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POSTED BY ON November 4, 2012 3:56 pm COMMENTS (13)
Hi, I am having this portfolio running for almost an year and SIP will stop in december all are equal allocation 25%. Could you please advise if i should make any changes or continue the same?
HDFC TOP 200
FRANKLINK INDIA BLUE CHIP
reliance equity opportunity
IDFC premier equity.
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Dear Mkshahi, what’s the update from you now?
thanks
Ashal
@
TheZionView
well explained your point of view!
@sachin
you said “This sector is not going to go down in one day ” are you sure see back in history you will find black swan days for sector in 1999 it did not take more than a week for the fall of more than 20-30% in IT sector.
What if you are on vacation and out of town and not able to make your redeem process. Its a risk not worth pursuing for normal investor.
The question here was from a regular investor most probably with a daily job to take care of.He will not have time to monitor the market in regular basis.Its for this reason no one recommend sectoral funds.
Let me show a example take the same funds you took i am just assuming extra time period(12 years)
Jan 2001 to To date
10K monthly SIP
SBI Magnum FMCG gives me
6,798,923.83 that is 24.58% pa
HDFC Top200 gives me
6,905,088.59 that is 24.81% pa
There difference here is 0.23% or 1 lakh
But the point you have to note here is in case of HDFC top 200 i could have monitored the performance of fund once in 6months or 1 years and compare it with benchmark and decide to continue or not.A Simple process which will not take much time.
But when it comes to SBI FMCG your cannot afford to monitor just once in 6months/1year. Its not just comparing with benchmark.You should also monitor the sector growth and its future prospects.
Its just a too much details to watch for and you end up getting 0.23% less than the other.
Its not worth the effort unless you can Time the market flawlessly,Which has never been done by anyone consistently.
perfectly explained..Thanks for detailed explanation. yes I completely agree with you that this will take more effort and is NOT for regular investor.
I completely agree with you, that is why I am asking to monitor more aggressively than a normal portfolio, and if this can pay you more than why not.
Let me give you some number, if you could have done a SIP of 10K in HDFC Top 200 and SBI Magnum FMCG since last 5 years you might have got 819,107.42 and 1,357,240.13. (CAGR 11.88 and 32.98). I am not saying this is the guarantee for future but why not to take some calculative risk. This sector is not going to go down in one day (at least in India) and if you can react timely you can make much better than a common portfolio. I personally own ITC which is a major part of this fund and growing great.
as I said earlier this might not work for everyone but if someone can monitor his portfolio little better can take chance (how much % it totally depends on each individual).
SBI FMCG
1-Year 36.85
2-Year 23.50
3-Year 34.50
5-Year 23.91
HDFC Top 200
1-Year 9.41
2-Year -3.62
3-Year 8.79
5-Year 5.76
please see the returns (source VRO) even if this is not performing for one year, your total returns will be far more than top performing fund. and as you will be checking your portfolio at least every 6 months, you can plan to exit.
This is my reasoning..this might not work for all. I have switched my all SIPs from HDFC top 200, HDFC Equity, IDFC Premier Equity to SBI FMCG and Reliance Banking fund.
I will monitor this more closely for any great downside and will switch that time to these safe funds until than (hopefully) will enjoy the profit 🙂
@Sachin,
What your trying to do is timing the market. It is not going to help you in long run. What you are doing by investing only into Sector fund is your speculating. Currently most of the FMCG stock demand PE of 30 which is not sustainable for long.
If your confident about timing go ahead. Its simply putting most of the eggs in one basket. A black swan day in market in that sector will wipe you out.It is for this reason sector fund is not recommended by many.
You can have as a small portion (5-10%) of your portfolio if you ready to take that risk.
Like you said if your have diverted all your SIP into only this sector fund then Good Luck to you!
But my question here is why not this funds..this is performing better since last 5 years and this is the time frame to judge any fund..you must have judged all funds based on this time frame..then why not this..just because this is a sector fund and some one sometime told no to sector fund.
Don’t take this wrong way I just want to know the real reasoning behind not choosing this fund. Thanks.
The simple reason is 5 years back, Infrastructure funds were among the best return funds. See their results after them being the top performers, 5 years hence.
Top performing sectoral funds do not continue to do so indefinitely.
By investing in diversified funds (and not limited mandate funds), you allow the fund manager to change the sector allocations accordingly.
Perfect funds. Do not add any sector funds like FMCG.
you can try SBI Magnum FMCG also, It gave very good returns since last 5 years..far better than any of above listed funds..but I am not sure none of the expert ever suggested this fund on this forum.
Good funds i dont see any performance aberration in a year ,so just continue and monitor the fund performance every year.
Dear mkshahi,
All are very gud funds, donot stop. continue SIP for at least 5-10 yrs. will give u gud returns on the investment.
Thanks
Roshan