Mutual Fund with Same AMC

POSTED BY Biswa Singh ON August 14, 2012 2:14 pm COMMENTS (8)

I have a simple question. What are the issues if someone opts a single AMC’s MFs for his MF portfolio. For example if I want to have a portfolio with HDFC Top 200, HDFC MIP LTP, HDFC Midcap Oppertunities, HDFC Balanced. These four belong to different category of MF (large cap, debt aggressive, midcap/small cap, multicap) and if i compare them with other AMC’s MF in the same category there is not much performance difference. Any thought on it?

8 replies on this article “Mutual Fund with Same AMC”

  1. BRSINGH says:

    Thanks Sharad for this detailed answer.

  2. 3sharad says:

    Dear Mr. Singh,

    If by ‘coincidence’, an AMC is the best performer in all categories, your thought is good and you can invest in different categories of schemes within the best AMC.

    However, I haven’t seen that happening often. A good AMC would be an average+ performer in all its funds, perhaps that’s why its a ‘Good AMC’. However, it doesn’t ensure its the best across the line of products/schemes. in that case, your ‘collective portfolio’ would be invested in best to average performing schemes giving you just average+ returns. (by law of averages).

    Beyond a difference of 1% (1% or so for switching costs, if applicable) in returns, I would consider a better performing scheme worth a switch (of course I would consider the fact… that past performance doesn’t guarantee future returns :).

    I can’t think of strong reasons to stay with one AMC (provided it’s not the ‘coincidence’). Since now we have websites through which you can invest across fund houses with zero hassle, so even the frustrating paper work isn’t there.

    But there can be drawbacks. All fund houses have a couple of ‘Star fund managers’ who deliver star fund performances. Each star performer has his/her good/bad period. Star performers switch jobs as well… 🙂

    Think of these points and the answer would be clear to you.

    Hope this helps.

    Regards,
    Sharad Singh

  3. BRSINGH says:

    Dear Ashal, Can you please give me your thought on the question that i asked?

    1. Dear BRSingh, as long as the funds opted by you are performing well, you may remain invested is those funds. There is no harm if you are satisfied within a single AMC. Yes if the over all performance skids for the whole AMC, you ‘ll be in deep trouble.

      Thanks

      Ashal

  4. Karthik says:

    I understand your question. when you say ‘the performance is more or less same’, what percentage is that?
    For me, 3 to +4 percent per year performance difference is a considerable amount.

  5. Karthik says:

    I will not agree with you. For eg, HDFC Balanced fund is the best in its category. Can you find a equivalent fund in LIC Nomura or in SBI MF?

    1. Karthik says:

      But, I agree that we can stay just with one (or twp) Good AMC as HDFC (which is number one in Asset size and Performance).
      Just don’t agree with you that all the Fund houses perform the same in each category.

    2. BRSINGH says:

      Karthik, I think you did not understand the actual intertion behind asking the question. I am not comparign MF here. I would like to know if the performance is more or less same then what are the issues that you feel going with a single AMC for all my MF.

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