MF portofolio creation help needed

POSTED BY George ON January 2, 2013 2:56 pm COMMENTS (6)

6 replies on this article “MF portofolio creation help needed”

  1. George says:

    Thanx for the reply Ramesh and FFC.

    @Ramesh
    6 fund house was not purposeful.It just happend.Do you have any other scheme suggestions so that i can study and decide before starting this.

    By yearly review i mean check how it performs after an year to decide on whether to renew the SIP.Right now planning SIP for 1 year only and later on extend it based on performance.
    about lessons,will never allow to loose my hard earned money due to my own laziness.

    @FFC
    Gold allocation is slightly on higher side.But will reduce it after couple of years.

    1. Ramesh says:

      1. If you can select two or three funds with contrasting styles (you need to know how to find that and how different fund styles work over different parts of the market cycle), then that is more than enough.

      2. If not, then choose a multicap fund like DSP Equity / HDFC Equity and that is it. Or, if you think you will be better off with a more conservative kind of fund, then Franklin Prima Plus is a good option.

      3. For SIP purposes, the above works well. While, a large number of funds works well, when you can put additional lumpsums in the underperforming funds.

      4. You have mentioned yearly review for 1-year SIP. This is a bad bad idea. Stock market cycles do not work in 1 year time frames, and your checking the performance of 1 year SIP is bound to create issues and confusion. See, what I want to say is you would have chosen funds which have done well across last 5-10-15 years, then how is a 1 year review going to work for them. Mostly, for good funds, there are times of underperformance in one phase of cycle, and outperformance in the other phase. So, if you would have stopped after an underperformance phase of a good fund, then you may miss out on its outperformance period. Check historical NAVs of some of the good funds, and analyse their performances in different market cycles, and use different time periods based on NAV, rather than performance till date. Since performance till date, will include last year’s 25% upmove too.

  2. I think its a pretty good portfolio. some may say too many funds but I am quite comfortable with the kind of spread you have. There is some overlap in stock bet one category and another. I think its not such a big problem. It is well diversified.

    I would limit exposure to gold to 10% or less. I think its just a little more than 10% now.
    Good luck.

  3. George says:

    That was my first post in this forum and somehow i made a mees of it.I am really sorry for that..
    I am 35 years old and planning to invest in MF SIP for a period of 10 years.Will review the portofolio on an yearly basis.Previously i made some mistakes with my MF investement and so did some home work this time.I am following this forum and though of getting some advise from experts in this forum on my selection. Monthly SIP planned for

    Large Cap
    Franklin India Blue Chip – Rs 4000
    ICICI prudential Blue chip retail – Rs 4000

    Large and Mid Cap
    Quantum Long term Equity – Rs 5000

    Small and Mid Cap
    IDFC permier Equity – Rs 3500
    SBI Emerging Business – Rs 3500

    Balanced
    HDFC Prudence – Rs 2500

    Apart from this i have around 70K in PPF annually and Rs 4000 in Gold ETF on monthly basis.
    Is this MF selection good enough?
    Any change in SIP amount needed for any of the schemes?
    Do i need to consider any other schemes?
    Please give your suggestions.
    Thanx in advance.

    1. Ramesh says:

      Since, you have started a more structured approach to MF investments, do some more study and analysis about the following points:

      1. Why have you selected 6 funds, from 6 different AMCs? Is it really necessary ?
      2. Quantum Long Term Equity fund is NOT a Large and Mid cap fund. It is a multi-cap fund, which has large-mid cap bias presently, and according to market conditions, it will change. So, this segregation is not a permanent thing, and you need to look at the individual funds if they are really what VRO or other sites put them into.
      3. What is your plan for yearly review? It is good to say that you will do that, but unless you have a clear concept and plan to do that, you will get confused one / two years later. So think more about it.
      4. Overall, you need to understand, the amount into equity is much more important than finding out the best fund or funds.
      5. What have you learnt from your past mistakes, make a note of them and always remember NOT to repeat them. 🙂

      Ramesh

  4. Dear George, what’s the query?

    Thanks

    Ashal

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