How to choose Mutual Funds for tax saving purpose
POSTED BY ON January 2, 2009 COMMENTS (109)
95% of the salaried people are rushing to invest in tax saving (India). 5% of smart people have already done it (like me). The biggest rush I know must be still for LIC policies and PPF because very fewer people in India invest in Mutual funds still.
In my earlier posts, I have told which two mutual funds are the best candidate for investing now. They are SBI Magnum tax gain and Sundaram BNP Paribas Taxsaver
Both of these mutual funds are long term consistent performers and come from very respected and best AMC’s in India. Both of these have always been one of the best in the category.
But time changes, situation changes :), We can analyze some numbers and see what are the future prospects for these two mutual funds in comparison to each other. We will see on what basis we can conclude that. Please read the following conversation with my friend. It should give you some idea about how to choose mutual funds and why one could be possible is better than others.
Robert: Hey Manish, need some suggestion from you.
Manish: Hi Robert, what’s up … how is life these days?
Manish: How is a job going on?
Robert: Nothing yaar, I am just busy with my tax savings, have to submit the documents ASAP, so need to invest now, I am thinking of investing in an ELSS, Any suggestions?
Manish: Hmm… See, There are two good funds I think you can invest in, SBI Magnum tax gain and Sundaram BNP Paribas Taxsaver. These are the 5 star rated funds from valueresearchonline.com. You can consider those. But if you only want to invest in one ELSS, I would say go with Sundaram.
Robert: Hmm. Can you give me how you did this analysis and why are you saying that Sundaram looks better than SBI at this moment? I thought if a mutual fund has been long term consistent performer and our time horizon is more than 3-5 years, We can invest in any good funds.
Manish: That is true, I am not saying that SBI is bad and Sundaram is the best, we are trying to see why Sundaram is a better choice for now. We will see the numbers and some charts, and we can look that Sundaram is doing much better than SBI for quite some time.
That gives us a good estimation of which one is good for investing now. So, this requires some long-duration talk, I will have to tell you the details, are you ready?
Robert: ok
Manish: So, Let me first tell you that Since Inception returns for SBI has been 16.67% and for Sundaram its 19.35%, Which is highly respectful .. Let us also look at the following chart of NAV of both mutual funds for last 3 years.
Green: Sundaram
Red: SBI
Blue: Sensex
Manish: You can see that in the last 3 years, Sundaram has outperformed SBI Magnum and also was less volatile than SBI, when it comes to being consistent with Sensex. Also, we must see the last year charts of these two in isolation.
Manish: You can see that Sundaram has taken over SBI around Jun 2008 and has performed better than SBI. You must keep in mind that NAV and index values have been rebased to 100, for comparison purposes only.
Robert: Hmm.. that is fine, I understood that we have some charts which try to prove the point, But there must be other numbers also which favors Sundaram over SBI.
Manish: Yes, let me tell you some things which you can use for comparison purposes.
1. Sharpe Ratio:
Generally, people judge mutual funds performance by the returns only, whereas the better parameter is Return with respect to the risk taken. The Sharpe Ratio of a fund measures whether the returns that a fund delivered were commensurate with the kind of volatility it exhibited.
This ratio looks at both, returns and risk, and delivers a single measure that is proportional to the risk-adjusted returns.
So, the Sharpe ratio is noting but risk-adjusted returns, So the higher Sharpe Ratio is better. Currently, in the Mutual fund’s industry, Sundaram Tax saver and Canera Rebecco mutual funds have the highest Sharpe ratio of 15. SBI has 0.0.
2. Alpha Ratio:
This is a very important ratio in mutual funds. Alpha is a measure of an investment’s performance on a risk-adjusted basis. It takes the volatility (price risk) of a security or fund portfolio and compares its risk-adjusted performance to a benchmark index.
The excess return of the investment relative to the return of the benchmark index is its alpha.
Simply stated, alpha is often considered to represent the value that a portfolio manager adds or subtracts from a fund portfolio’s return. A positive alpha of 1 means the fund has outperformed its benchmark index by 1%.
Correspondingly, a similar negative alpha would indicate an under-performance of 1%. For investors, the more positive an alpha is, the better it is.
