Mutual Fund advice

POSTED BY Vish_Jais ON May 22, 2012 2:46 pm COMMENTS (12)

Hi all,

I am 28 years old married and have a working wife. We plan to invest around 16k per month in the form of SIP in 4 different funds (4k/fund). I have an average risk appetite. Time horizon for investment is atleast 5 years without the intention of withdrawing any amount and would like to continue as long as possible unless the financial situation demands otherwise.

I realize the distribution should be made in terms of Large/Mid/Small/Muti cap, Balanced etc.
On preliminary research, I have selected the below mentioned fund. Please help me pick 4 funds amongst these to create a well balanced portfolio.

1. Franklin India Bluechip
2. DSPBR Top 100 Equity
3. HDFC Top 200
4. IDFC Premier Equity A
5. DSPBR Small & Midcap
6. HDFC Equity
7. HDFC Prudence

Please suggest any good/better funds I may have missed. I can afford to be a little aggressive and opt for more equity oriented funds as we don’t have any dependents as of now. We have adequate insurance coverage, invest 50k yearly in our PPF accounts respectively and have 6L in FD’s.

Thanks!

12 replies on this article “Mutual Fund advice”

  1. Renu Chauhan says:

    Dear Vish,

    An Opportunity Lost is an Opportunity Cost… ๐Ÿ™‚

    SO hurry up and Go for it ๐Ÿ™‚

    Renu

  2. My two cents.

    Everything is going your ways. stay focused and remain invested.

    1. Franklin India Bluechip / DSPBR Top 100 Equity – Pick one of these
    2. HDFC Top 200 / HDFC Equity – Pick one of these. Both have same fund manager.
    3. IDFC Premier Equity A – My portfolio is incomplete without this. Sure pick
    ——————————————————-

    4. DSPBR Small & Midcap – Avoid
    5. HDFC Prudence -Its good fund but i dont think you need it.

  3. Vish_Jais says:

    Thanks for your responses!
    Based on inputs here and some more research with the fund card reports, I plan to invest 5k/month in the following MF’s –

    1. Large Cap – Franklin India Bluechip – Growth
    2. Large/Mid Cap – Quantum long term equity – Growth
    3. Mid/Small Cap – IDFC Premier Equity fund Plan A- Growth

    Lemme know if this looks fine for my portfolio. Few might be surprised for not having a HDFC fund in my list. I am too. ๐Ÿ™‚

    1. Ramesh says:

      Well and good. Steam (or should i say, Petrol) ahead!

    2. Dear Vish, now it’s the time to be in action. Please start investing the 3 funds of your choice.

      Thanks

      Ashal

  4. Dear Vish, I w’d ask you to invest in only 2 funds. Quantum Long Term Eq. fund & HDFC Top 200 fund.

    Regarding that taxation issue of FD, yes you should keep a good amount in liquid funds if the money is meant for emergency.

    Thanks

    Ashal

  5. Renu Chauhan says:

    Dear Vish,

    Sorry to jump in between of the conversation. But after going through the complete post and answers I just thought to add my simple comment too.

    I agree with Ramesh that before building a portfolio you should have a clear vision of the role of each fund on your platter and that vision shouldnโ€™t lose ground with the volatility in the market. With a complete equity based portfolio you should be ready to digest little hiccups time to time.

    Would like to share what I keep reminding myself everytime market falls: โ€œMarket crisis should be seen as an opportunity and not a concernโ€.

    My choice of funds although would be Franklin India Blue-chip, IDFC Premier Equity and one of the all rounder funds mentioned above.

    Also would like to suggest that if you fall into the highest tax bracket then the amount invested in your FD would attract a TDS so you may look at other debt products available which can help you plan your taxes better (provided you compare post tax returns in both cases).

    Fundsupermart is a good choice as I invest through them so can recommend them ๐Ÿ™‚

    @ Ramesh : Very good link shared in the above comment. Thanks ๐Ÿ™‚

    Thanks

    Renu

  6. Vish_Jais says:

    Ramesh –

    1. I want to limit the number of funds as it’d be easier for me to track/manage. However, I am open to increasing/reducing the number of funds if it benefits me.

    2. Am sorry for creating a confusion here. I have a steady source of income and I work abroad frequently which helps me draw significant additional income. With age on my side and extra surplus money I can afford to take a hit. But just as you mentioned about being Indian, I’d not be comfortable if I were to lose a big chunk of my investment. This being one of the reason I plan to invest for a longer duration.

