[graaja]

Originally Posted by fhdowntheline

Typically, for people who accumulate more surplus in the later years like mid-40s due to change in job profile, would you still recommend SIPs since they would be looking to accumulate wealth by their mid-50s so they can plan for rebalancing at the time of retirement?

Yes. If you are in the mid-40's then you can definitely do manual investing to rebalance the portfolio every month. That is what I do these days.

Every month decide on how much to add to debt or equity to get the balance. If either of the categories outgrows the other by a huge margin, then consider switching existing funds. This can result in some taxation, but the decision has to be taken based on how much accumulation has happened.

[fhdowntheline]

Thanks @graaja. What is your view on HDFC Balanced Advantage Fund? I have redeemed most of my money from this but still have some (<75k) in the Regular Growth plan. I have been given contrasting views on this as some believe that Dynamic Asset allocation by principle is volatile compared to other hybrid funds, others feel it is better suited to the current market scenario.

[graaja]

Originally Posted by fhdowntheline

Thanks @graaja. What is your view on HDFC Balanced Advantage Fund? I have redeemed most of my money from this but still have some (<75k) in the Regular Growth plan. I have been given contrasting views on this as some believe that Dynamic Asset allocation by principle is volatile compared to other hybrid funds, others feel it is better suited to the current market scenario.

I don't know about the HDFC balanced advantage fund in particular. But earlier I too had considerable amount invested in SBI Equity Hybrid fund. During market fluctuations, I observed it fall as much as equity funds, but recover slower. I did not understand the reason behind this. I expected the opposite to happen - the fall to be cushioned.

I remember SmartCat mentioning about investing in proper debt and equity funds and maintain the portfolio balance instead of investing in hybrid funds.
When I did my rebalancing about 18 months back, I completely quit from the hybrid fund and invested in proper debt and equity funds in the right percentage.

[SmartCat]

The biggest problem with Hybrid Equity fund is that they are forced to keep 65% in equities and 35% in debt. Only then, they will be classified as an 'equity fund' and investors will be taxed accordingly. The higher skew towards equities means it has higher volatility than often recommended 50:50 equity/debt portfolio

Now, some adventurous fund managers of these hybrid funds try to generate returns of a proper 100% equity fund by taking aggressive bets on high volatility stocks. So many times, such hybrid funds behave unexpectedly during a crash/recovery.

[sunilch]

Originally Posted by fhdowntheline

Thanks @graaja. What is your view on HDFC Balanced Advantage Fund? I have redeemed most of my money from this but still have some (<75k) in the Regular Growth plan. I have been given contrasting views on this as some believe that Dynamic Asset allocation by principle is volatile compared to other hybrid funds, others feel it is better suited to the current market scenario.

Originally Posted by graaja

I don't know about the HDFC balanced advantage fund in particular. But earlier I too had considerable amount invested in SBI Equity Hybrid fund. During market fluctuations, I observed it fall as much as equity funds, but recover slower. I did not understand the reason behind this. I expected the opposite to happen - the fall to be cushioned.

Originally Posted by SmartCat

The biggest problem with Hybrid Equity fund is that they are forced to keep 65% in equities and 35% in debt. Only then, they will be classified as an 'equity fund' and investors will be taxed accordingly. The higher skew towards equities means it has higher volatility than often recommended 50:50 equity/debt portfolio

Now, some adventurous fund managers of these hybrid funds try to generate returns of a proper 100% equity fund by taking aggressive bets on high volatility stocks. So many times, such hybrid funds behave unexpectedly during a crash/recovery.

If you want liquidity and safety/features of a balanced/hybrid fund, then invest in Tier 2 of NPS. They have a stricter mandate in terms of allocation, are highly regulated and have lower expense ratio compared to MFs. This works better.

If you are ok with the life-time lock-in, then Tier 1 is even better.

[sunilch]

Hello Experts,

Usually I do my own research on investing and make my decisions based on my readings. But today I am a little confused and hence asking for guidance. I can now only invest in MFs due to employer restrictions going forward. I was heavily into Direct investing in Equities and other linked assets/products until now. Hence my MF portfolio is negligible and now I need to rebuild everything after withdrawing my funds from Markets. I have started the following SIPs

1) HDFC Small Cap - 7.5k/m
2) Kotak Emerging Equity - 7.5k/m
3) Motilal Oswal Flexi Cap - 2.5k/m
4) ICICI Prudential US Bluechip - 5k/m

These cover Small Cap, Mid Cap and Multi Cap in Indian Equities and an International one. All these SIPs are meant to be perpetual and withdrawal will be done only when needed (for emergencies) and at my retirement. Of-course, if the fund screws up, I will change but otherwise my SIPs will continue.