Alpha for Sundaram: 3.35
Alpha for SBI Magnum: -1.18 !! (Bad)
3. R-Squared:
R-Squared is a statistical measure that represents the percentage of a fund portfolio’s or security’s movements that can be explained by movements in a benchmark index.
Higher the R-squared Value, closer the mutual fund to the index, what it means is that it will behave like Index funds up to that percentage, which means what if a mutual fund has r-square value of 100, its nothing but an index fund, then why to buy the mutual fund and pay high managing fees, A mutual fund should have a balance in R-square it should not be more than 90 and less than 80.
A mutual fund with less than 80 R-square shows that they have more tendency to be volatile and be close to the index benchmark. forbes.com says: Mutual fund investors should avoid actively managed funds with high R-squared ratios, which are generally criticized by analysts as being “closet” index funds.
In these cases, why pay the higher fees for so-called “professional management” when you can get the same or better results from an index fund.
R-squared for,
SBI Magnum: 94
Sundaram: 87
Read more about the ratios at :
https://www.investopedia.com/articles/mutualfund/112002.asp
Robert: Great !! those ratios are really important parameters while judging the mutual funds. Btw, I understood these things. Any thing regarding holdings?
Manish: Definitely, Ratios are important, but we should also look at simple things like its holdings in different types of companies. See below –
Sundaram Portfolio
| Market Capitalization | % of Portfolio |
| Giant | 56.17 |
| Large | 17.10 |
| Mid | 24.88 |
| Small | 1.85 |
| Tiny | — |
SBI Magnum
| Market Capitalization | % of Portfolio |
| Giant | 46.07 |
| Large | 21.48 |
| Mid | 25.52 |
| Small | 6.91 |
| Tiny | 0.01 |
If you compare the investments by Sundaram, it has a high concentration in Giant companies and has avoided investments in Small and Tiny Companies, which helps in avoiding Risk (also returns can be affected, but more important is managing risk).
Also in the future when Markets improve and start rising, front line stocks (big companies) will be the first to move up.
Robert: Any other small things to consider?
Manish: Other things you should see are
Expense Ratio (lower the better) : Sundaram : 2,.24 , SBI : 2.5
Market Turnover
PE Ratio: Lesser is better
PB Ratio: Lesser is better, SBI is better in this Market Capitalization There are many other,
Robert: That is fine, but I can see that SBI is ranked 1st when you consider 5 yrs return and Sundaram is 2nd, I saw it on Value research online site.
Manish: True, But did you see its 3 yr Rank also? Its 5th !! and did you see 1 yr rank: its 12th for SBI Where as Sundaram is 2nd in 5 yrs, 1st in 3 yrs and 2nd in 1 yrs return category, which gives an indication that Sundaram is taking over as one of the best funds available over SBI slowly.
Robert: Hmm.. that makes sense, Great !! I would really consider these points, this helped a lot. Manish: My Pleasure !! But please understand that there is no guarantee that Sundaram will outperform SBI next year or from now on. There is just a high possibility for it, because of our analysis.
Question: Guys (and gals) … Do you know who is Robert and Manish 🙂 Ans: Both are Me … :), I just created this talk to present the article and learning in a different way and to make it practical and enjoyable .. I hope you all liked it.
Note: Please note that the views and analysis are personal, there may be some error, if someone finds any please, let me know. I will correct it. But I am sure there is no mistake or error in data.
Source: valueresearchonline.com and forbes.com
Dear manish I have invested in following funds 1. Franklin high growth company fund growth – 1000
2.dsp black Rock equity regular fund (G) – 1000
3. Icici prud value discovery fund (G) – 2000
I want to invest 3000 more which MF will be good
My time frame is 10-15 yrs
I think you should invest more in same funds. they are excellent
Hi Manish, thanks a ton for sharing your knowledge. I’m 37 years, married with two children (8yrs and 5yrs). I earn close to 1L/month. I read your post on how to invest and would like to start investing a minimum of 20% of my take home salary.
I have a goal in mind and want to invest for 10-15 years. I review the research on VRO. Please guide me on how to choose MFs.
Thanks for you time. Regards, Chetan
I think 20% of your income is a good amount to start with, but you should target atleast 40% (increase your income)
We think our pro membership will help you as it fits in your requirement. We have various benefits under it like life insurance, health insurance, mutual funds and your financial analysis too..
