Re-balancing Mutual Fund

POSTED BY Sonal R Patel ON February 8, 2013 10:02 am COMMENTS (7)

I am investing through SIP 1500 in each HDFC Equity and Reliance Regular Saving Balanced and 1000 in SBI Dynamic Bond since last couple of months for a goal of 1-2 years. But I feel to do STP from HDFC Equity to HDFC Prudence an amount of 1000 keeping the investment horizon in concern. Can you guys help me?

Thanks

Sonal

7 replies on this article “Re-balancing Mutual Fund”

  1. Sonal R Patel says:

    Thank You Ramesh and Ashal.

  2. Dear Sonal, HDFC MIP LTP is not meant for the purpose of Debt fund – STP – Eq. fund. the reason is it’s already investing close to 20% of it’s assets into Eq. itself.

    Following funds may be chosen as debt fund for STP.

    HDFC Cash Management Saving Plus
    HDFC High Interest STP

    thanks

    Ashal

  3. Sonal R Patel says:

    How will be HDFC MIP Long Term for this purpose?

  4. Sonal R Patel says:

    Can you suggest a Debt instrument from HDFC fund house to do the STP from HDFC Equity?

    1. Ramesh says:

      HDFC High Interest Short Term and/or HDFC Short Term fund. Pretty good funds, with decent management.

      HDFC MIP LT is a hybrid fund, with upto 25% equity exposure. For your purpose, I will not recommend it.

      Check quarterly performances in 2011 and 2008 (http://www.valueresearchonline.com/funds/fundperformance.asp?schemecode=1930). If that happens in 2013, you do not have enough time to get back the returns later on.

  5. Ramesh says:

    STP from equity fund to equity fund (balanced fund, either equity oriented or debt oriented) does not make any sense. If you want to transfer, do it in lumpsum otherwise not.

    Keep things simple:
    1. 1-2 years horizon so principal protection is very high priority.
    2. Keep 90-95% in pure debt funds. Short term Income funds should be having the most amount. Small amount in Dynamic fund.
    3. A max of 5% in equity funds, just so as to get some more return, in case you want that. Otherwise, there is no need of these.

  6. For a goal 1-2 years away you should never have invested in HDFC equity!
    Suggest you stop that sip and STP into HDFC Balanced.
    If I were you I will stop all SIPs except the dynamic bond fund and move to debt instruments like MIPs.
    If you are in the lower tax bracket then even a liquid fund or RD should do if you are certain about when you need the money. Gradually exit the balanced funds when you are year or so away from the goal or earlier (if you cannot stomach risk)

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