MF selection guidance

POSTED BY Animesh Koya ON November 6, 2012 10:12 pm COMMENTS (11)

Fellow Investors,

I have a savings of 25k/month which I would like to invest in mutual funds via SIP. I have shortlisted the following route based on the rating, AMC as well as 3/5 yr performance.

1. Rs 5000/month: HDFC Top 200 (The current one) or UTI Opportunities Fund (G) (Large cap)
2. Rs 5000/month: SBI Magnum FMCG (FMCG Sector)
3. Rs 5000/month: Reliance Equity Opportunities Fund – Retail Plan (G) (Diversified Equity)
4. Rs 5000/month: SBI Magnum Emerging Business Fund (G) (Small & Mid Cap)
5. Rs 5000/month: Canara Robeco Equity Tax Saver (G) or Reliance Tax saver (ELSS) (G) (ELSS)

I am new to mutual funds and my goal is a minimum of 5 years investment. A friend/fellow invester suggested that I should have funds of different types rather than just one lump sum investment. But, being a regualr reader of this forum, I don’t plan to invest before getting your valuable suggestions. So, is this the right path? If not, then please suggest one. 🙂

Thank you!

11 replies on this article “MF selection guidance”

  1. Dear Animesh, why are you investing at all? Any goal?

    thanks

    Ashal

  2. TheZionView says:

    The selection is fine, but are you fine with extra risk posed by high concentration on mid and small cap funds along with sector fund?

    If Yes,Then go ahead.

    I would like to differ with waiting for sometime to start the investing .There is no thing as high NAV. What if the market rallies from here on and you might never see this Nav again.

    So best is to invest regularly in SIP right away

    Unless you know what your are doing and have enough time for research dont go into direct equity(stock) investing,just stick to the MFs.

    You have said minimum of 5 years ,after that what is the plan?
    5 year might not be enough to get full benefit out of equity.So plan accordingly

    1. Animesh Koya says:

      Thanks Zionview,

      I shortlisted a fund from each of these sectors based on a suggestion so, I don’t mind tweaking a bit here and there. I am OK with the risk posed by the funds though.

      Even I think it is best to not wait for a lean period. I am not aware of someone who can time the market, I for sure, cannot. So, it’s wise to do so SIP regularly.

      I just have a small amount of money already invested in direct equity and don’t plan to invest in it for now. I do not have time to monitor the market everyday so I don’t intend to do any trading on a regular basis.

      Also, I said 5 year just because that is my bare minimum time frame. Even I agree that I will have to be invested for a longer duration to get full benefit out of equity (maybe 10-15 yrs).

  3. Manish Ahir says:

    Ohhh, I forgot to write few things as your savings are 25k per month and entirely you,etc are investing them , I hope your general financial situation is under control such as
    1. An emergency fund
    2.Some savings for short term goals (in the form of Bank FD,etc)

    In short I mean to say that after investing 25k/month you must have some funds to meet your unexpected needs in your life.

    1. Animesh Koya says:

      Yes Manish. I have kept and 8 month emergency fund apart from my investments in FDs & PPF.

      1. radhevajrakaya@gmail.com says:

        (LOL) well you area great and intelligent investor you have investments in Share’s ,PPF, Bank FD, MF, Bullion Market everywhere ,, By the way what do you do JOB or business.

        1. Animesh Koya says:

          He he. I was not a sound investor a few months back until I stumbled upon this forum by Manish Chauhan. What an eye opener it has been. Manish and fellow investors are doing a great job by helping people like me get on track.

          As far as my work is concerned, I work in the field of renewable energy (wind turbines, solar PV etc)

  4. Manish Ahir says:

    According to me your Choice’s are good well diversified & well researched , but I feel you must hold on until the market cools down because all the NAV’s of these MF’s are all time high now and if you plan to invest now than might be latter on after few months you might get trapped (if market falls in the DITCH) .

    Purchase when the NAV’s are at discount.

    The Benchmark Index of all these funds have touched the peak in comparison to previous few months or year’s. Just wait till the market comes down a bit.

    Also, if you have time to monitor your investments than put a small fraction of money in direct equity ( diversify it). I think Combination of both MF’s & direct Eq will yield better.

    I any mistakes than boarders kindly rectify me.

    1. Animesh Koya says:

      Thanks Manish!

      What exactly do you mean by direct equity? I forgot to add that I already have some money invested in FDs and also have a good balance in PPF along with some investments in silver.

      1. radhevajrakaya@gmail.com says:

        Direct equity means investment directly in Stock Market through Demat Account or in short do investment in SHARES for long term.

        Also one more thing you can purchase all the above listed MUTUAL FUNDS online and monitor them on daily basis.

        I hope now it is clear.

        1. Animesh Koya says:

          Thanks radhevjrakaya!

          I have some money invested in stocks as well. Seems I was not aware of the correct terminology. 🙂

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