Just check out our Pro membership once and schedule a FREE call with us to know more – http://jagoinvestor.dev.diginnovators.site/pro
Manish, u r really helping us to keep on investing , thanks.
I have already invested in mirae asset opportunity and motilal Oswal most focused 35.
I still want to invest 1000 rs in 3 more funds for say more 10 yrs pls suggest, good funds.
These are two good funds.
I suggest increasing money in these two funds itself as 5 are too many. Or you can take one more like ICICI pru discovery fund !
very useful article sir.
sir i want to know how purchase mutual fund. is it necessary to purchase MF via agent.
No , you can go and buy it directly also from the fund house
Hi Manish,
I am 27yrs old, 1st time investor.
I choose below MF for my Long Term(10 years) SIP based on Standard Deviation,Sharpe Ratio,Alpha,Beta,
Expense Ratio,Turnover ratio and my risk capacity.
Can you suggest if below funds are okay or need some changes.
Tax Saving
1) Axis Long Term Equity Fund-Direct(G)-500/-
2) Reliance Tax Saver-Direct(G)-500/-
Large cap Equity
3)ICICI Prudential Focused Bluechip Equity Fund-Direct(G)-1000/-
Mid&Small cap Equity
4)ICICI Prudential Value Discovery Fund-Direct(G)-1000/-
Hi Sushil, Bluechip equity fund with ICICI is a great option considering the kind of investment you are looking for . You can also check http://www.icicipruamc.com/equity-funds/ICICI-Prudential-Tax-Plan.aspx for more information.
Looks good to me !
Thanks Manish and Amit,
I have started my Mutual fund SIP investment in below funds…
Tax Saving
1) Axis Long Term Equity Fund-Direct(G)-1000/-
Large cap Equity
2)ICICI Prudential Focused Bluechip Equity Fund-Direct(G)-1000/-
Mid&Small cap Equity
3)ICICI Prudential Value Discovery Fund-Direct(G)-1000/-
4)Balanced Fund
HDFC Balanced Fund – Direct(G)-1000/-
Great
Hi Manish,
I am planning to do sip of 20K /month in for next 5-7 years.
I am planning for equal distribution of 4k/month for the following fund.
Tata Balanced fund
ICICI prudential balanced advantage fund
UTI Opportunities Fund
Quantum Long term equity
HDFC Mid cap
I am a moderately aggressive investor.
Please suggest accordingly,
Thanks,
Koushik Das
These are good enough funds . you can continue in these !
Dear Manish,
Presently I am analysing few MFs as per the points in this article. But I am unable to get the 3 year and 1 year charts for comparison. Kindly guide me regarding how to get these charts and how to rebase them to 100. If any website is providing the same, then please let me know.
Thanks and regards,
Dinesh
You will have to spend some time to find them properly . No one website I can point you to !
Manish,
Brilliant article. Though I have heard n seen sharp ratio, alpha ratio, r-squared in VRO etc I never understood their meaning. This article really helped me. Tnx a lot !! Btw VRO is now revamped and I dont see these ratios on the site. Or Am i missing something?
HI Chetan
Thanks .. I have not looked at VR revamped version . Will have a look
Hi Manish,
I have recently invested in ICICI Pru Balanced fund for 3 years with monthly SIP of 2000/-. What would be the other best investment alternatives/MF’s for another 2-3K/month ?
Thanks for your response!
There are many Quantum Long term equity fund is one ! . Another is SBI emerging business !
Manish, great Blog, I am planning to start my MF investments through SIP in below. All are targeted for a Three year period. My intention is to invest in Low risk funds.
1. HDFC Taxsaver – Growth (500 Rs/-)
2. ICICI Prudential Focused Bluechip Equity Fund – Retail – Growt (1000 Rs/-)
3. UTI Opportunities Fund – Growth (1000 Rs/-)
4. SBI Gold Fund – Growth (1000 Rs/-)
Could you please provide ur comments on the above……does this qualify as a decent portfolio ?
I would say just choose 2 of them
HDFC tax saver and UTI opportunies are good choices overall ..
Thanks Manish,
I have a sharekhan demat account, I would like know if there will be any charges that will be levied by sharekhan on my SIP purchases?
I have heard that they dont have any charges, but better confirm it once from the customer care
Manish, firstly I want to congratulate the great work you keep doping here.
