Mutual Fund Portfolio Review

POSTED BY Sonia Bhatia ON February 10, 2012 4:09 pm COMMENTS (15)

As if now i am 28 Year old Currently i m investing in below mentioned Mutual Fund, My monthly investment Via Sip in MF is 16000 , which i started in the year Aug 2010. Yes, I would continue investment till the age of 50-52 Years. Moreover i just want to share one more thing recently i have purchased 2 Term plan of 25 Lacs Each one from LIC & other from HDFC Clicktoprotect online term plan for which i m so much happy i have been wanting to do it from last 2 years but had done it a month back only… Also want to share i have invested 35K yearly for LIC Jeevan Saral with SUM Assured of 8 Lacs. I have completed given 5 Years and policy is for 25 Years. I know i m paying huge amount for a cover of 8 Lacs but what i feel is as per my portfolio i have been investing in all equity where risk is high so i pretend this LIC jeevan Saral Policy as a debt fund in my portfolio. Still i m open for the comments and suggestions on the same also want to increase my SIP to addition 6-8 K per month . Please suggest

Here is my Investment

HDFC Top 200 – 5000 PM
DSP TOP 100- 2000 PM
Franklin India Prima Plus G 1500 PM
Fidelity Equity Fund G 1500 PM
IDFC Premier Equity Fund -Plan A G 2000 PM
Birla SL Frontline E FUND G 1000 PM
Tata Divident Yield Fund G 1000 PM
ICICI Pru Focussed Bluechip E Fund G 2000 PM

Also please suggest m i on the right track …. AND how to add 6-8 K further investment…. I want to create a corpus of 3 Crores……

15 replies on this article “Mutual Fund Portfolio Review”

  1. Deepak Bhaskar Bhor says:

    Hi my name is Deepak bhor 29 yrs old married man
    Can you help me out regarding my Mutual fund Portfolio
    My Currnetly Portfolio :

    DSP BR Micro-Cap Fund (G) (Growth) – 1000
    Canara Robeco Emerging Equities (G) (Growth) -1000
    Birla Sun Life Frontline Equity Fund (G) (Growth) -3000
    Mirae Asset Emerging Bluechip Fund (G) (Growth) – 1000
    Tata Balanced Fund – Regular (G) (Growth) -1500
    ICICI Prudential Value Discovery Fund (G) -1000
    ICICI Prudential Focused Bluechip Equity Fund (G) -1000

    I have started my monthly SIP in above mutual fund schemes before one year. As you have seen i have purchased too may schmes
    Investing in too many funds will not help me gain maximum profit,So i have decided to close some scheme
    for e.g I am planning to close either DSP BR Micro-Cap Fund (G) (Growth) – 1000 or
    Canara Robeco Emerging Equities (G) (Growth) -1000 and contine with one schme with monthly sip 2000 Because both the schmes are in Small & Mid cap
    Same in case of Birla Sun Life Frontline Equity Fund (G) (Growth) -3000 & ICICI Prudential Focused Bluechip Equity Fund (G) -1000
    Kindly advice me which should i close and contine.
    My risk taking ability is Moderate and I have a long term wealth creation horizon(10 Years Or More than 10 Years)

    I select Large cap funds for my long term goals(more than 10 yrs) like child education,child marriage etc and Small & Mid cap funds(more than 7 years )for wealth creation.
    & Balance fund for goals for repayment of of home loan premium after it complete.

    Thanks in advance
    Deepak B

  2. BanyanFA says:

    @ Ramesh – I agree with your view completely. Hence I had mentioned that if one needs to beef up their debt component in their portfolio – better go via PF / PPF instead of Balanced Funds. I find balanced funds a good solutions for NRIs rather than Residents as PF / PPF are not available for them.

  3. I am sure our experts have answered several points you wanted clarity on. Here are my additions:

    1) USUALLY – When looking to invest additional money, if you are convinced your current portfolio is doing well, just pump more money in existing schemes via SIP.

    2) Learn this rule of the thumb calculation (using Microsoft Excel) to calculate your approximate maturity value. Simple, straighforward and easy.

    =FV(1%,288,-16000,-275000,1)

    1% ~ Is the approximate monthly return assuming annuualized return in MFs is 12%
    288 is the number of periods of investment (24 years = 288 months)
    -16000 is the monthly cash outflow
    -275,000 is the current value of your investments you started in Aug 2010. I have assumed the SIP has lost ~ 5% in this time period. [Outflows are all indicated as negative in finance]
    the last character ‘1’ denotes you start the contributions at the beginning of a month. Ignoring this parameter does not make a huge difference.

