Wish to invest in Mutual funds. Need guidance

POSTED BY Jeena ON September 6, 2013 12:01 pm COMMENTS (10)

I would like to invest in Mutual funds but i would say i’m an illiterate in this field. Can you guide me if it is wise to invest in mutual funds right now considering the current economic scenario? if so, which is the best one to invest? Thanks

10 replies on this article “Wish to invest in Mutual funds. Need guidance”

  1. ashalanshu says:

    Dear Jeena, this safer thing is only relative. In a pure Eq. fund, 85-95% money is invested in Eq. whereas your balanced fund may have 70-75% Eq. exposure. So what’s the safety here?

    thanks

    Ashal

  2. Jeena says:

    Hi Ashal,

    I read that balanced funds are safer and also provide good returns. as my risk taking ability is low, I shortlisted it.

    With ICICI Pru top 100 out of my list (as per Lakshmipathy’s info), i’m really in a dilemma which fund to go for. Franklin Bluechip is still in my mind and i need one more fund along with it.

    Would really appreciate if someone can suggest some funds with good returns but at the same time are low risk

    Thanks
    Jeena

  3. Jeena says:

    Hi Lakshmipathy,

    I was planning for an SIP in this fund but i overlooked it, looks like ICIC Pru Top 100 does not provide SIP.
    Thanks for bringing that to my notice.

    Jeena

  4. ashalanshu says:

    Dear Jeena, your approach is good for fund selection. But putting too much wait on past performance is like driving the CAR with looking into rear view mirror. Can you drive this way? The answer is NO.

    I want to understand, why do you want to invest in a balanced fund? What is there in it for you? Regarding the 2 large cap funds, Franklin India may not provide top class returns but it’s conservative in it’s style and that’s the reason I w’d prefer it over IPru Top 100.

    if you are investing for a long term wealth creation, Growth option should be your default choice. dividend option is normaly for those people who wants to cash in some profits in between. But interestingly, as an investor you do not have control on dividend, it’s the fund manager’s call to declare or not any dividend.

    Disclosure – I have my personal investment in FIBCF, so my view may be a biased one.

    thanks

    Ashal

  5. Jeena says:

    Hi Ashal,
    Thank you for your prompt reply.

    I have used the Value research online website to select these funds. I checked their 3, 5, 7 & 10 year returns, risk grades and expense ratios and also other aspects like std Dev. alpha, beta etc. As i said previously, I’m looking for funds with low risk grade and all the above funds fall under below avg risk grade. I found the above funds more consistent during their 3, 5, 7 yrs performance. For now i’m looking for a 5 to 7 year performance and funds like ICICI Prudential Top 100 were in the top 3 in 3yr, 5 yr and 7 yr ranking. Am I in the right direction or am i missing something here?

    1. so do you suggest Investing in ICICI Prudential Top 100?
    2. I prefer Tata Balanced for their consistent performance. see below
    3yr return Rank 5yr return rank 7 yr Return rank 10 yr return rank
    Tata Balanced 4.31 5/27 14.75 4/26 12.06 1/25 18.28 3/20
    HDFC Prudence -1.33 21/27 13.64 7/26 10.94 5/25 18.77 1/20

    Tata balanced was in the top 5 all the time. The only issue they have a very high expense ratio of 2.65 whereas HDFC Prudence is 2.24. Can i have your thoughts pls on this as well?

    3. yes i want to invest in only 2 funds from the shortlisted ones. but i’m not sure if i need to invest in small and mid cap right now? what do you suggest for a beginner?

    4. sorry but i still don’t understand it. which one is good for investing? D or G? (sorry if this question sounds silly)

  6. Lakshmipathy G says:

    jeena,

    To add on to Ashal Points,

    To my knowledge i think Minimum Investment required for
    ICICI Prudential Top 100 Inst I is 1 Crore.

    http://www.valueresearchonline.com/funds/funddetails.asp?schemecode=3279

    FundsIndia Account may not be needed for you. You can go directly to the AMC website and go for Direct Options than through Distributor. As This will reduce the Distributor Fees and make it beneficial in the Long term.

  7. ashalanshu says:

    Dear Jeena, on what basis you selected these 5 funds? Regarding your queries –

    1. IPru Top 100 was not available 10Y ago, hence the performance data is not available.

    2. Why are you opting TATA Balanced over HDFC Prudence?

    3. Do you want to invest everywhere or want to creat wealth for yourself in the long run? If your choice is wealth creation, you do not need so many funds. 1 or 2 good funds are OK.

    4. D stands for Dividend and Growth stands for Growth. In Dividend option, fund may provide dividend to you in between. Growth option ‘ll not provide any dividend. Please do note for Dividend option, the NAV of the fund ‘ll come down as per the dividend announced.

    Thanks

    Ashal

  8. Jeena says:

    Thank you Anshuk and Ashal for your advise. Also apologies for the late response. In fact I have been reading about mutual funds in this website as well as on valueresearchonline during this period and I think I have a fair idea on mutual funds now.

    I have already activated an account in FundsIndia and have shortlisted some mutual funds which I feel is good to invest. I would appreciate if you can help me with selecting a fund to invest.
    As i’m investing for the first time, I would like to start with a small amount of 4000/month. My risk taking ability is low currently.

    Following are some of my shortlisted funds:
    Equity – large Cap
    1. ICICI Prudential Top 100 Inst I
    2. Franklin India Bluechip
    ( reason for choosing – Returns are good,Risk grade and expense ratio is lower in both compared to others)

    Hybrid: Equity-oriented
    1. Tata Balanced Plan A
    2. HDFC Prudence

    Equity- mid and small cap
    1. ICICI Prudential Discovery Inst I

    I would like to invest in 2 funds from the above and would like your suggestions on which one to go for. Also i have few queries if you can help?
    Q 1. ICICI pru Top 100 Inst I has been consistent in the 3 yr 5yr and 7 years but they dont have 10 yr values, is it still ok to invest in this fund?
    Q 2. Among the hybrid plans above I prefer Tata balance Plan A but it has a higher expense ratio and hence not sure whether to go for it. Which among the two will you prefer?
    Q 3. Equity mid cap and small cap fund- I’m not very sure if i want to invest in this category as i am a beginner. would like to have some advise here as well
    Q4- while i was searching through the funds, I came across funds having letters D and G at the end of them. For eg HDFC prudence-D, HDFC Prudence-G. what is the difference between these two?

    Would be grateful if I can get an early response.

    PS: A Big Thanks to the Jago Investor team. Your website is very informative and you are doing a great job in helping people like me. 🙂

  9. Dear Jeena, do you really want to invest for your future or just want to ride the wave.

    if you are really interested in your own financial life’s well being, please invest your time first in reading & understanding about MFs. You can start from this forum as well as the main jagoinvestor site.

    thanks

    Ashal

  10. Anshuk Jain says:

    Jeena, search on jagoinvestor.com. There is a great article on this. No time is bad time to start an investment..

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