It would be great if you give some ideas as I am planning to start my MF investments thru SIP in below list considering thier history and feeling diversified..
1. HDFC 200 (2000 Rs/-)
2. IDFC Premier Equity Plan A (2000 Rs/-)
3. ICICI FMCG (2000 Rs/-)
4. Reliance Pharma Fund (2000 Rs/-)
5. UTI Gold ETF (2000 Rs/-)
can u just throw u r comments and I am sure your expertise will help me to choose the right ones any..
Pramod
WHy are you choosing the mix of funds ,why not just pure equity diversified funds ? What is your goal in next 5 yrs ?
when all the people are invest their money into different mutual funds basing on the investors preference or funds manager preference how can you justify
Veera
Justify what ? can you explain ?
very useful article manish.. gave a good idea on how to clear the clients questions..
hi,
i visited this site today only and too by chance. This site is very informative. I learnt a lot from the articles, which I read today. Just by chance, my name is also manish 😉
thanks,
Manish
Good to hear that you learnt a lot .. keep reading
Manish
I want to start investing in mutual fund.. am just a coll grad.I am now reading your blogs to get a clear idea before entering into mf. its so helpful. should i need to start with debt funds and then stp to equity??as i dont need any immediate amount can directly start in sip in any mf??I ll analyse the mf using the above parameters and then i ll decide.Thanks for the valuabe info..keep posting many of ths kind
Vignesh
You can invest in some balanced funds as a start like HDFC Prudence
Manish
Manish,
Could you write an article on how to choose a debt fund as there a lot of varieties? There a lot of blogs/websites on how to choose a equity fund but not debt fund. I want to use the the debt fund only for my portfolio rebalancing. I’ve been investing in BSL dynamic bond but I’m really not sure if this is a right a choice for this purpose. I just went by VRO’s suggestion.
Should one consider PPF+EPF+FD’s while managing the equity:debt ratio? Or is it just the equity funds:debt funds?
Thanks.
Hem
There are many articles which I had written on debt funds and how to choose them , see http://jagoinvestor.dev.diginnovators.site/archives
Hi Manish,
Thanks, I looked into archives but no one seems to suggest how to select a debt fund just for periodic portfolio re-balance?
Thanks,
Hem
Hem
Not like that , you have articles for good Debt funds like http://jagoinvestor.dev.diginnovators.site/2010/03/floating-rate-mutual-funds-%e2%80%93-how-when-and-why.html . Choose some funds from there . And then for rebalancing you just need to transfer the money in these funds .
Manish
Thanks so much, Manish.
Best language…very good presentation and interesting.. Thank you Manish.
Hi Manish,
Great site. It is on my bookmarks now, and going thru the archives is on my To-do list 🙂
Quick query please – Continuing my debt investments alongside, I’m looking to invest 30-40K per month into MF (medium risk appetite) thru SIPs…Maybe 6-8K in 5/6 MFs. Does it look too high / over commitment ?
Many thanks.
Samir
Samir
It would depend on other things . If you are earning a lakh rupees and your expenses and other commitments are leaving you with 30-40k per month, then its nothing wrong to invest in MF . Go ahead .
Manish
I wanted to invest in a Banking fund, since this is one sector, which is beaten as of now. I did research based on your article and video on MF selction. Reliance banking retail looks to be really having good Rank since last 7 years. But it’s Rsuqared ratio is 97, which means it is equivalent to index fund.
On the other hand Kotak PSU Bank ETF maintains these ratios, but doesn’t maintain ranking.
So how should I decide here? What other factors I should look for which would help me nail down one.
Ashish
I would say you can go for any and dont look for these small details which would result in difference of .5 or 1% returns . These things stops us in taking Action which is more important
Manish
Hi Manish
I want to invest Rs. 1000 per month in Mutual Fund….. Please suggest a MF considering my investment period for more than 5 years.