    The future value generated in 24 years is 3.16 Crores. Assuming you can increase the monthly amount with every passing year your targeted amount is achievable. If you now increase the monthly contribution to 24k then the final corpus will be around 4.5 crores.

    One of our buddies guessed your total monthly EPF contribution will be INR 5000. Letting that grow @ 8% for 24 years will create another 43 Lacs.

    All in all if you know that is about the money you need you are in the right path as far as ‘wealth creation’ is concerned. However in Personal finance Weatlh creation needs to be protected with ‘wealth preservation’. At this income level (and all income levels) a Term Plan is a must; So is a Health Insurance. If you have covered that and have inflation adjusted your future expenses needs to be around 3 crores you are in safe hands.

    And yes, before I forget, please make the Jeevan Saral a paid up plan! And also contribute to PPF (try to maximize to 1 lac each year) for strengthening your debt component.

  4. BanyanFA says:

    @ Ashal – I really like your approach of knowing the complete background before expressing your views – helps in answering appropriately. However, the only thing which I fear is too much personal information gets released on public blog.

    @ Amit
    I am always stuck in this confusion of appropriateness of recommending Balanced funds to investors. It would be nice to know from the community as well. My view points in not recommending Balanced funds are :
    1. Balanced funds target the debt component of the portfolio, reducing risk & volatility. However :
    a. If the investor has a very long term outlook (greater than 10 years) – there is very low level of volatility and risk;
    b. Debt portion can easily be catered by much efficient instrument such as PPF & Provident Funds which are less costlly to the investor in terms of annual charges levied by the AMC. Take it this way – a debt fund would give around 8-10% return per year in long term. They may end up charging 1.5% charge per year reducing the return to 7-9%. Why should the investor invest into their PF which will give tax free 9.5% or even PPF which gives 8.5% tax free ?
    For the Mutual fund distributor community this may not be a good advise at it results in loosing commission income, but hey – it is a prudent advise – isn’t it ?

    1. BanyanFA – A couple of Balanced Funds have got returns that have beat 80-90% of the diversiifed equity funds – HDFC Balanced and HDFC Prudence [ I am not a HDFC agent btw!].

      Balanced funds can reduce their equity holdings rapidly in a falling market thus protecting gains and can hide in debt for some time and come out aggresive and move into Equity again when the markets rise. So a 60-40 portfolio which is supposed to return less than equity funds now returns way higher. Hence if someone is including Balanced funds I would recommend either of the above 2. I know there is the risk of timing involved but I would make an exception on such selected ones.

      And… most Debt funds usually charge less than 1% as mgmt fees.

      1. Ramesh says:

        I differ from the above view.

        ‘couple of balanced funds beaten 80-90%’. Thats a bad statistic. You should compare the same AMC funds. You will find, over a 10 year period term, the same 2 funds have been massively beaten by a 3-12% YoY margin. Check the long term returns of 10 years. Prudence (26%), Balanced (18%), Growth-Taxsaver (26%), Equity, Top 200 (29%).
        Same goes with other AMCs.

        You seem to have forgotten that even supposedly pure equity funds can also deploy cash/debt upto 15-25%. Though, I am not a fan of a fund manager, who becomes defensive by increasing cash.

        HDFC Prudence has a portfolio very similar to HDFC Mid-cap opportunities (small and midcap space), which gives it Aggressiveness and return potential.

        Equity-oriented debt funds charge similar to the Equity funds. There is no difference in there as well.

        In my opinion, Balanced funds are a lazy approach and their function should be actually managed by proper asset allocation in a more conventional manner.

        Ramesh

        1. @ Ramesh – 26% and 18% returns over 10 years are absolutely no mean achievement. Dont compare Balanced funds with schemes of the same AMC – rather compare it with the entire universe of MF schemes in India. These funds have beat, i would say, more than 90% of the supposedly ‘full time’ Euity oriented funds. That is a ‘massive’ performance.

          It is easy to look at numbers and say in retrospective it is better to push money into top rated funds. I can reasonably say that 90/100 people visiting this forum may have stopped SIPs when the markets fall – the worst time to stop SIPs really. However having a Balanced fund will always cushion your overall portfolio and perhaps lead you to safeguard the existing portfolio by tricking you in showing some performance. What I may say may appear theoretical but it an absolutely practical gyaan. I agree Asset allocation is indeed the best way to go – check out http://wp.me/p1Y418-24 . Having a Balanced fund definitely augments wealth generation [just these 2 btw, the rest of them have lagged way behind]

          1. By equity oriented I really meant DIversified equity funds. And usually pure Debt funds charge expenses less than 1%.

          2. Ramesh says:

            The last line says it. The performance of these 2 funds is odd.

