Kindly rate these three mutual funds

POSTED BY Tarun ON February 18, 2011 12:48 pm COMMENTS (11)

Hi,

I am planning to invest in these mutual funds. This is going to be my first investment in mutual funds and i am planning to invest for atleast 2 years through SIP. After my analysis on valueresearch i have found these three mutual funds to be good enough. Kindly share your views.

1) Birla Sun Life – 95 (G)

2) HDFC Prudence – G

3) HDFC Top 200-G

 

 

Tarun

 

 

11 replies on this article “Kindly rate these three mutual funds”

  1. Tarun Aggarwal says:

    Thanks moneysight for the help and detailed explanation.

    TArun

  2. Tarun Aggarwal says:

    @moneysight – Wht I have understood is….thru STP i can withdraw money gradually over a period of time (basically to reduce the equity) and I can reinvest the amount in some other MF having higher portion of debt in their portfolio ( Please correct me if i am wrong).

    Tarun

    1. moneysights.com says:

      @Tarun,

      Yup…it may be better if you put funds you redeem in Liquid Fund or Short-term debt funds or Fixed deposit. Medium term or Long-term debt funds are not advisable for shorter horizons.

      Also, its better if you understand this concept as a re-balancing exercise.

      In effect what you are doing is reducing your investment in Balanced Fund. When the investment amount reduces, by definition your proportionate equity amount will also reduce. We have tried to explain it in this blog-post here – http://goo.gl/yT8Lb

      moneysights.com

  3. Tarun Aggarwal says:

    @moneysight – Thanks brother for the advice. But tell me……as u suggested….is there any option in the same mutual fund to decrease the equity exposure after a period of time? If no, then how to do it?

    1. moneysights.com says:

      @Tarun,

      Very good question, indeed 🙂

      One should always look at investments as a portfolio. For example – Say, you start a SIP of Rs. 5,000 in HDFC Prudence or HDFC Balanced fund. Suppose after 12 months, your Rs. 60,000 has become hypothetically Rs. 65,000. All Mutual Funds declare their portfolio every month. From the info, you can easily get to know how much of Rs. 65,000 is in Equity & how much is in debt.

      You can set up a Systematic Withdrawal plan & keep redeeming some units every month, depending upon how gradually you want to cut down the exposure. Overtime, at the portfolio-level, you will be able to achieve this i.e. reducing equity in your overall Mutual Fund portfolio.

      It may be difficult to do it manually. But with slight involvement, its possible. At moneysights, we will be helping people do it easily. In fact, we already help people know their exact portfolio break-up on an ongoing basis in our own offering (note: currently available by invite only) at moneysights.com.

      Hope this solution helps.

      moneysights.com


      moneysights.com

  4. Tarun Aggarwal says:

    @moneysight & Bharat – thanks for your replies…..i will do the analysis on the funds suggested by you. Thanks for the help.

    @Ramesh – Thanks for the reply.
    My goal is to invest for 2years and then upon seeing the result I will decide. Bt rite now….My goal is to invest for 2years and then withdraw it.

    Tarun

    1. moneysights.com says:

      @Tarun,

      If you are clear from the beginning that you would be first investing only for 2 years, then we are afraid that by putting money in equity funds you are taking risk which is not advisable.

      Even if its SIP, it is a better idea to only stick to Balanced funds + you should start re-balancing after 12 months by starting to cut down your equity exposure & gradually decrease it as you approach 24th month. You never know how markets are going to be.

      Happy investing!

      moneysights.com

  5. Ramesh says:

    @tarun

    what is the goal of this investment?

    also, is it that you want to invest for 2 years, and then withdraw after 2 years?
    Or, is that that you want to invest for 2 years, but withdrawal is a distant thing in future?

    Or do you just want to get a feel of MF?

  6. bharat shah says:

    if i am mistakening, bsl 95 and hdfc prudence both are equity predominated hybrid fund. if it is so, better select one from multicap diversified mutual funds: hdfc equity, quantum long term equity, or templton india equity income instead of bsl 95.

    1. moneysights.com says:

      @bharat shah,

      Yes, they are balanced funds. In fact, for its equity component of the portfolio HDFC Prudence is more like multi-cap & Birla 95 is pre-dominantly a large-cap oriented Balanced Fund.

      We believe, one’s asset allocation plan should decide how much percentage allocation should be towards Diversified funds or Balanced funds. For someone with 2 year horizon, it may be better to go with Balanced Funds.

      moneysights.com

  7. moneysights.com says:

    Tarun,

    All the funds that you have mentioned are good. You can’t go wrong with these choices. However, if you are a beginner in Mutual Funds & have not yet taken exposure to direct equity, it may just help if you have funds which tend to be less volatile while giving you return.

    HDFC Balanced & HDFC Children’s Gift Plan are also good balanced funds that you may want to consider. They have been less volatile than Prudence. There is also UTI Children’s Gift Advantage Plan which has proven to be less volatile while generating better than category average returns.

    As far as HDFC Top 200 is concerned, its again one of the best picks. But again from past performance point of view UTI Dividend Yiled & Birla Sun Life Dividend Yield is found to be good.

    There is also a unique fund in ICICI Prudential Dynamic Plan which actually is an Equity Diversified fund but acts like a Balanced Fund when it needs to be. It has proved to protect downside everytime while generating returns (including the recent carnage on stock markets).

    You can study them all in detail here – http://goo.gl/oEyoW

    Hope this helps.

    moneysights.com

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