Thanks
Rgds
Diviay
HDFC top 200 or DSPBR top 100 looks good . Remember that they are pure equity funds and a long term view is required .
manish
hello Mr. Manish,
you might not realize this but you are making a difference in people’s life……..i really appreciate it and saying this after looking the effects. i myself have started thinking of managing my funds rather than asking for any agent’s help.
a big thank you…….
your hold on the subject is amazing considering the fact that you are a system engineer!!!!
keep up the good work!!
bye!!
dr.ankur
thanks , I feel great to hear those kind of words 🙂 . Let me know if there are any doubts 🙂
Manish
Hi, i have never invested in mutual funds. i want to invest now. which is best to invest in-equity or debt? can you suggest me best equity mutual fund to invest with around 100-2000/- p.m. to invest.
thanks.
Further to my question….also tell me what are the major items shd i check before investing like 5yr return/ nav/ or anything else to quickly make my decision to invest….?
Lavanya
http://jagoinvestor.dev.diginnovators.site/2009/01/95-of-salaried-people-are-rushing-to.html
Manish
Lavanya
You should invest in equity if you have long term view like 5+ yrs , if its small like 1-2 yrs you should go for debt oriented funds .
http://jagoinvestor.dev.diginnovators.site/2009/08/list-of-best-equity-diversified-mutual.html
http://jagoinvestor.dev.diginnovators.site/2009/11/list-of-best-debt-oriented-mutual-funds-for-2009-2010.html
Manish
hi Manish,
can you help me out here…
i have recently made an investment in an Tax Savings Fund through my Net banking Facility(Citi Bank).
Now i am wondering how to submit the same investment details in my office for getting tax exemption, as i do not have any certificate or anything related to that investment.
So can you kindly enlighten me in w.r.t what details/certificates that i should get from my bank to submit as an investment proof in my Office.
Thanks a lot in Advance:)
Loyal Follower of JagoInvestor,
kris
Sravan
There should be some way of getting the printed certificate from your Netbanking . With ICICI you can take the print and submit , there should be something similar in the Citibank .
Manish
Pls let me know, which is the best SIP at the moment in all respect, in which i should invest @ 1000/month.
Salil
Look at : http://jagoinvestor.dev.diginnovators.site/2009/08/list-of-best-equity-diversified-mutual.html
Manish
Hi Manish,
I am a regular follower of your blogs and I started investment in Equity SIPs. I have questions and need your suggestion/opinion what ever you call. I invest around 1 lac in tax savings in ULIP for 80(C). I want to know your option to invest a 5 lac rupees instead of just sitting on that.
Ramesh
Great Blog!! Its really to find this website, really informative!! I tried finding about Superannuation funds, their benefits etc, could get not much except one article where i got something. I am specifically intrested to know how beneficial it is to invest (subscribe) lets say Rs 80,000 to superannuation Vis-a-vis to get the after tax money (80000*0.7 = Rs 56000/-) invested in a good Equity diversified fund.
When will the breakeven happen? And assuming that the pension will start at 58, will it be really beneficial at that time as compared to the returns of the returns from the equity diversified fund.
If you can through light on this, i am sure a lot of people will get answers / clarity.
Thanks,
Vin
Vin
Getting pension at retirement is a big issue .. you should not rely on superannuation or any debt product to generated your retirement portfolio. rather use Equity for long term . Invest in equity diversified mutual funds through SIP .
Manish
Hi Manish
Its feels great reading your blog, actually I got some idea how to invest with my hard earned money.I have just joined a job and started to invest in mutual funds. I joined my job on Oct ’09 so didn’t start any PPF or tax saving MF. I have invested 1k (SIP)/each in the following funds :
1> Reliance Diversified Power Sector Fund – Retail Dividend Plan
2> Reliance Natural Resource Fund – Growth Plan
3> Reliance Infrastructure Fund – Retail Dividend Plan
4> UTI Energy Fund – Dividend Plan
5> UTI Wealth Builder Paln
I am planning to invest another 5k/month ( including my tax saving plan). How should I invest? Are the selections of my(seeing what others are doing) MF alright ? Do I need to make any change. I am mainly looking at my long term(5/10 years) goals.
I read your other articles of why one should not have more than 8/10 MF. So if I need to invest more should I invest in the same MF and only increase my SIP amount ? Looking forward for your answer.
Keep bloging !
Tirtha
Tirthankar
Thanks for the comments.
All your MF selection comes from sectoral funds basket , You should rather choose diversified equity funds mentioned at : http://jagoinvestor.dev.diginnovators.site/2009/08/list-of-best-equity-diversified-mutual.html
What is the reason you chose those funds you mentioned ?
