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Mutual Fund Turnover Ratios

Turnover ratio shows how frequently the fund manager buys and sells the underlying stocks. Higher the turnover ratio, the more your fund manager churns.

Most of the fund managers seem to be jokers based on this data.

I currently have following mutual funds in my portfolio -

• SBI Blue Chip Fund - Direct Plan (G) - Large Cap
  
• L&T Emerging Businesses Fund - Direct Plan (G) - Small cap
  
• Aditya Birla Sun Life Pure Value Fund - Multi cap
  
• Aditya Birla Sun Life Equity Hybrid '95 Fund - Direct Plan (G) - Hybrid
  
• UTI Transportation and Logistics Fund - Direct Plan (G) - Automobile Sector Fund

I am looking to add a few more mutual funds to my portfolio including another large-cap mutual fund. I am seriously considering to add an international mutual fund for US region. I am also considering adding a few sectoral funds as I see they have performed good (15% above returns) and the companies in their portfolios are also mostly bluechip. The sector shortlisted are - Banking & Finance, FMCG, IT and

Please share your opinions on having international and sector bases mutual funds.

I have shortlisted following mutual funds which I am eyeing to enrol during Diwali festival. Please suggest.

• ICICI Prudential US Bluechip Equity Fund
  
• ICICI Prudential Bluechip Fund
  
• ICICI Prudential FMCG Fund
  
• ICICI Prudential Banking and Financial Services Fund
  
• ICICI Prudential Technology Fund

Looking at your fund selection, I will assume you have an aggressive risk profile. I will also assume you have sufficient allocation to your debt portfolio.
There is no need for a balanced fund with such an aggressive profile.
In my opinion sectoral funds are highly volatile and best avoided. It is best to stick to diversified funds and let the fund manager decide which sector to invest in. Your current portfolio is very risky. You have a sectoral fund, a small cap fund and a highly volatile value fund. ABSL pure value fund is very volatile with a standard deviation of 20. It invests almost 70 percent in small and mid cap stocks and has a high portfolio churn. In my opinion you should avoid thematic funds altogether and add a good diversified multicap fund to your SIP profile. The large cap universe is small with only 100 stocks and it makes no sense whatsoever to have two large cap funds. investing in foreign markets for diversification is fine as long as you don't go overboard with it. I would suggest the following portfolio for you.

SBI Blue Chip Fund or ICICI bluechip ( choose one)-large cap

L&T Emerging Businesses Fund - Direct Plan (G) - Small cap

HDFC capital builder fund or tata equity p/e or invesco contra - value

l&t mid cap or kotak emerging equities or dsp midcap- mid cap

mirae asset india equity or absl equity or principal multicap- multicap

ICICI Prudential US Bluechip Equity Fund( about 10%)

Thanks a lot for your valuable advice.

I am shortlisting - ICICI Prudential US Bluechip Equity Fund, L&T Midcap Fund, HDFC Capital Builder Fund after analysing from the above funds.

Also from the 100 rupees (amount for example only), I am investing, I was thinking of investing Rs. 80 in Indian mutual funds and Rs. 20 in the US international bluechip fund. What say? or shall I invest only Rs. 10 in international funds.

Your any other inputs will be highly appreciated.

I guess there is no harm in allocating 20 percent but do remember that international funds are taxed as debt funds i.e profits accrued will be taxed as incremental income if sold before three years and at 20.6 percent with indexation if sold after 3 years. I find investing in Indian funds to be more tax efficient for me. I invest in ppfas long term fund which is treated as an equity product as far as taxation is concerned and invests upto 35 percent in international equities. You could consider this fund.
I would also recommend that you don't add too many funds in your portfolio. 5-6 funds in total is more than enough.

It might be a good idea to substitute nifty index funds or nifty ETFs instead of large cap funds in the portfolio. As our markets evolve, it will become increasingly difficult for fund managers to beat the index in case of large cap funds. We have seen this year when Nifty 50 outperformed most large cap oriented funds and it is also proven in more mature markets like US. The lower expense ratios for the index funds makes it a even more attractive option.

You could also look at NV20 index based ETFs. I have recently started a monthly Systematic Equity Plan into the ICICI Pru NV20 ETF.

