Mutual Fund for 23 year old.

POSTED BY Kamaljit ON April 17, 2011 1:31 pm COMMENTS (12)

Sir,

 

I have Birla Sunlife Frontline Equity-2K, Dsp Top 100-2K, DSp MicroCap-4K, Hdfc Prudence-2K and HDFC Equity-3K. Currently in my Portfolio. I am investing around 13K in these funds.

I can increase my investment by 2K more and i am thinking i should add IDFC Premier Equity in my Folio. Considering i am 23 years old. My Folio should have more Midcap and since Dsp Micro looks at Small and Micro sector and since Idfc Premier has more exposure to midcap it will complement each other. Request your Views.

12 replies on this article “Mutual Fund for 23 year old.”

  1. Kamaljit says:

    Did some Analysis on Value Research :-
    My portfolio is as below:-
    MIne

    As per Valueresearch for 25 Yrs old Aggresive Investor

    Giant Cap – 23%
    Large Cap – 1 14%
    Midcap – 43%
    Small Cap – 20%

    Now if i add one Midcap I would be able to balance it, but is there any way by which i could add more midcap.
    My sip are as follows :-
    Birla Frontline – 2 K
    Dsp Top 100 – 2K
    Hdfc Pru – 2K
    Hdfc Equity – 3K
    Dsp Microcap – 4K
    Please suggest as i dont want to add more funds but at the same time i want to be aggresive more towards Midcaps.

  2. Kamaljit says:

    Did some Analysis on Value Research :-

    My portfolio is as below:-

    MIne As per Valueresearch for 25 Yrs old Aggresive Investor

    Giant Cap – 37.69 % 23%

    Large Cap – 1 5.53% 14%

    Midcap – 18.01% 43%

    Small Cap – 25.84% 20%

    tiny- 0.54%

    Others- 2.54%

    Now if i add one Midcap I would be able to balance it, but is there any way by which i could add more midcap.

    My sip are as follows :-

    Birla Frontline – 2 K
    Dsp Top 100 – 2K
    Hdfc Pru – 2K
    Hdfc Equity – 3K
    Dsp Microcap – 4K

    Please suggest as i dont want to add more funds but at the same time i want to be aggresive more towards Midcaps.

  3. Kamaljit says:

    What is the normal Duration for which gnerally DSP Micro cp fund Mgmt would invest in a Stock.Because a stock which is small today would be midcap tomorrow and largecap day after.

    So probably this is my logic with this fund.

    This only comes true if they invest for a longer gestation period.

    and i dont mind investing if they have this mandate because this will mean HIgher Rsik Higher Return.,

    Request your view on the same.

    1. Ramesh says:

      If your planner believes in the fund (which is actually a good fund), and you believe in him, with proper perspective. Then, I do not see why should not invest in it. 🙂
      At a younger age, conventionally it is taught that you should be more in equity. I tend to equate younger with less value of portfolio.
      A person with less amount of money, needs to take an aggressive approach in investing his money. Whether he is young or old does not matter.

      Regarding your Midcap query. Just because the name of the fund is Microcap does not mean there are no midcaps in it. The Indian market is not so differentiated as to categorise stocks in definite large-cap, midcap, small, microcaps, etc. It is just a convention and marketing tactic.

      Over long terms, generally well-diversified equity oriented portfolios tend to fetch the maximum returns at minimum risk (Not at high risk, as is generally taught or written).

      Follow your FP’s advice and be informed.

  4. Kamaljit says:

    @ ramesh

    Thank You Sir.

    I intend to keep this fund for next 5-10 years pr till the time i will be invested that is long term ..hence i think Nandish sir must have Recommended. We had debated on this fund in past but he said if you keep patience this fund could be a winner..Just continue SIp and you will benefit.

    So if i am looking long term then this is the best fund..Am i right ?

    Last query, since this funds looks at Micro cap. I think there is Scarcity of Midcap fund. As i have large Cap , MultiCap Small Cap but not too much on MIdcap generally what is more suitable for younger age.

  5. Ramesh says:

    @Kamaljit

    In view of the information, two additional points.