I chose the above mentioned fund because power is in huge crisis and different forms of power will come into play sooner or later, and Infrastructure is in huge demand these days.
Regards
Tirtha
Tirthankar
Power and Infrastructure has always been in demand 🙂 . just that we are getting to know about it and its highlighted more these days .
I am not saying that these funds will not have good returns , they can have some amazing returns , just that you should be aware of the risks involved and should be fine with them . If things go bad and the sector messes up , you can loose such a big part of your investment in a short time that you wont imagine (only if you dont take action on time)
otherwise , All is well
manish
Oops … I think I am is a hot soup .. can you suggest how long should I continue with this investment, as you suggested(in another article of yours) with a minimum period of 6.5 yrs would be good and then let it grow and take it out when in need, or should I stop now (already invested for 6 months i.e. 30k) and start with diversified equity ?
i have been visiting ur blogs since 1 week and since then i’m wondering why couldn’t i catch u since dec 2007 when u started blogging. i would have made a fortune by now if i had followed on ur footsteps. i wish to start up financial planning for myself now altho i’m a bit late as i’m 34. some of the queries i have are
1. what are the different ways by which u can buy MFs? do we have to have a demat account/trading acc like icici direct (or others) for buying MFs online ?
2. can we buy the MFs of different fund houses thru their online websites? which methods are having less brokerage charges (thru agents or thru online methods?)
3. which online trading account do u suggest for opening a demat account with respect to its charges and other performance criteria
hope to be in constant touch and learn from u the art of financial planning
dr kishan
Dr. Kishan
1. You can buy mutual funds by 3-4 ways .
a) agent (commision)
b) Direct (go to MF office and invest)
c) Online trading account
d) Some websites offer free investing
2) You can , but for that you need to have folio number (for the first time , you have to visit in person , from next time you can invest online)
3) I use ICICI direct and like it .
Manish
Do you recommend FundsIndia.com over directly approaching the fund houses? And do we get lesser expense ratio by directly approaching the fund house?
Yes you can get more units when you go Direct .. However I cant say if you should switch from fundsindia because overall it would depend if you need their suggestions or not ..
But how is it tax free ? Any income in India is taxable !
dude :::
this side aadi ::
d things u described here : are really appreciable’
itz helpz one Knowing d practical facts::
anywayz ::: wht u doin professionally ?? ?
Aadi
Thanks , i am a systems engineer .
Manish
Very good read. Thank you.
Thanks Daddy Paul
Manish
Hi Manish,
I am looking to invest to save tax u/s 80C to avoid tax burden. Could you pls suggest me investing now in MF lumpsum of 30K -50 K would advisable or could u pls suggest any good investment right now. I can take risk (as my age is 26). Pls suggest
Better to invest in tax saving mutual funds if you can take risk and can lock in money for 3 yrs .. Sundaram tax saver , HDFC tax saver are good funds .
Manish
Hi Manish,
Appreciate if you please tell me which MF should I invest now. I am new to MF and want to save for my kid (1 year) for his higher education.
Whether to invest in PF account on kid name or to invest in ELSS for 18 years period? Investment budget is 25000 rs. per year.
Please suggest me.Thank you
Prashant
Prashant
You have to use PPF + SIP in equity Funds or Index funds . Get funds names from the list of Equity funds i have discussed .
Manish
Manish
Thanks for the prompt reply. I am planning to invest in lumpsum 25k p.year as I rarely watch the market updates/condition.
So investing 15K/year in PPF and 10K/year in SIP ( HDFC top 200) would be good?
Also If I open PPF account for my kid and after 20 years if I withdraw on his name, what will be the tax position in New tax code? Thanks in advance.
You should invest 1k per month in HDFC Top 200 and rest in PPF . After tax code the maturity value will be taxable after 20 yrs .. but that will happen with everything .. so it does matter much .
Manish
i want to know that which option should i choose if i invest in equity fund for more than one year or vice versa ? 1-growth fund 2-dividend fund
For person who is investing for long term .. growth would be good .. read my article on difference between the two .
Manish
I would choose HDFC top 200 for its amazing performance till now .. Others are also good , but you choose over this .
Expense ratio is with each mutual funds , not the FUND house , am i wrong ?
