[SmartCat]

Originally Posted by Simhi

1. How should the allocation be between the two categories if I am looking at investment horizon of 3 to 5 years?

Personally, I'm not adding to any Banking & PSU debt funds (but I'm not exiting them either). That's because there have a couple of instances when Govt let PSUs default on their bonds:

Centre defaults on PSU bond obligation (2013 article)
https://www.business-standard.com/ar...1801045_1.html

PSU banks risk default on stock-like bonds: ICRA (2016 article)
http://timesofindia.indiatimes.com/a...w/53818630.cms

In my case, any surplus cash goes into either overnight funds or g-sec funds.

I am leaning towards 100% in Gilt Funds. Should I allocate some percentage to BPF category too? (Note: I have taken care of investing in other categories like overnight/liquid funds etc)

My debt fund allocation is roughly 40% g-sec funds, 40% overnight funds, 10% liquid funds (legacy investment) and 10% PSU & Banking funds (legacy investment).

How do Gilt funds manage their allocation during increasing interest rate regime? Do they increase their allocation to T-Bills?

In theory, yes. They can move up to 50% or 60% of their assets into short term treasury bills. It all depends on how accurately the fund manager predicts the future interest rates. Right now, almost all g-sec funds are 90% in long term bonds (means fund managers are predicting that RBI will slash rates further).

[INJAXN]

In a first ( or I have noticed it first time) : NSDL and CDSL reports have details of commission paid to your financial advisor ( if any). If he is still charging you fees, time to confront him and negotiate may be.

[graaja]

Originally Posted by INJAXN

In a first ( or I have noticed it first time) : NSDL and CDSL reports have details of commission paid to your financial advisor ( if any). If he is still charging you fees, time to confront him and negotiate may be.

I too noticed this in the CDSL statement for the month of March 2020. Are the amounts listed paid annually? Roughly it came to about 0.35% of my total holding. So, this has to be annual.

[INJAXN]

Originally Posted by graaja

I too noticed this in the CDSL statement for the month of March 2020. Are the amounts listed paid annually? Roughly it came to about 0.35% of my total holding. So, this has to be annual.

This is half yearly, commissions usually are about 1%. If you check the MF details section, it says :
The gross commission paid to distributor/s mentioned above indicates payments actually received by the distributor/s during the half year period and includes all direct monetary payments, other payments made in the form of gifts, rewards, trips, event sponsorships etc. by AMCs/MFs during this period. It also includes advance commission, if any paid in this period.

[saket77]

Commission to distributors are paid monthly. For equity funds, it is around 1% annually (but paid monthly) and ranges between 0.1% to 0.6% for debt funds. For liquid funds, it’s around 0.05%. The payout is calculated on the current value of investment and not on the principal.

The distributors are barred by AMFI to share the commission received with their clients, so legally one cannot ask for payback. Also one cannot negotiate the brokerages as it’s fixed in prior and not on case to case basis.

Regards.

[graaja]

Originally Posted by INJAXN

This is half yearly, commissions usually are about 1%.

Originally Posted by saket77

Commission to distributors are paid monthly. For equity funds, it is around 1% annually (but paid monthly) and ranges between 0.1% to 0.6% for debt funds. For liquid funds, it’s around 0.05%. The payout is calculated on the current value of investment and not on the principal.

Thank you for the update on distributor commission. I used to have a distributor to purchase all my MF investments till about a year back. My distributor does not provide me with active investment advice since a year. I have started my own planning, fund selection and investment through MFUtility portal in direct funds. But I still have about 40% of my portfolio in regular funds purchased over many years.

Even with -ve returns in equity funds, I believe fund houses pay commission to distributors. I understand this is the norm.

My doubt: Now that I have started managing my own investment and haven't received any investment advice or support from the distributor for more than a year, does it make sense to quit the equity investments (even booking loss) and investing back in the same direct funds? Or is this a really bad idea?

[ranjitnair77]

Originally Posted by graaja

My doubt: Now that I have started managing my own investment and haven't received any investment advice or support from the distributor for more than a year, does it make sense to quit the equity investments (even booking loss) and investing back in the same direct funds? Or is this a really bad idea?

I went through this exact exercise in 2018 but under different circumstances as the market was bullish at that time. I was investing with a financial advisor in regular mutual funds. I felt that the advisor had vested interests and was pushing recommendations that got him better commissions. I decided to move my portfolio over to Zerodha to have full personal control.

In this move, I exited all my regular mutual funds, parked them in Liquid/Overnight funds and staggered purchases of new funds over a few months. Some factors that guided my decisions.

• I had incorrect asset allocation which needed fixing. This was the biggest factor.
• I had large cap funds which I wanted to replace with index funds.
• Exiting equity funds had no tax implications at that time.
• Holding on to equity funds for long periods does not guarantee returns. Compounding is a myth so exits and rebalancing is fine.