My mutual fund portfolio looks like this:

FI Bluechip-15.92%
FI Equity advantage fund-9.12%
FI Focussed equity fund-11.65%
FI Low duration-4.34%
FI Prima-8.74%
FI Smaller companies-1.52%
HDFC TOP 100-24.58%
HDFC CAPITAL BUILDER VALUE-10.84%
ICICI Bluechip-1.91%
ICICI Value-Discovery -1.98%
Quatum long term equity-7.6%
Quantum dynamic bond-0.9%
ICICI Tax-0.84%

With this portfolio, I am not getting the return I wanted (in the range of 12 to 15% per annum).
I realise that this is top heavy and Large cap dominated- 41%
How to re- cast this portfolio?
In this I am most unhappy with FI BLUECHIP, :Frustrati Once , one of my topmost fund standing like a rock.It's performance is very poor continuously, may be 3 years. Is it time to fully redeem the stake?

With the recent re-classification of Mutual funds by SEBI the mandate of fund manager has been restricted heavily for most of the categories. Due to this I think the funds will not be able to deliver similar long term performance as before. For example now the midcap funds have to remain invested 65% in a well defined and limited midcap universe of 150 stocks. Even if there is a meltdown in midcap space as we witnessed recently they couldn't move the funds out to safer spaces. As a result they will not be able to manage the downside risk as efficiently as they did in past. This will have an impact on their ability to deliver high returns. Hence one should invest more in categories which allow the fund manager greater freedom and less restriction to choose investment opportunities and deploy funds. Due to this I would say only multicap funds, value funds, aggressive hybrid funds are worth investing.

For sectoral funds-
The whole idea of investing in Mutual funds is to not have to track investments actively. With sectoral funds one has to keep track of what is happening in the sector and act accordingly. This defeats the purpose of investing in Mutual funds.

For international funds-
Typically the expected return from any market should be inflation+riskfree rate of return. For india this comes out to be about 10-11% which is what one should expect from investing in large cap or index funds. For US it would be much lower. Recent high returns from international funds has more to do with Rupee falling 15% than stock picking.

I have similar funds in my portfolio too, to name FT Bluechip, Quantum Long Term Value, HDFC capital builder, FT prima etc. FT bluechip being the top most holding even in my portfolio is indeed frustrating. I have stopped further SIPs in this fund, and will redeem in a year after considering taxes.
Recently I have changed tactics. For large cap, I am just investing in Nifty ETF, NV 20 ETF, and Nifty Junior ETF only. Only for midcaps/small caps I am investing in actively managed funds.

Thank you for your inputs. SInce I am holding Bluechip for Long, I have started SWP right away. But the returns of ETFs also are nothing to write home about. I agree that you are paying lesser (expense ratio percentage)

Hi, Need some comments on my MF holdings for 2 years now ending in 1 week.. via SIP for 10k PM
(All are direct funds)
SBI Blue Chip : 30%
HDFC Hybrid Equity: 40%
PPFAS: 10%
HDFC ST Debt Fund 10%
SBI ST Debt Fund. 10%

Now i have some lumpsum at hand and also thinking of revising the allocation. Could you share your viewpoints please ?

Also , since i have less time to track is it advisable to use Fund house like Fundsindia to invest? Is it really that different what comes to the % difference in long run on profits for common man assuming the investing is max upto 10 lac e.g. ?

Your portfolio is that of a moderate risk investor. you have hardly any exposure to small and mid caps. If your goal is about 5 years away and you are a conservative investor than you should increase allocation to your existing funds only.
In case your goal is further away or you can now take higher risks then I suggest you consider a midcap fund like kotak emerging equities. You can perhaps even replace hdfc hybrid with a multicap fund like sbi multicap or mirae India equity. It all depends on your risk appetite, your age and the debt equity ratio you wish to maintain.

You have already made a great start with direct funds. Please keep them that way.

If you like FundsIndia features, there are now many other portals that provide similar or better features and access to direct funds. freefincal.com has an article on 16 and counting ways to invest online in direct funds.



BTW, you may invest 10 lacs. But the trail commission is based on the fund value which hopefully keeps growing. So the difference in TER would be significant in 10 years and more.

I used to regularly keep my data in a spreadsheet. Now with most funds changing their labels over the past year or so I have requested my bank investment adviser to update and then send me the new spreadsheet.