    1. It is very good that you have got a financial planner that too so early on.

    2. If he has recommended a fund, you should always know why and how about that recommendation. You should trust them (not blindly of course) and then follow them. If you are not going to trust them at all, then it can become very problematic.

    Regarding the DSP Microcap fund.

    Facts – The investment mandate of the fund is to invest in small cap companies only and not at all in the large cap universe, whether it is good or bad depends upon how the investor behaves. The fund remains invested most of the times, and does not run to cash during downturns. The management of DSP and this fund is one of the best that is available in the country. In this style (small-microcap), it is “the best” fund.

    How can you benefit from all this:

    1. The small caps are considered to be very volatile and have huge upsides and downsides. So, if you can buy the fund during its huge downsides, you will benefit from the upcoming upsides. Its a contrary strategy. Buy when the fund / and the BSE smallcap are going down. “Buy when there is blood on the Dalal Street”. If you cannot do that (most investors cannot do that – they think since there is so much downside, we should exit this fund. This fund has not performed, etc, etc).

    2. Thats why, for a normal investor, this fund should be only a smaller part of the portfolio. If you can stomach that volatility, then this fund is fine.

    In the end, you should monitor the Whole Portfolio and you should be aware of all the aspects of it and how does it impact you. Think long-term and dont ever panic!!

    (I do hope, you have not taken the FP advice as a one-time thing. It should be an ongoing and long term relationship).

    There is no term like Stable and Equity. More so, in respect to the mid-small cap.

  6. Kamaljit says:

    @ Ramesh request your View on DSP MICROCAP, as you said its INvestment Mandate is not that good. Can you explain in detail.

    I am 23 year old now , hence Nandish Sir Recommended these funds.

  7. Kamaljit says:

    Great Ramesh,

    Thanks for your detail explaination. I have HDFC PRU- Hybrid , HDFC EQUITY- MUltiCap and one Large Cap fund.

    I selected BSLFrontline because its – LArge and MIdcap and not totally a large cap fund.

    DSp top 100 is Large Cap.

    DSP MicroCap as recommended by Nandish (Jago Investor- My financial Planner)

    :- Do you think i should add one Quality, stable Midcap fund like :-

    1) Birla Sunlife DIv yield

    2) ICICI Pru Disc.

    3) IDFC Prem. Equity A

    4) DSp Small and Midcap.

    Request Opinion on the same.

  8. Ramesh says:

    Your funds:
    1. BSL Frontline Equity and DSP top 100 are similar funds which cater to the largest stocks in the market (large cap). So even 1 is enough. Adding HDFC top 200 will just add one more similar fund. Thats why i wont recommend it.

    2. DSP Microcap. In my opinion, this fund should not be there because of the severe volatility that it can undergo, because of the investment mandate. Though, if you do lumpsum in this funds, during its underperformance times, it can give you a good return. But for routine SIP and “normal gastric function”, a large exposure to this group of funds is not good. 😉

    3. HDFC Prudence. This is a good equity-oriented fund, which will give you the benefits of debt as well as equity. Overall, a very good fund. You can also build your core portfolio around this fund.

    4. HDFC Equity. A very good multi-cap fund, investing across all market caps.

    Overall, you can have 1 large-cap and 1 mid-small cap plus 1 equity hybrid.
    Or get 2 multicaps and 1 equity hybrid. Though you can get any combination. But try to minimise the Number of funds (convenience without sacrificing overall return is what you should strive for).

    Invest in them and track the Whole Portfolio and not individual funds and stocks.
    Once you get to know, that the whole portfolio is doing good, your job is done! Trying to find the “best” performing fund and chasing the returns is, overall, degrading.

    Hope, I am able to convey the message.

  9. Kamaljit says:

    @ Ramesh so do you feel my composition of funds is correct.

    @Atul why HDFC top 200 its a Large and midcap fund. Any reasons.

  10. Ramesh says:

    With your portfolio already having hdfc equity and hdfc prudence, i would suggest just increase your investments in these 2 funds, instead of adding any more fund, whether it is idfc premier or hdfc top 200.

  11. Atul says:

    Hi Kamlajit,

    I suggest do not over expose to Mid cap and Small cap fund. Your current portfolio looks fine.

    Include HDFC top 200 which has given good returns.

    Cheers

    Atul

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