[pnredkar]

Hi,

I am no expert, but have been investing in MF for more than 10 years. Below are some guidelines that I follow (not all may be rational):

- Research across multiple source (moneycontrol, valueresearchonline, etc.) and preferably should have a CRISIL rating of 1 or 2. Check mainly for 1, 3 and 5 year returns compared to peers and preferably no change in fund manager over this period.

- I don't do SIPs. If risks are averaged out, so are returns.

- I don't do balanced funds, I do the balancing myself (explained below)

- I stay invested in a fund for long term (>1yr for equity, >3yrs for debt) so that I pay CG at a lower rate.

- If a fund falls in the lower percentile when compared to its peers (after the long term cutoff), i consider it for sale/switch.

- I attempt to keep close to 70-30 ratio between equity/debt funds and review this ratio once a year. If the ratio goes higher, time to book profits and move some amount to debt. If the ratio goes lower, time to invest in equity because the market is down. Lots of gut feel involved in this step.

- Use money market MFs (along with debt funds) for lowest risks

That's all I can remember now.

- Prasad

[SmartCat]

Originally Posted by tejas08

All the points are pretty much in line with what I feel. Except that the above one doesn't fall in line.

The ratings change over a period of time. Currently two of my funds which earlier were 5 Star Ratings are now 3-star rating. I am guessing this to be because of the current performance of these funds.

1. DSP Blackrock Microcap Fund
2. Franklin India Bluechip Fund

And the rest of them are 4-Star which too most of them were 5-star once on www.Valueresearchonline.com

Regardless of these ratings & all, I am quite happy with the performance of these funds are these are well above the expectations that I have set individually for Large, Mid & Small Cap funds.

Valueresearchonline's ratings are based on a technical parameter called "Risk Adjusted Returns". It is based on how much risk a fund is taking to achieve returns.

Easy to understand examples:

1) If a fund earns 100% in a year beating the hell out of all funds, but has only 10 micro-cap stocks in its portfolio (which causes lots of volatility), it will probably be rated only 1 or 2 stars out of 5.

2) If a fund earns 20% in a year but with very low volatility (fall in NAV from its peak), it can still be rated 4 or 5 stars.

The ratings of a fund change because individual components that affect its long term performance change with time.

A fund cannot be ranked or evaluated purely on its returns alone, because it can all vanish in a deep correction.

[DigitalOne]

I started my MF investment journey 14 years back. Here are my experiences, strategy, and learnings. Hopefully it helps somebody.

- Initially I invested in too many fund houses and funds. Now stick to only 7(FT, HDFC, ICICI, Birla, Reliance, Quantum, Motilal Oswal). This also is couple more than required.

- Only direct investments, directly on the fund house portals. Not even using MFUtilities.

- Both Equity and Debt; Debt mostly in FMPs. Started investing in short-term debt funds recently. Converting my FDs to Short-term debt funds to take advantage of tax efficiency.

- Sticking to only Systematic investments; Previously it was all SIPs. Now doing SIP into the liquid fund of the fund house and from there an STP to equity/short-term debt funds. This gives greater flexibility to start/stop STPs and also "idle" funds give better returns (around 6% for the liquid fund). Any lump-sum investments are only to the liquid funds which act as a funnel.

- Fund selection based on valueresearch star ratings (4 or 5). Generally very less churn. If fund ratings fall to 3, stop new investment. If ratings fall to 2, then switch.

- Longest running funds in portfolio - FT Bluechip, HDFC Capital Builder; Both around 13 years. New favourites are the Motilal Oswal funds :-). (This is not a recommendation)

"Mistakes"/Learnings

- Choosing dividend payout option initially for the 7 years: If investment horizon is long and regular income is not a necessity, go for growth. Otherwise small insignificant amounts keep coming back to you but you lose out big time on compounding effect.

- Choosing Large-cap funds: Again if horizon is long, better to go for aggressive mid-cap/small-cap funds. The difference is significant. In retrospect I feel I could've taken some more risks. Of course, this depends on each individual.

- Churning: Used to keep churning a lot earlier. Lost out when I redeemed FT Prima early.

[techcoze]

Originally Posted by pnredkar

- I don't do SIPs. If risks are averaged out, so are returns.

- I don't do balanced funds, I do the balancing myself (explained below)

What's the alternative you follow instead of SIP? Can you share your methodology?

[JMaruru]

Originally Posted by DigitalOne

Not even using MFUtilities.

Any negatives?

You can have all your investments consolidated in one single portfolio account, with MFU, right?

[rajathv8]

Originally Posted by smartcat

V
A fund cannot be ranked or evaluated purely on its returns alone, because it can all vanish in a deep correction.

In the above context, can you please elaborate about what you mean by deep correction?

[SmartCat]

Originally Posted by rajathv8

In the above context, can you please elaborate about what you mean by deep correction?