Manish
You are right, expense ratio are per fund not per fund house and I did mean the same.
Should I go for 1000 rs monthly sip or 12000 lumsum investment in HDFC top 200.
Also this is how my portfolio looks like:
DSPBR Tax saver : 10000 (lumpsum, 3 ys going to complete in Jan 2010)
BSL Front line Equity – Rs 1000 SIP
BSL Mid cap – Rs 1000 SIP
Fidelity Tax Advantage – Rs 500 SIP
Reliance Growth – Rs 1000 SIP
HDFC Young star plus (ULIP) – Rs 2000
Also looking for Rs 1000 SIP in upcoming Axis Equity fund, 5000 Lumpsum in Fidelity India value and Sundaram PSU each.
How is this portfolio looking and suggestions to make it better. I am planning for 5 yrs horizon and risk appetite is good.
Should I redeem DSPBR tax saver for another SIP or remain invetsed?
Thanks in advance.
You may want to reconsider BSL Mid cap .. its a pure mid cap funds , are you ok with it ?
Also better invest in Sundaram tax saver instead of Fidelity . Axis Equity is NFO , dont go for it ? Why do you look up to it ? Reason ?
same for Sundaram PSU ?
Why ?
Manish
Taking care of my risk apetite and BL mid cap’s performance, I thought it to be a good fund to invest in. To make my portfolio diversified (all other are Equity diversified) I opted for this one.
MAy consider moving to Sundaram Tax saver after locking period of 3 yrs gets completed for Fidelity. But now I have home loan and not looking for tax benefits. Can you please suggest another good fund in lieu of this on (Fidelity tax saver)
Looking at government’s disinvestment decision, thought PSU fund will be a good investment. What’s your suggestion on alternative PSU fund? Or bigger question is investing in PSU is worth? Seemed worth to me but I may be wrong as most of the times 🙂
PK
For general investor , the best thing to invest is a fund is Diversified mutual funds .If you are trying to go to sectors and timing the markets , better start investing directly .
manish
Hi Manish, I need to start a SIP of rs 1000 in Equity diversified fund. I already have Birla sun life Frontline equity and now considering HDFC top 200 OR DSPBR top 100 or Reliance Growth. All seem same to me but finding it hard on zeroing on any one of these. Should I consider NAV as my select criteria? I mean HDFC is around rs. 170 and DSPBR 90 and Reliance growth 15.14, should I consider taking reliance or DSP over HDFC knowing HDFC has minium expense ratio. Please suggest.
Also, thank you very much for this awesome blog for educating us:).
it was very informative vist on this page i have yet read only few lines on this site. which impreass me now i would like gain all imformation from this
@santosh
Welcome 🙂 .. go through the archive section and look for all the things which excites you .
Manish
Hey manish,
can you change the color of either red/green in the graphs to black. I’m finding it difficult to discriminate btwn them (I am color blind)
By the way..great blogs..completely hooked from the past week
Cheerio & Keep it up
pradip
@Pradip ..
I am using online tools for creating the graphs and the color is not in my control actually .. Actually you do not need colors to discriminate .. For all the time frame nth mututal fund is same , so if the 4th bar in 7yr time frame is XYZ fund , then 4th bar in 5 yrs and 3 yr time frame is also same XYZ fund . You can see the Fund name below one by one .. You really dont need colors ..
Thanks a lot of your appreciation .. Readers like you is what a blog needs 🙂
manish
@Jayashree
No promise because of my long list of to-do's . But in short PPF is the best thing for long term investment in debt .
KVP and NSC are short term products and not for big returns .
Manish
Hi Manish.
I came across ur blog recently. Very simple and easy to understand articles…Would be good if you could post something like a comparison of post office savings schemes – NSC, KVP, PPF etc…maybe a comparison of the schemes and some illustrations to show which schemes are suitable for different goals.
@Bharath
Thanks for stopping by and appreciating the articles .. I would love to hear your views on what is the reason which makes you beleive that a person should invest in direct equities rather than Mutual funds .
Mutual funds is the answer to the problem of "I cant invest in equities my self properly" . Fund managers are into full time research and choosing the best share to invest is there 24/7 job . apart from that they have better access to information , better qualification and more time than a common person .
