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POSTED BY ON June 3, 2013 8:46 am COMMENTS (16)
Hi to all. I am 37 years old. Thanks to you all, I have now dumped my endowment policies and NFOs. Have taken adequate term cover & opened PPF account. Having dumped all rubbish previous funds, I now want to create inflation beating retirement corpus, and would like to invest via SIPs for 23 years.
1> FIBC- 37.5%
2> QLTE- 37.5%
3> HDFC midcap- 12.5%
4> SBI emerging- 12.5%
I did not choose IDFC premier equity, as:
a. IDFC as parent company has not always worked in customer’s best interest.
b. This fund is too dependent on charisma of a star fund manager.
If I take SBI emerging as sectoral fund (due to its concntrated portfolio), cant I put 12.5% of SIP money into it, provided I keep a hawkish eye on it? Just for that extra zing.
I urge everyone including all esteemed experts to enlighten me.
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Dear Kuntal, no matter you are investing 5K or 50K mly or even 5L mly, the number of funds should not increase just with the increase in amount. From my original reply to you for 40+40+20 ratio, please do tell me, is it really a matter to you that the amount at stake is 5K or 5L?
Thanks
Ashal
Ashal, thanks for your reply. My doubt is resolved.
Tks,
Kuntal.
Dear Kuntal,
If you wouldn’t have switched then in case of correction your initial fund would also have shown the decline.
Ashish
Thanks for replying Ashish. But in that case all that amount (50X) wouldnt have been invested at a go. It had been bought over 50 months at varying prices. In the later case it will have to be bought at one go. Please tell me where I am wrong.
Tks,
Kuntal.
Dear Kuntal,
consider your invested amount (50X) is at an avg of Rs 15 per unit with 1000 units accumulated. Total invested amount Rs.15000. Now current NAV rs. 20, so value is Rs.20000. Now if NAV goes down by 20% due to correction value will reduce to 16000.
now lets say you shift the whole value to another fund, when at peak, and its NAV is 40 so you will get 500 units. Now here again the corrction is 20% so NAV comes down to Rs.32 and value will become 16000. Whats the difference??? The difference would only when the %of correction in both NAV is different but in a mkt correction scenario this difference would be almost the same or very close in funds having same benchmark/ investment strategy/ investment holding.
Hope I am able to clarify.
Ashish
Thank you Ashish. I get your point.
Another doubt which I had is- should the no of funds in my portfolio depend on total amount of SIPs/month, i.e. lesser amount=lesser no of SIPs & vice versa.
Tks,
Kuntal.
Tks Ashal, I am convinced of your views. So for now I will keep FIBC+QLTE+HMO=3+3+2.
Dear Ramesh, please make this clear to me. If I had 50 monthly SIP of amount X of a particular fund, and if I switch, wont I have to make a lump sum of 50X (in addition to starting a new SIP of amount X in new fund). Suppose that scenario is now. So now that lump sum will be invested at sensex level around 20000. What if market corrects further? Am I making myself clear? Is there something I am missing? Please reply
Tks,
Kuntal.
Dear Kuntal, I agree with your views. Now what ‘ll happen in your case? Either SBI EB ‘ll perform better or HDFC Midcap Opp. ‘ll perform better. So in a sense, when you are invested in both these funds, one of the fund ‘ll pull your portfolio down. That’s why it’s not at all advisable to to keep both funds. If you are investing in HMO & it’s not performing well, you can point out the performance & correct your mistake. Same is the case if you opt SBI EB.
Thanks
Ashal
Thanks Ashal for your reply. I have been an avid fan of yours for 6 months now. You replying directly to me is like a dream come true.
About my funds, I felt that mid caps are more dependent on fund managers skill and intuition rather than large caps which are more parent-house-process driven. So I thought to diversify, between two fund houses and styles. Specially since I saw that the top 10 stocks of these two have only 1 name in common.
I also urge the other experts to come forward with their inputs.
Dear Kuntal, I w’d like 40+40+20 ratio. Keep only one from the 2 midcaps. if it’s HDFC Midcap so be it. if you want extra zing, invest that 20% in to SBI EB.
Thanks
Ashal
I am personally investing only in qltef. check morningstar for each MF, they provided upside and downside ratio. downside for qltef is good meaning when market falls, NAV falls lesser than the market. if you are choosing qltef, avoid midcaps and qltef is a diversified fund and can invest in any type of company. if there is a good midcap, it will find its place in qltef like petronet lng. You should consider ppfas as well, they have good reviews.
Thanks to Muthu Krishnan V for replying. I dont think I have the courage to invest in a single fund. But I do not agree to ur comment regarding PPFAS. A NFO remains an untested entity,
regardless of parent.
hi kuntal, would like to know your views as to what is preventing you from going with one fund?
I mentioned ppfas to track it for a few months or a couple of years and then add it along with qltef. Also ppfas is going to have the same investment style as their PMS and since PMS entry is raised to 25L, they have opened MF to allow investors with amounts less than 25L.
The main risk here, (my personal views only- may be wrong) is that what if quantum sell their MF business to someone else (not being able to gather as much asset as others), and that AMC does not follow quantum’s process. So then, I will have to switch lump sum to another fund; and may enter at market peak.
I accept your view that one can be a fence sitter regarding PPFAS for time being.
Tks,
Kuntal.
At the market peak, your current fund would be at peak too.