Hi,

I have investment in below ELSS mf

1. HDFC Tax Saver (G)

2. HDFC LT Advantage (G)

3. ICICI Prudential Tax Plan (G)

4. SBI Magnum Tax Gain (G)

5. Sundaram Tax Saver (G)

And small % in

1. Franklin India Bluechip (G)

2. HDFC Equity (G)

All ELSS are out of lock-in period.

Now I am planning to get out of all ELSS mf and invest that amount in other funds.

I want to invest for long term ie more than 10-20 years. And I am ready to take higher risk.

So I am thinking of investing more into small and mid-cap MF.

I have just started shifting from ELSS to below funds

1. Quantum long term Equity fund-(G)

2. IDFC Premier Equity fund Plan A-(G)

3. HDFC Mid-cap Opportunity -(G)

I wanted opinion on:

1. For long term is small/ mid cap funds better than multi or large cap……?

2. What all funds should I go with?

Thanks,

Rakesh

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Dear Rakesh, Please invest in following funds only –

Franklin India Bluechip

Quantum Long Term Eq.

IDFC Prem. Eq.

Thanks

Ashal

Dear Ashal & TheZionView,

Shall I sell all my ELSS in ONE GO and invest the amount to funds as you suggested…….?

What % should go to each fund considering the 10-20 years view with higher risk appetite…..?

Thanks,

Rakesh

Dear Rakesh, as it’s merely a switching from an Eq. fund to another one, I w’d ask you to switch into one lump sum.

Thanks

Ashal

@rakesh

1. For long term is small/ mid cap funds better than multi or large cap……?

Well Yes in long term higher the risk higher the reward right?

Well No the risk of losing your premium is high in down trend of market which might be the time you need the money

Why am i contradicting? Well no one can predict the market thats why

So what to do,,? Thats why diversification is important “dont put all your egg in one box”

2. What all funds should I go with?

Franklin Blue Chip because its a Large cap and excellent track record

Quantum Long term Equity its a Multi cap with very good track record and investment methodology

IDFC Premier Equity fund Plan A-(G) its a Mid CaP has good record

Final point keep tracking the performance every 6-8 quarter and take appropriate actions

Hi,

If you do a part switching or lumpsom switching, it won’t make much a difference. Hence as suggested by Ashal, you can go with a lump sum switch / redemption.

You should invest a proportion of your investment into different categories of MF :

1. Large caps – 20-30%

2. Mid Caps – 40-50%

3. Small Caps – 10%

4. Gold Funds – 10%

5. Sector Funds – 10%

Regards

BFA

what i suggest for switching from your elss to other non elss funds in lump sum as the market is volatile, with vision to be in market whether going up or down, you may use your liquid fund sufficient at least for one elss fund a/m , so one elss fund could be sold and other elss fund of approximately same a/m could be bought on the same day. then the redemption a/m of elss fund could be used for switching other elss fund to non elss fund and so on. this way one can be always in the market up or down.

Dear Bharat, as the money is already invested in Eq. funds (ELSS), does it make sense to invest in bits in non ELSS funds? Please do remember the person in question is ready to put money for next 10-20 years.

Thanks

Ashal

i am not asking to transfer in bits for any one fund. i am also asking switching lump sum. but now a days market is volatile and some day it is increasing upto 2% and other day down . when one is selling elss , its redemption would take at least two days . by the time market may have increased by 1-2% . to avoid such uncertainty ,i suggested to use liquid fund in bank for effecting both on same day. i remember , some study shows the whole increase of the year happened in some 20 or some days, so it is important to be in the market and so this is suggestion to implement. it will cost you nominal cost of bank interest for a few days (till you complete all funds.)

Dear Bharat, Do you really feel that for 15-20Y period the initial 1 or 2% swing in NAV in either way (up or down) ‘ll make any significant impact on the final return?

Thanks

Ashal

it depends how the future would shape out.but as a principle one should try to maximize the return at every point ,particularly when it is with no extra effort or with a little effort .and who knows how future would shape up. moreover i think the compounding principle would have better effect when the corpus would increase at early stage. did not we get happy when the entry loading was abolished for direct investment? should not we consider the stt for any time switch , or exit load for equity mf switch before completion of one year? for me effort saving a pie is earning a pie and 100 pie would make one rupee!

HI,

I suggest the following:

1 Large Cap

1 Mid cap

1 Multi cap

1 Debt fund

If you cannot invest separately in debt fund, remove multi cap and invest in balanced fund…diversification is important Rakesh sir!

Hi All,

As it is suggested that we should invest our money across large, mid & small cap.

So if one invest in any multi-cap fund then isn’t this allocation taken care.

Like Quantum Long Term Eq. which has

Large cap – 66%

Mid cap – 30.5%

Small cap- 3.5 %

This I am asking purely from allocation point of view as I understand that there is risk in investing all the money in one AMC/fund.

Thanks,

Rakesh

Dear Rakesh, in case of a multi cap fund, the fund manager is making call for allocation of our money towards large or mid or small cap. Nothing wrong to invest in a multicap fund. Yes the usual risk of single fund is there. That’s why I had offered you 1 large cap + 1 mid cap along with this multi cap fund.

These 3 funds ‘ll provide sufficient diversification to your portfolio.

Thanks

Ashal

Dear Ashal,

What % should I invest in each suggested fund considering 10-20 or may be 30 years view with higher risk appetite…..?

Thanks,

Rakesh

Dear Rakesh, you may have your own allocation based upon your own requirements. For example 40, 40, 20 in large, multi & mid cap in that order. Focus on investment & not on individual fund’s allocation in your portfolio as of now. Start with what ever ratio you want to, after 1-2 years you may change that ratio based upon your own learnings.

Thanks

Ashal

Dear Bharat, both of us have given our views, now dear Rakesh should decide what path he wants to move ahead?

Thanks

Ashal

Dear All,

Thank you for all the valuable information.

Regards,

Rakesh

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