            I compared with similar schemes, to tell the difference how asset allocation affects the performance of the same manager (Prashant Jain, in this case).

            If balanced funds were any good, in general, you should be able to get any decent balanced fund, and not these 2 funds only. There is nothing to counter, that in future, these funds will severely underperform.

            If 90% people visiting this forum have stopped SIPs, then its their own fault and bad financial planning. They need to arise and awake.

            Ramesh

    2. Dear BanyanFA, thanks that you liked my approach. Regarding revealing of too much personal data, I already offered my mail ID to the person if keeping privacy on an open forum like this is an issue.

      Thanks

      Ashal

  5. Dear Sonia, may I ask some questions to you?

    Your yly income?
    Do you have PF corpus?
    Salaried or self employed?
    Married or unmarried?
    If married, size of family?
    Any loan liabilities as on date?
    Any health cover?
    current valuation of all of your investments?
    Any bank FDs?

    If you feel, I’m asking too many personal question, you may write a personal mail to me (ashalanshu@gmail.com). Be assured your details ‘ll remain confidential.

    Thanks

    Ashal

    1. Sonia Bhatia says:

      Sir,

      I have already send you all my details as asked by you. Also do suggest me do i continue with the Jeevan Saral i have SA 8 Lacs Premium 35 K Yearly. 4 Years completed….. Desperately waiting for the input from your side…..
      Please do design a fresh Portfolio for me monthly SIP around 22-24 K…
      How much do i need to put in my PPF account.
      How much emergency fund should i maintain
      Do i purchase a health insurance. (As if now i have company provided 3 Lacs)
      Currently i have 50 Lacs insurance (Term Plan) Do i need to increase it.
      And i have taken a car loan 2 months back for 2.75 Lacs for which i m paying around 7k EMI. I can afford to pay the loan amount this year only. Apart from my investment in SIP & monthly expense i can save around 15-20 K monthly so on an average in 6 months time i can either pay my car loan or can have done a FD. As if now i decided to pay off my car loan prepayment. It was just a thought i have just want to know your view on this , M i thinking the right way…

      1. Dear Sonia, Yer, your details are with me & I’m going to answer you very shortly. Regarding your Jeevan Saral query, Please make it paid up one or surrender it which ever is more favorable to you as per your own judgement.

        Thanks

        Ashal

  6. Amit Kumar Singh says:

    Your approach to invest through SIP is good. It lowers your risk in long term. Since your horizon of investment is long term, I will suggest you to start investing in good stocks for higher return. Apart from this, you may have some good balanced fund( HDFC balance or HDFC prudence) and Reliance Gold saving fund in your portfolio. You have investment in so many funds of different fund houses which are investing in bluechip companies.
    Example: ICICI Pru Focussed Bluechip , HDFC Top 200, Birla SL Frontline E FUND and DSP TOP 100 .It makes your investment more risky. Having a good fund of one type is good approach as it makes tracking easy too.

  7. BanyanFA says:

    Hi Sonia,
    Can I assume that you are a salaried employee and that your employer & you are paying towards your PF ? If you are able to invest around 20K per months into SIPs, I am assuming that your PF contributions would be atleast 5K per month (both your & employer contribution in total). Do not forget that PF is a debt component of your portfolio.

    Further, having a look at your SIPs, I found one thing very much in common – all of your SIPs are large cap focused. Remember that though in Equity, Large caps have growth lesser than small / mid caps. It is important to have Large cap funds in your portfolio, but having only them in your portfolio can result in a drag on your return.

    Try having a healthy combination of Large, Mid & Small Cap with a flavour of Sector funds. You are lucky that you have age on your side and with an investment horizon of 20-30 years, no sector is risky !

    So I would suggest the following mix:

    Large Caps (upto max 30%):
    BSL Front Line
    DSP BR Top 100
    HDFC Top 200

    Mid Caps (30-40%)
    BSL Dividend Yield Plus
    HDFC Mid Cap Opportunities
    ICICI Pru Discovery or Dynamic Fund

    Micro Caps (10%)
    DSP BR Micro Cap

    Sector (10%)
    Reliance Banking Fund
    Reliance Gold Savings Fund

    Just a clarification – no need to sell any MF in which you have already invested. Just wait for 1-2 years and then you can switch them over into any of the respective funds. This would save a 1% exit load if you switch within 1 year of investing as well as attracting possible Short Term Capital Gain Tax.

    Try out our portfolio tool which maps the investments to your financial plan and helps an investor to track the progress of their investments by registering at https://banyanfa.com/banyanfa/portfolio.asp
    Regards
    BFA

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