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POSTED BY ON October 19, 2011 3:27 pm COMMENTS (8)
Dear All
Kindly help me to simplify the portfolio.
During the last 5 years, I have invested in many mutual funds (most of them are lumpsum investments). Invested in about 15 number of mutual funds in the following fashion:
Total investment is more than Rs. 2,50,000/-
Break-up is as follows:
Birla SL Frontline Equity (Rs 45,000/-); Can Robeco Eqty TaxSaver (Rs 10,000); Fidelity Tax Advantage (Rs. 15,000); HDFC Tax Saver (Rs. 10,000); HDFC Top 200 Fund (Rs. 50,000); JM Basic Fund (Rs. 10,000); Principal Tax Savings (Rs. 10,000); Reliance Short Term Fund (Rs. 25,000); SBI Infrastructure – Sr I (Rs. 10,000); SBI Magnum Contra Fund (Rs. 20,000); SBI Magnum Tax Gain (Rs. 15,000); Sundaram Energy Oppor (Rs.10,000); Sundaram SMILE Fund (Rs. 10,000); Sundaram Tax Saver (Rs.15,000); UTI Infrastructure Fund (Rs. 10,000).
In one TV channel, I heard, it is always better to keep the portfolio simple and not to make it complex. I just invested based on the market trend at that particular moment. I dont know much calculations or knowledge about the market.
I request you all to kindly advise me to SIMPLIFY MY PORTFOLIO AND DISPOSE OF SOME UNNECESSARY FUNDS.
Thanks and Regards; KK Babu, Hyderabad.
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You definitely need to simplify your portfolio of 15 funds that is made of 6 ELSS funds, 2 infrastructure funds, 2 thematic funds (JM Basic and Sundaram Energy Opportunity), 2 large- and mid-cap funds besides 3 large- and mid-cap funds. All this makes your portfolio diverse in number; not in character.
Some lessons to prune your holdings
1. Invest in only as many funds that you can track and manage
2. A portfolio of 4-5 well diversified funds is much better than one with 10 odd funds.
3. Adopt a style that suits your asset allocation (and the risk that you can take); which could be in lines with the core and satellite philosophy.
4. It is not enough to invest regularly through SIPs; you should also assess the progress made by your investments at least once a year to ascertain its progress and to rebalance your portfolio to suit your asset allocation.
5. Invest in thematic and sector funds only when you have achieved diversification and you understand the risks when investing in such funds. Most important; you should include such funds to ride the gains a sector makes or a theme is likely to benefit from.
Based on these guidelines; prune your holdings. And at best never invest through SIPs in ELSS as each SIP has to be invested for three years to qualify for tax deductions. To overcome this problem; you can stagger your ELSS investments to 2-3 times a year.
I would say exit the infra funds as well as the thematic funds; the themes that they are based on are not playing out at all. Likewise, a debt fund in a predominantly equity mutual fund portfolio does not gel well; you can exit that as well. This right away reduces 5 funds; once you consolidate your ELSS holdings to 2 at best three funds; your portfolio would get manageable.
Narayan
thank you sir. I shall follow your advise
Dear KKBabu, IMS stands for Invest more though SIP as I posted in my 1st reply. I do hope that you are already aware of SIP.
amp? I’m unable to understand as there is no such word in my reply to you.
Thanks
Ashal
Dear KKBabu, here is my view for your investments.
Birla SL Frontline Equity (Rs 45,000/-) – Invest more through SIP (IMS)
Can Robeco Eqty TaxSaver (Rs 10,000) – IMS more only if you do have space left for 80C investments
Fidelity Tax Advantage (Rs. 15,000) – Switch the money to Fid Eq. if lock in is over & IMS in Fid. Eq.
HDFC Tax Saver (Rs. 10,000) – Switch to HDFC Top 200
HDFC Top 200 Fund (Rs. 50,000) – IMS
JM Basic Fund (Rs. 10,000) – Switch to Fid. Eq.
Principal Tax Savings (Rs. 10,000) – Switch to HDFC Top 200
Reliance Short Term Fund (Rs. 25,000) – Switch to Rel. Eq. Opp. & IMS
SBI Infrastructure – Sr I (Rs. 10,000) – Switch to Fid. Eq.
SBI Magnum Contra Fund (Rs. 20,000) – Switch to HDFC Top 200
SBI Magnum Tax Gain (Rs. 15,000) – Switch to Rel. Eq. Opp.
Sundaram Energy Oppor (Rs.10,000) – Switch to Sundaram SMILE
Sundaram SMILE Fund (Rs. 10,000) – IMS
Sundaram Tax Saver (Rs.15,000) – Switch to Sundaram SMILE
UTI Infrastructure Fund (Rs. 10,000) – Switch to Fid. Eq.
After the adjustment, these funds ‘ll be in your portfolio.
Fidelity Eq. , HDFC Top 200, Rel. Eq. Opp, Sundaram SMILE & Canara Robeco Eq. Tax saver.
Thanks
Ashal
Dear sir
I thank you very much for detailed reply. However, can you pl. tell me what is ‘IMS’ and ‘amp’.
Thanks N Regards
KK Babu
Mr. Ashal ji
Thanks for your detailed reply. However, due to shortage of time (busy with regular office works), I could not act any thing on the above. I did not touch the portfolio and entire Pfolio remained same.
I request you pl. let me know “Is your earlier advise is still valid as it is about 2 month old & a lot of changes happend in the market during these days”
Or any modifications so that i can quickly act.
Thanks N Regards, KK Babu
Dear KKBabu, I’ll still go with my Oct 2011 suggestions. It’s up to you now, how fast you can make changes.
Thanks
Ashal
Babu
You are right keeping it simple will not only make things in order but also disciplined in a way
My first thought is you should stop the lumpsum investment and start SIP instead which is best way to go in this volatile times and in general.
HDFC Top 200 Fund Large and Mid Cap
Birla SL Frontline Equity Large and Mid Cap
Can Robeco Eqty TaxSaver Tax saving
are the three funds you can retain.Even among them you can skip one of the Large and Mid cap funs and retain other.
Tax Saving fund you can retain for tax benefits otherwise you can stop those.
If you feel the need for another fund choose one good fund in Mid & Small Cap.
Don’t invest in sector based funds