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POSTED BY ON May 7, 2013 11:05 am COMMENTS (8)
Dear friends
I am maintaining a free portfolio a/c with moneycontrol.com for the last two years. Recently I got an update from them about the performance of some MF schemes, stating that those (first 4 schemes mentioned below) schemes are performing average and need to be switching to better performing schemes. Kindly give your valuable suggestions/opinion whether I should switch over the first 4 items or not. SIP for those 4 schemes are started during 2011 July for two years. I was thinking to continue those SIPs for 6-7 years further.
1. DSP Top 100 Equity Dir
2. HDFC Equity fund Dir
3. HDFC Prudence Dir
4. HDFC Top 200 Dir
5. ICICI Pru Discovery
6. ICICI Pru Focused Blue Chip Dir
NB: Since I have not selected a debt fund, I was using HDFC Prudence (balanced fund) for that purpose.
Thanks to all in advance
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Thank you so much Ramesh for a detailed reply.
Dear Lakshman, as dear Ramesh has answered your aptly, I’m not adding more to confuse you. 🙂
Thanks
Ashal
Dear Lakshman, please use MC portfolio tracker only for tracking & not to decide the fate of your investments. Please take corrective actions as mentioned by dear Ramesh.
Thanks
Ashal
Keep 1,2,3.
While the purposes of 4,5,6 are already matched by the above 3.
That is all.
More detail:
4. HDFC Top 200’s work is done by 1,2
5. done by 2,3.
6. done by 1.
Automated software are Dumb (or as smart as their makers made them). Do not rely on them much. They are good for tracking but not for actually deciding.
Thanks to Ramesh and Ashal for a quick update. While MC analyses to switch the first 4 schemes, you have just suggested to keep first 3 items. But I understood the logic and thanks. Since 5th and 6th funds are performed well, just for clarity, pls enlighten me whether I should discontinue those scheme keeping only first 3 funds?
I prefer AMCs which have consistent management teams with reasonable styles.
ICICI AMC in recent and mid-past has not been able to keep its management team. Their managers for ICICI Discovery and Focused Blue-chip have changed.
While at the same time, the managers at HDFC, Franklin and DSP have not. So, I prefer these 3 rather than others.
Also, short-term performances (<3 years) are not very important. Performances across market cycles (bear+bull, multiple preferably) are better in helping to select funds.
I hope, this way you can check and understand my recommendations.
Regarding SBI Emerging Businesses fund. Since, you have already started it, there is no point in saying anything about it at this point in time. Over next few years, and provided you keep monitoring and learning, you will come to know the differences. And also, maybe tell me that my analyses were right or wrong.
Thank you so much Ramesh for educating people like me. I will consider your recommendations positively. You mentioned something about SBI Emerging Businesses fund. But I don’t have such fund. Having only 6 funds already stated above. ICICI funds SIPs are signed for 3 years and HDFC and DSP SIPs for 2 years from 20011 July. Can I switch before reaching that period? Or should I wait till the given SIP period is completed? Sorry for asking such silly doubts.
Sorry, I got confused between two separate queries. Leave aside my comment of SBI fund.
1. You can stop SIP anytime and need not wait for the complete SIP period (2/3 years in your case).
2. You can switch over your entire amount in one go to another BUT any unit which is within 1 year from its allotment date will incur an exit charge of 1%. So, it is better to wait for shifting.
3. All of these are equity funds and their long term capital gains tax is zero, which means if you keep them for >1 year, any gain will be taxfree (of course including the original amount).
So,
1. Stop SIPs Now.
2. Do not shift money from stopped funds. Wait for 1 year since last transaction and then shift whole in one go. (Yes, you can shift periodically, but that is just inconvenient. Per se, your funds are not bad, remember, they are just too much in number, that is all).