This, in hindsight, has been an excellent decision.

Things might be different in your case. However I think this is a good time to relook at a portfolio specifically from an asset allocation perspective. If you feel that a significant part of it needs fixing then I would recommend a sell and a switch to direct. This is a great time to do this.

[khan_sultan]

Originally Posted by graaja

....My doubt: Now that I have started managing my own investment and haven't received any investment advice or support from the distributor for more than a year, does it make sense to quit the equity investments (even booking loss) and investing back in the same direct funds? Or is this a really bad idea?

My 2 cents: Why NOT? Right now is a better time than ever! You could also use this time to re-assess asset allocation, tax implications for capital gains, see which of the investments are performing/not-performing in absolute and relative to market conditions and then re-invest accordingly.

[graaja]

Originally Posted by ranjitnair77

I went through this exact exercise in 2018 but under different circumstances as the market was bullish at that time. I was investing with a financial advisor in regular mutual funds....

Things might be different in your case. However I think this is a good time to relook at a portfolio specifically from an asset allocation perspective. If you feel that a significant part of it needs fixing then I would recommend a sell and a switch to direct. This is a great time to do this.

Originally Posted by khan_sultan

My 2 cents: Why NOT? Right now is a better time than ever! You could also use this time to re-assess asset allocation, tax implications for capital gains, see which of the investments are performing/not-performing in absolute and relative to market conditions and then re-invest accordingly.

Thank you for the advice. I did an asset allocation correction a couple of months back just before the fall started. I had set equity-debt ratio to 50-50 (now it stands at 40-60)

I will watch how the market moves and then switch everything gradually from regular to direct funds in the coming months.

[SideView]

Originally Posted by INJAXN

In a first ( or I have noticed it first time) : NSDL and CDSL reports have details of commission paid to your financial advisor ( if any). If he is still charging you fees, time to confront him and negotiate may be.

Noob question:
Is there a way to find for mutual funds? I cant seem to find from cams report or commission is not deducted since NAV*units seem to match the amount.(maybe the fund houses are paying directly)

[hondafanboy]

Does anyone have any views on Index funds ? Any recommendations ?
I have 3 active SIPs going into 3 AMCs Multicap Equity funds and I am thinking about adding 4th fund in Index category.

[JMaruru]

Originally Posted by hondafanboy

Does anyone have any views on Index funds ? Any recommendations ?
I have 3 active SIPs going into 3 AMCs Multicap Equity funds and I am thinking about adding 4th fund in Index category.

Could you please share the multicap funds you have invested in and the rationale behind the same.

I am looking to invest in a well managed multicap fund in this downturn!

[hondafanboy]

Originally Posted by JMaruru

Could you please share the multicap funds you have invested in and the rationale behind the same.

I am looking to invest in a well managed multicap fund in this downturn!

When I started SIPs couple of years back ,it was for Long term and wealth creation goal and with the moderate to high risk expectations. I chose the following value and multi cap and still continuing some of them;

Aditya Birla Sun Life Equity Fund- Growth-Direct-
ICICI Pru value discovery -Growth-Direct
Quantum long term equity value fund- Growth-Direct
Franklin Prima -Growth -Direct-
Franklin India focused Equity -Growth direct
[ I have stopped SIPs into Franklin's funds]

[warrioraks]

Originally Posted by hondafanboy

Does anyone have any views on Index funds ? Any recommendations ?
I have 3 active SIPs going into 3 AMCs Multicap Equity funds and I am thinking about adding 4th fund in Index category.

I have used UTI Nifty index fund in the past. Seems a good choice with low expense ratio.

I would suggest everyone should pick one Nifty index fund and one Nifty Next 50 index fund. This gives a diversified coverage across large and mid caps.

Also, since you already have 3 multicap equity funds in your portfolio, would be worthwhile to check if investing into additional funds is giving you any diversification advantage. You certainly would not want to end up investing into the same stocks but through a different fund.

[hondafanboy]

Originally Posted by warrioraks

I have used UTI Nifty index fund in the past. Seems a good choice with low expense ratio.

I would suggest everyone should pick one Nifty index fund and one Nifty Next 50 index fund. This gives a diversified coverage across large and mid caps.

Also, since you already have 3 multicap equity funds in your portfolio, would be worthwhile to check if investing into additional funds is giving you any diversification advantage. You certainly would not want to end up investing into the same stocks but through a different fund.

Thanks for the suggestion ! will look into it. Also on the overlapping front, it is around 14 % (between Mcap and value) and 36 %(between value funds).

I have not spent enough time in Equity market but sometimes I wonder whether the market really gives any meaningful returns to the average investor over the long period. E.g. the freefincal guy managed to get only 2.75% returns after 12 years of investing. He is more than an average investor.