    3. Yes, I do realize that. As rightly pointed out by BanyanFA in the first response, I have a significant portion invested in debt, therefore I am more inclined toward being mostly equity oriented.

    4. I plan to invest through fundsupermart.

    5. Yes, it’s a bold statement to make. By god’s grace, considering my family & financial situation, I believe I can afford to make that statement.

    Ashal –

    What you are saying is absolutely correct and I do take in consideration all that you’ve mentioned. Quitting of job may be temporary. Both myself and wife have opportunities to work abroad and create a surplus that will keep driving our investments in those situations.
    And ofcourse I can anytime reduce the SIP’s if the situation requires so.

    I hope I have been able to address all the queries. Now, if you guys can guide me, it’d be great. ๐Ÿ™‚

    1. Ramesh says:

      1. Each fund in your portfolio should have a role. Mostly you can work with 2 or max 3 funds. Using a single good fund is not a bad choice also. Investing in equity and remaining persistent in that is Much Much More important than which fund or market timing things.
      For selection, go through this thread- http://localhost/jagoforum2/mf-advice/3168/

      In short, if you want
      Conservative funds – Franklin Prima Plus / Bluechip
      Aggressive funds – HDFC Equity / IDFC Equity / Reliance RSF
      Value-oriented (they are neither conservative nor aggressive in the conventional sense) – Templeton India Growth (if only India oriented) or Templeton India Equity Income (mostly India, rest Emerging Markets)
      All rounder fund- DSP Equity / Quantum Long Term Equity.

      Persistence on your path is the key (and a written portfolio statement goes a long way in reinforcing that).

      2. Whenever there is crisis, you get better returns (provided we get out of the crises safely). So, do not shun your funds, because of crises. If you can stomach that, great. (whether you score low, average, high risk appetite is a mostly senseless parameter).

      3. The debt portion gives you stability and peace of mind during troubled times. And support you during them, in case you need them.
      4. fundsupermart is good.
      5. Long term is easier said than done. But create / think / learn / and WRITE your portfolio statement and always follow written statements about managing your portfolio.

      A simple example. If you want to have a reasonable portfolio which will work in every kind of Indian environment, invest in Franklin Prima Plus or ONE of the All rounder fund. etc.

      Ramesh

  7. Dear Vish, Please read my reply in addition to what dear Ramesh is asking for? As of now both of you are working but what about family size increase after 2-3 years & who ‘ll quit job at that time? What ‘ll be the income & expenses at that time? What ‘ll be the saving surplus at that time?

    Thanks

    Ashal

  8. Ramesh says:

    1. How did you come to the conclusion that you require 4 funds (and not 1,2 or 5,6)?

    2. What is meant by average risk appetite? (You do realise that on an average, Indians put negligible amount of money in equity-related products). Plus a little aggressive also? Now, I am really really confused.

    3. A portfolio SHOULD comprise of large/mid/small/balanced funds is NOT mandatory. Choose what you are comfortable with and in proportion to your requirements.

    4. How do you plan to invest? Do you have any online portals (already) or online bank account facility?

    5. Also the phrase “atleast 5 years without the intention of withdrawing any amount and would like to continue as long as possible unless the financial situation demands otherwise.” acquires great significance.

    Please answer these questions, which will help in giving you a good advice.

    Ramesh

  9. BanyanFA says:

    Hi,
    You have already got the jist of what I was about to mention. One thing which I might want to mention (though other boarders may disagree with it) – You really don’t need a balanced fund. A balanced fund tends to reduce the risk in your portfolio by investing into Debt. If you are already investing into PPF, that solves the debt component of your portfolio. If you further want to de-risk your portfolio, reduce some more amount of your Equity portfolio and push it into PPF.

    If I was you, I would invest 100% of the funds into Equity. Considering your Risk appetite, I would suggest the following mix :
    1. Large Cap Funds – 30% – . DSPBR Top 100 Equity & HDFC Top 200 are good
    2. Mid Cap Funds – 50% – HDFC MidCap, ICICI Discovery
    3. Small Cap Funds – 10% – DSP BR Micro Cap
    4. Gold Fund – 10% – Reliance / HDFC Gold Funds

    Regards
    BanyanFA

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