] Yes, I just want to win anyway. I'm going to do every day, day understand what's going on. Maybe now's the time to buy anyway. We will. We'll leave it there. A reminder that if you have any questions for us, can send them through to contact@equitymates.com. And speaking of questions, we have our Ask an Advisor episode coming up this Thursday with Patrick Malcolm. So tune in to that because we're going to be answering all of your questions that have come in for advisors, some of the best advisors in Australia joining us here in the studio. And then on Friday we continue with our new series called Uncovered, where we shine a light on a lot of the small caps listed here on this in the Australian market. And we have a very interesting company in record medical, doing some amazing things with heart ablation. 

Bryce: [00:38:59] Ablation. 

Alec: [00:39:00] All right, heaps happening. But that will do us for today. See yah.