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POSTED BY ON February 22, 2014 10:11 am COMMENTS (5)
I started investment in SBI Dynamic Bond Fund – G with a lumpsum amount of 2 lacs and then a monthly SIP of 10000. This has been continuing for an year and half. The investment was done for a goal that will come in another 2.5 to 3 years from now. When started, I was hoping to have around 9-10% of annual return. However, I am disappointed with the performance of this fund. SIP has now come to renewal and I need an advice if I should continue with overall investment and SIP.
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Yes, some times we should get out of the traditional thinking. 🙂
Anyway, I have said what I would do, if I were him.
when he started investment it was 3.5 to 4 years goal, if he would have chosen balanced fund in first place, he would not be disappointed with the performance.
Interest rate cycle is close to peak, CAD is in control, inflation data softening, Govt is trying to boost MFG, Auto, infra sectors and hence India’s growth story is picking up slowly, obviously magic speedy recovery is not going to happen, but still India is much better then other EMs and favorite to FIIs, so I would like to be with equity in this time.
Dear Sumit, for 2Y time frame you are recommending a balanced fund with 70-75% Eq. exposure?
Dear Tonsi, please switch over to SBI Arbitrage Opportunity. Old money as well as fresh money.
Thanks
Ashal
Thx Ashal.
1. It appears SBI Arbitrage Opportunity invests 65-80% in equities and rest in debt. Would it be ok to have this high allocation for a time period of 2/3 years.
2. For existing investment in SBI dynamic bond, should I do one time switch or STP to this new fund? Which one will be less cost to me?
Dear Tonsi30, please read a bit about arbitrage opportunity funds and then you ‘ll understand that these funds are not typical Eq. funds. Please opt for a one time switch.
Thanks
Ashal
This is not a bad fund, but it suffered badly due to the recent cash outflow from debt fund and RBI’s interest rate increase. I would not renew SIP if I were you at this time, and if the goal is still 2 years away then would not withdraw the money either, it should compensate the loss it made in recent past.
Another option could be to Systematically Transfer to balanced funds – ICICI Pru, or SBI Balance.– This is the time to be with equity more.
Thanks
Sumit