Why do you think that a common person who has another job , can be better than these fund managers , Do you personally know a lot of people who have beaten fund manager performance in long run for different time frame .
Looking forward to this important coversation .
Manish
Hi, your blogs are really good. I agree with you on many things , except for few. I feel like, you tend towards more on MFs rather than straight forward Equities. I dont think , these MFs are better than us in making/losing money in market.I would say out of total investment in equities, do invest 80% directly in equites(large caps) and 20% by some mutual funds (for tax breaks).
@Orangesplaash
Your choice of funds are good . How ever you can also consider DSP Blackrock Equity top 100 , Sun birla front line equity
manish
I just came across this blog..and I kinda got stuck here. Great read, thoroughly analyzed and nice insights..
I am looking to invest in a SIP, 2 mutual funds in diversified equity category, 5000 per month for each. Do u have any suggestions?
I have narrowed down on Reliance RSF Equity and HDFC Top200
Looking forward to reading more of such insightful posts..
Thanks Sumi
If people take the pain of reading stuff and invest logically , it can increase there protfolio performance drastically 🙂
Lots of information explained in an easy way. I think we can all take informed decisions on tax saving ELSS funds from now instead of just blindly investing.
sumi
@Merlin
Nice to hear that the post is helpful in your project .
What is your main Project topic ?
-“how to choose a good mutual funds” or “how to maximize returns from Mutual fund”
If its “maximizing returns” then “choosing a good mutual fund” is first and a little step .
The main step or work is to manage it after taking it after applying portfolio rebalancing and proper asset allocation .
Did you see my video post on how to choose mutual funds , may be that helps .
Manish
hey Manish,
Im doing a project on a similar topic..i read your articles,I have been using the parameters you had also used to assess mutual funds..wud be glad if you could post something additional that would be useful to my project..
All the best..n keep up the gud work..waiting for ur new post asap…:-)
Tc..
@Anonymous
Great that you are learning from me . My effort is paying . Thanks to readers like you .
Keep visiting the blog .
manish
I wait for your topics. I am pretty new investor into share and mutual funds. But learning a lots from the Gurus like you. Keep up the good work. All your articles have been quite informative. I have recently started SIP in 4 difference mutual funds which a broker and friends suggested. Now i know how to judge a good one. I will review right away my MFs and if necessary i will change them. Thanks in million.
God bless & Happy investing.
I do agree as its a gamble. It might work and may not work as well. good thing about these ratios is that u can find some kind of winner by doing simple comparisions. I do have exposure in SBI Magnum Taxgain since Sep 2005 (since when they started doling out dividents in tune of 100% and 150% and Sandeep Sabarwal days) and due to erro, I got opted for Div-Payout option. For long time, they do not have growth option as well and recently introduces ( some where 2007). Net effect is they almost paid same amount of dividend till date as my cost of investment (value is lower due to meltdown since Jan 2008) and I am protected from this down slide (may be kind of effect of partial profit booking, u can say). Sunderams also good at giving dividends but that that liberal and only once in a year near Feb or March to attract marginal tax payers who do their investments only in Mar 2008 and on 31st March 2008.
Milind
Thanks for the comment …
Important thing to understand is that ratios give a good idea of what lies in future and not the promise . So its always wise to have finger crossed . Its not nessecary that Sundaram does better than SBI in coming days but , yes it a matter of chances .. overall investing and trading is a game of probabilities .
Manish
hey manish, its gr8 man. Even I used to invest a lot using seeing past performance of mutual funds and was successful for some time. may be 3/5 used to do better due to this analysis and things were all good (till Jan 2008) even if you choose any mutual fund to invest in. But now if I want to compare best of best, I will use R sqare, Beta and sharpe ratio. I do use other info like market cap distribution giant/large/mid cap based on data available on valueresearchonline.com but never got time to compare based on ratios or I was not serious investor but having a serious money in indian market via MF. Good service to web community in regards to Investment decision. Also liked other articles on Insurnace, and one with deleveraging portfolio using derivaties. ( Thought not able to get it how to practically follow it as what i hold won’t be in extact proportion to nifty or sensex).. more comments on other articles soo..
Happy blogging and investing..
Milind
Thanks Joshua
I thank you for appreciation .. Keep visiting the blog .. There are many things coming in some days .
Manish
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Deborah
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