[carboy]

Originally Posted by saket77

Actually the problem with recommending scrips are many.

Absolutely. Most retail investors should buy either the index or managed Mutual Funds. Picking stock is not for retail investors. However, it's difficult to resist, so I put 80-85% of my equity portfolio into the Index and keep 15-20% for picking stock. This is even though, I know that in the long run, I would be better served by not picking stock at all.

[sagarpadaki]

Originally Posted by carboy

Absolutely. Most retail investors should buy either the index or managed Mutual Funds. Picking stock is not for retail investors. However, it's difficult to resist, so I put 80-85% of my equity portfolio into the Index and keep 15-20% for picking stock. This is even though, I know that in the long run, I would be better served by not picking stock at all.

Have you diversified your investments in all the index types,ie, nifty50, sensex 30, midcap and small cap index funds?

[carboy]

Originally Posted by sagarpadaki

Have you diversified your investments in all the index types,ie, nifty50, sensex 30, midcap and small cap index funds?

Index is only large caps - Nifty 50 & Nifty Next 50. Stock picks are usually Mid Caps

[SmartCat]

You should pick stocks only if you enjoy the process. Else, invest in mutual funds. Stock picking does not necessarily generate higher returns.

Just like how you should drive to a destination only if you enjoy driving. Else, take a bus/train/flight.

[sagarpadaki]

Originally Posted by carboy

Index is only large caps - Nifty 50 & Nifty Next 50. Stock picks are usually Mid Caps

Oh ok. I did not know that. Thanks

Originally Posted by SmartCat

You should pick stocks only if you enjoy the process. Else, invest in mutual funds. Stock picking does not necessarily generate higher returns.

Just like how you should drive to a destination only if you enjoy driving. Else, take a bus/train/flight.

Great analogy. I will stick to Mutual Funds then!

[carboy]

Originally Posted by sagarpadaki

Oh ok. I did not know that. Thanks

I think you misunderstood me. I have 80-85% of my equity investments in Index Funds. 15-20% in individual stock picks. What I meant was the only Indexes I have invested in are the 2 large cap indexes - Nifty 50 & Nifty Next 50. And all my stock picks are medium cap stocks.

[sagarpadaki]

Originally Posted by carboy

I think you misunderstood me. I have 80-85% of my equity investments in Index Funds. 15-20% in individual stock picks. What I meant was the only Indexes I have invested in are the 2 large cap indexes - Nifty 50 & Nifty Next 50. And all my stock picks are medium cap stocks.

Yes, i misunderstood you then. I interpreted your post as All index funds are large cap based. Thanks for clarifying.

[skchettry]

Trying to bottom fish again (I am into mutual funds only and I know bottom fishing is not that easy). With today's fall, my advisor has started telling me to invest in small quantities with any spare money that I have. What do you think? Corona Virus effect has just started or today's fall was just something different and the market could change the direction any time soon?

[SmartCat]

Originally Posted by skchettry

Trying to bottom fish again (I am into mutual funds only and I know bottom fishing is not that easy). With today's fall, my advisor has started telling me to invest in small quantities with any spare money that I have. What do you think? Corona Virus effect has just started or today's fall was just something different and the market could change the direction any time soon?

Bottom fishing or timing the markets is easy if you set a few ground rules, and follow them with discipline.

• In your MF portfolio, set a debt mutual fund to equity mutual fund ratio, say 50:50. That is, if you have Rs. 10 Lakhs in equity mutual funds, you need to have Rs. 10 Lakhs in debt mutual funds too.
  
• Disable SIP. Manually invest in either debt fund portfolio or equity fund portfolio every month (or week, if you want to be more involved). Let's suppose you can invest Rs. 40,000 per month.
  
• If index crashes 10% in a month, your equity mutual fund will be worth Rs. 9 Lakhs while debt mutual funds with be worth Rs. 10,06,000.
  
• Now you have more funds in debt funds, than in equity funds because of market crash. Invest Rs. 40,000 in equity funds so that equity fund portfolio value is Rs. 9.4 Lakhs
  
• Next month, let's assume that your portfolio shoots up, and your equity portfolio value is Rs. 10.3 Lakhs. Now equity fund portfolio value is more than debt MF value.
  
• Then, invest Rs. 10,000 in equity MF and Rs. 30,000 in debt MFs. This way, you will set the debt to equity ratio back to 50% each.
  
• In a rising market, you will be investing in debt mutual funds - because equity mutual fund portfolio value will be going up with the markets.

This way, you will automatically buy stocks when they are falling. No need to depend on an "advisor" to tell you what to do. You won't go overboard buying stocks either, since you are limited to buying the SIP amount (Rs. 40,000)

[skchettry]

Originally Posted by SmartCat

....

This way, you will automatically buy stocks when they are falling. No need to depend on an "advisor" to tell you what to do. You won't go overboard buying stocks either, since you are limited to buying the SIP amount (Rs. 40,000)

Thanks for the advice. Let me see how best I can work on it given the size of my portfolio, the skew towards equity (hardly have 5% in debt funds), size of monthly SIPs distributed unevenly between two advisors and lately direct mode too.

[strawhat]

A lot of bloodshed happening in the stock market. All the equity funds I invested in have taken a good beating. I think this situation will worsen in days to come till the Corona virus fears abate. My debt portfolio surprisingly remains intact. This made me think if I should "time the market" and buy funds like Mirae Asset Emerging Bluechip since this is one of the equity funds which has been doing well even during this economic downturn, I'd like to invest in this fund for starters. I'd like continue further investments in debt funds too.

[carboy]

Do actively managed funds provide downside protection?

[saket77]

Originally Posted by carboy

Do actively managed funds provide downside protection?

Good article on basics. But it misses that then there’s fund’s mandate which the fund manager cannot overstep by investing in any asset class beyond the stated percentage. Under any circumstances. So even actively managed funds can only offer a very limited protection from downside- even if the fund manager is pro-active.

Regards.

[carboy]

Originally Posted by saket77

But it misses that then there’s fund’s mandate which the fund manager cannot overstep by investing in any asset class beyond the stated percentage.

Not sure if that is relevant. The article is not a critique on the active fund manager, but rather on the myth that active funds provide downside protection over passive funds.

[SmartCat]

Originally Posted by carboy

The article is not a critique on the active fund manager, but rather on the myth that active funds provide downside protection over passive funds.

Actually, I have never come across articles that suggest that active funds offer downside protection. But if somebody wants downside protection (vs Index) but still decent returns, they need to do more research (as always).

Step 1: Go to the list of funds on Valueresearchonline and click on 'Equity: Large Cap' category
https://www.valueresearchonline.com/funds/



Step 2: Click on RISK STATS tab and list the funds based on BETA
https://www.valueresearchonline.com/...tab=risk-stats



Lower BETA means better downside protection during crashes, corrections and bear markets.

Step 3: Ignore funds from JM, Nippon & Quant fund houses. JM and Quant are small fund houses while Nippon fund is thematic. Look at the fund with next lowest Beta score and decent brand name -> Axis Bluechip Direct fund.
https://www.valueresearchonline.com/...nd-direct-plan

Step 4: Click on PERFORMANCE tab



You will notice that Axis Bluechip has offered downside protection during crashes, when compared to index. At the same time, it has outperformed the index over long time.