Deep correction as in 2008 crash. Explaining with an example: Taurus Discovery Fund Vs Birla Sunlife Frontline Equity Fund

Taurus Discovery Fund went up 100% in 2007
https://www.valueresearchonline.com/...schemecode=215

Birla Sunlife Frontline Equity Fund went up "just" 62% in 2007.
https://www.valueresearchonline.com/...chemecode=1400

But in 2008, Taurus went down 75% while Birla Frontline was down just 48%. This means, if you had invested Rs. 1 Lakh each at the beginning of 2007 in Taurus and Birla, you would be left with Rs. 50,000 in Taurus Fund and Rs. 80,000 with Birla fund by the end of 2008. That is, you were better off in Birla fund despite growing slower than Taurus fund - because Taurus fund took huge amount of RISK to achieve those returns.Basically, RETURNS are meaningless unless you analyze the RISKS being taken to achieve those returns.

Usually it is a bad idea to chase funds that give the best "past 1 year" returns. You will never know what kind of risks the fund manager took to achieve those returns. Conversely, it is a bad idea to exit a mutual fund just because it did not enter the top 10 returns list. Good analogy is pinch hitters vs solid technically sound batsmen. The former come in and whack the ball around, but don't last for a long time. The latter stay around for a long time, score steadily and are match winners.

[govigov]

Originally Posted by DigitalOne

Converting my FDs to Short-term debt funds to take advantage of tax efficiency.

- Now doing SIP into the liquid fund of the fund house and from there an STP to equity/short-term debt funds. This gives greater flexibility to start/stop STPs and also "idle" funds give better returns (around 6% for the liquid fund).

DigitalOne, I find this advice very useful, but I have some doubts. Can you please answer two queries?

How can short term debt funds have a tax advantage?

What is a liquid fund of a fund house?

Sorry If I sound like a noob and if the questions do not make sense.

PS: I currently am holding all direct growth elss funds from SBI, FT, Mirae & DSPBR. Currently almost exceeding the 80c cap of 1.5L. So would like to invest in other avenues as well.

[pnredkar]

Originally Posted by techcoze

What's the alternative you follow instead of SIP? Can you share your methodology?

My logic is simple: I am going to stay invested for long term, I can afford to let my money idle for few months to find the right instrument. Few events in the sensex plateau of 2013-14 reinforced this for me. Each investment is preceded by some research; I don't want to commit my future money to today's research (that's how I view SIPs ). Also, this has a side benefit of lesser rows in your excel sheet making tax computation easier.

Having said that, I am not against SIPs. If that works for you, please do it by all means. Its important to keep investing regularly: monthly, quarterly, or at least yearly.

Hope, this helps.

- Prasad

[sgiitk]

How do you do the KYC/Aadhar linkage on an HUF folio. I tired but CAMS threw it back that it needs some form to be filled. Please advise.

[hserus]

Originally Posted by sgiitk

How do you do the KYC/Aadhar linkage on an HUF folio. I tired but CAMS threw it back that it needs some form to be filled. Please advise.

1. Fill the KYC form for individual AMC(s) where you have a HUF folio

2. Attach copies of HUF PAN, HUF charter (where you incorporated the HUF on stamp paper)

3. KYC form and all documents above signed by HUF Karta and stamped with HUF seal.

Hand it in at CAMS.

[sgiitk]

Originally Posted by hserus

1. Fill the KYC form for individual AMC(s) where you have a HUF folio

2. Attach copies of HUF PAN, HUF charter (where you incorporated the HUF on stamp paper)

3. KYC form and all documents above signed by HUF Karta and stamped with HUF seal.

Hand it in at CAMS.

Thanks. I will ask SCB to take care. Why does the CAMS site show e-option as well?

[hserus]

Originally Posted by sgiitk

Thanks. I will ask SCB to take care. Why does the CAMS site show e-option as well?

Online is only available for individuals not for HUF, Trust or other non individual holders.

[rajathv8]

Originally Posted by smartcat

The latter stay around for a long time, score steadily and are match winners.

Thanks for that quick lesson
I took a peek at the 2007-current graphs for those two. The latter has made a staggering recovery.

[DigitalOne]

Originally Posted by JMaruru

Any negatives?

You can have all your investments consolidated in one single portfolio account, with MFU, right?

Probably, no negatives; As I have not tried I can't say if it has any negatives.

In my case I started with advisers with few fund houses, then moved to Direct via their sites. So it kind of evolved. Never felt the reason to consolidate.

Every month I get a NSDL consolidated statement which is pretty useful and comprehensive.

Originally Posted by govigov

How can short term debt funds have a tax advantage?

What is a liquid fund of a fund house?

You can read this

Liquid Funds. Liquid funds typically have no entry or exit loads; So are good candidates for keeping funds parked for short time before switching to other funds.