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1. Have ULIP's become more attractive due to this. An RM from a brokerage that I have my account with claims if investment is more than 5 years, then ULIPs are now a better option than even direct mutual funds (see attached excel he shared).
I have shunned away from ULIPs due to the various costs/complexity, is it time to relook ?

2. Should we now book regular profits every year so as to take advantage of the 1 Lakh exemption available every year ?

Ever since LTCG on equity was imposed, insurance agents are making such comparisons and trying to market their policies. I hold an Elite wealth policy from ICICI Prudential (5 yrs now) and my experience has been as follows
1. The fund managers managing ULIP funds are not as competent as big popular MF schemes
2. Over time the ULIP company comes out with new funds to attract new investors, but old existing policy holders are not allowed to switch into these funds. Old funds tend to get neglected.
3. Once a fund has been in existence for a long time they are not very actively managed and the funds are allocated with more priority for capital protection than growth.
4. Some ULIP policies give unlimited switch options. Can be a good thing or a bad thing depending on how you look at it. But it gives you the option of switching your funds to debt funds during periods of volatility or book profits when market are high and switch back to equity when markets crash.
5. ULIPs are illiquid compared to MFs.

So don't look at expense and taxation alone. How well a fund is managed should be more important to you. In hindsight I would have been happier had I invested in MF instead of this ULIP.

Even if we take the numbers in the spreadsheet as correct, I would still say MF's have a few advantages. Here are my thoughts

• The assumption is the ULIPs will not have Long Term Capital Gains tax. This may not be necessarily true. I believe the MF industry is pushing for consistent tax treatment with ULIPs so that they don't lose business to ULIPs (exactly what the RM was trying to do. :) )
• MF have more options in terms of different category of equity funds (large cap, multicap, madcap, small cap, value, Hybrid, Dynamic asset allocation etc, that one could choose based on their risk profile. I don't know if similar choices are available in ULIPS. With this choices, I believe it is possible to achieve a return higher than 10% over a 15-20 year time frame.
• The biggest advantage in my opinion is the flexibility to rebalance, switch, withdraw at any point of time for whatever reasons in the case of MFs.
• There is no significant differences in IRR between the two options to compensate for losing out on the flexibility.

Recent article from Valuresearchonline on this subject. MF is the way to go still compared ULIP Link

I have invested in MF , only in BIG fund houses. Major investment in Franklin templeton and HDFC. Some minor allocation (10%) in Quantum and Prudential ICICI(6%).Even in that , in Franklin templeton alone, Ihave investment in FI BLuechip (45%), FI Flexicap (20%), FI Prima fund(15%), FI High growth companies(15%). Out of these, FI Bluechip is the real laggard, ifeel. But that is the oldest scheme in my portfolio, started about 18 years back with some very small amount at that time, occassionally depositing rs 500.
Somehow I have reluctance in going to newer fund houses like Mirae, DSP Blackrock or Kotak.
Should I shift from FI Bluechip?

Hey Smartcat, if by dividend yield funds you mean funds that have a dividend plan and declare dividend then I would suggest you read up on Mutual Fund Dividends.

Most people including me until sometime back, did not realise it is NOT the same as a stock like Tcs or RIL giving dividend to shareholders. It is your own money returned to you (NAV reduces), that too in a tax inefficient way.
FD is better in case someone wants regular income since unlike mutual fund dividend where quantum of money is unpredictable, here atleast you know what you will be getting.

I have personally made a big portion of my investments in PPFAS Long Term Equity Fund since I admire how they work and are also giving decent returns.
Moreover they AMC and fund managers have a large part of their own money invested in the fund itself (skin in the game), which I look for.

From whatever I read on this thread, I could not find any other investor discussing the PPFAS fund. Do read up, I think they are doing a good job.

That's not what I meant. There is a separate category of equity funds called dividend yield funds. You can find the list here:
https://www.valueresearchonline.com/...t=113&x=5&y=11

These funds primarily invest in stocks that offer high dividend yield (Eg: Coal India, ONGC etc). When the underlying stocks pay dividend, it adds to fund NAV. Mutual fund holders won't receive any dividends.

Dividend yield funds have low volatility than other type of equity funds. They fall less in a downtrending market.

Excellent choice. As a bonus, you get about 20% exposure to American stocks too (Google, Facebook etc)

Well I would hardly call Quantum as a big fund house, they are ranked 34th out of 38 fund houses with respect to AUM. However the size of the AMC has no correlation to the performance of its funds.

Franklin Bluechip as you have rightfully said is a laggard, it's underperforming its benchmark by 11% which is a huge difference. I belive you should jump ship to better managed large cap funds such as ABSL Frontline equity, SBI Bluechip or Sundaram Select Focus.

I would suggest you keep no more than 5 funds although the fund management house shouldn't be a concern as long as you stick to well known schemes with a decent AUM.

I think your investment is concentrated on FT. My suggestion is to spread your investments across fund houses. I do not see it's problem to invest in Kotak or DSP etc. In fact, these fund houses have good funds and have proven over a long period of time. There are multiple fund houses handed over their funds to someone else have exited in the past. This did not affect those funds all of a sudden. Irrespective of which fund or fund house, you need to review the funds once in a year at least.

I guess you should consider a multicap and not a large cap. Though some large caps are doing well, the current large cap rally is led by exactly 5 stocks and let us not forget that 7-8 years back, the large cap category was really languishing.

<Quoting from ET>
Simply put, multicap schemes offer the fund manager the freedom to invest across largecap, midcap and smallcap stocks or any sectors that he believes are going to benefit in the coming days. This means the investor need not worry about where the action is going to be or chasing the action or worry about missing out on rallies in some pockets of the market. Chances are that the multicap fund may have a meaningful exposure to the segment already.

https://economictimes.indiatimes.com...w/62630765.cms

Thanks. I did not know of this category. Will read up.

Hey smartcat, how do we choose one between PPFAS Long Term Equity, Axis Focused 25 & ABSL Equity Fund?

Of the lot, I would probably pick Aditya Birla Sunlife Equity Fund. Has been around for 20 years now. They have seen 2 bear markets (2000 and 2008) and have consistently beaten the benchmark.

The other two funds have a different approach to equity mutual funds - they have only 20 and 30 stocks in their portfolio. That is, they make concentrated bets on a handful of stocks. As of now, they have done well and it is to be seen they will perform in different market conditions.

A hack for icicidirect users. You can buy mutual fund units without transaction cost even if your net portfolio is less than 8 Lakhs. If you set up SIP with duration mentioned as "Till cancellation" instead of specifying any specific duration they will not charge the 35 rupee transaction cost. Needless to say you can cancel SIP as many times as needed which means you can do a lumpsum, also that way. Saves a lot if you are investing in 5-6 funds.
I am not promoting ICICI direct, it was just a hack specific to it that I wanted to share. I have accounts in IciciDirect, Zerodha and SBI Cap.

About SEBI's recent decision to cap trail commissions and ban upfront commissions, I feel it will further reduce the gap between direct and regular funds. Contrary to advertised differences I have always found the difference to be between 0.5% to 1% rather than 1.5%. I think it should further shrink. It will also make larger funds more attractive for investors. Any thoughts?


I am also very impressed with this fund. Its like all in one. Invest and forget. Due to overseas investments it fell much less compared to other multicap funds on monday 24th Sep and was able to recover well on 25th. Also heard one of its fund manager Raunak onkar's interview which was about an year old. All the stocks he talked about then made good profits during the year.

Is anyone else invested in Credit Risk Debt funds? The NAVs of 4 funds of mine have all tanked in recent days since the companies involved have defaulted (temporarily, I hope) on repayments to these funds. Other than the IL&FS scare in the market, I see my funds have all sold much of their exposure to Vedanta. I couldn't quite put a finger on what else is going wrong out there...any thoughts?