Bone of Contention: The investment so far is small and will not cover my retirement needs at this rate and an assumed RoI of 8% p.a. (I know I am being pessimistic but I would rather be safe than sorry with RoI). So I have to increase my investments. I don't want to add another fund as such as I believe number of funds should be minimal. But recently I have been reading on Index Funds / ETFs and I am tilting towards those for their low Expense Ratios.

Is it advisable to start an Index Fund?

If yes, which fund is a good one? I have SBI Nifty Index Fund and HDFC Index - Nifty 50 in mind. Which one shall I pick from the two?SBI seems to have a lower expense ratio.

If no, then I guess I will simply increase my investments in some of the above funds. Please recommend any other fund as a replacement for one of the above if any of these 4 are not good.

[fhdowntheline]

Originally Posted by sunilch

Hello Experts,

Usually I do my own research on investing and make my decisions based on my readings. But today I am a little confused and hence asking for guidance. I can now only invest in MFs due to employer restrictions going forward. I was heavily into Direct investing in Equities and other linked assets/products until now. Hence my MF portfolio is negligible and now I need to rebuild everything after withdrawing my funds from Markets. I have started the following SIPs

1) HDFC Small Cap - 7.5k/m
2) Kotak Emerging Equity - 7.5k/m
3) Motilal Oswal Flexi Cap - 2.5k/m
4) ICICI Prudential US Bluechip - 5k/m

These cover Small Cap, Mid Cap and Multi Cap in Indian Equities and an International one.

You could look at an Index fund to replace the Flexicap fund. The amount you are assigning to Flexicap may be too less to derive any substantial gain. And there may be some overlap between Flexicap, Small Cap and Emerging Equity funds too. You could have a Large Cap/Index , Mid and Small cap or have a Large/Index fund with a flexicap.

[Dry Ice]

Originally Posted by sunilch

4) ICICI Prudential US Bluechip - 5k/m

I was recommending this to one of my friends, and he couldn't see it in Coin (Zerodha). I don't see it in their list as well - https://coin.zerodha.com/funds

Has anyone invested in this fund via Zerodha? Or is going direct the only option?

[sramven]

Originally Posted by Dry Ice

I was recommending this to one of my friends, and he couldn't see it in Coin (Zerodha). I don't see it in their list as well - https://coin.zerodha.com/funds

Has anyone invested in this fund via Zerodha? Or is going direct the only option?

I find this in GROWW and yes coin does not have it.

[adimicra]

Originally Posted by sunilch

Hello Experts,

Usually I do my own research on investing and make my decisions based on my readings. But today I am a little confused and hence asking for guidance. I can now only invest in MFs due to employer restrictions going forward. I was heavily into Direct investing in Equities and other linked assets/products until now. Hence my MF portfolio is negligible and now I need to rebuild everything after withdrawing my funds from Markets. I have started the following SIPs

1) HDFC Small Cap - 7.5k/m
2) Kotak Emerging Equity - 7.5k/m
3) Motilal Oswal Flexi Cap - 2.5k/m
4) ICICI Prudential US Bluechip - 5k/m

These cover Small Cap, Mid Cap and Multi Cap in Indian Equities and an International one. All these SIPs are meant to be perpetual and withdrawal will be done only when needed (for emergencies) and at my retirement. Of-course, if the fund screws up, I will change but otherwise my SIPs will continue.

Bone of Contention: The investment so far is small and will not cover my retirement needs at this rate and an assumed RoI of 8% p.a. (I know I am being pessimistic but I would rather be safe than sorry with RoI). So I have to increase my investments. I don't want to add another fund as such as I believe number of funds should be minimal. But recently I have been reading on Index Funds / ETFs and I am tilting towards those for their low Expense Ratios.

Is it advisable to start an Index Fund?

If yes, which fund is a good one? I have SBI Nifty Index Fund and HDFC Index - Nifty 50 in mind. Which one shall I pick from the two?SBI seems to have a lower expense ratio.

If no, then I guess I will simply increase my investments in some of the above funds. Please recommend any other fund as a replacement for one of the above if any of these 4 are not good.

At the risk of sounding like a broken record, I would like to reiterate that first focus on asset allocation based on your risk profile and return expectations. Once you have decided your equity allocation, invest bulk of the amount (60% ) in largecap stocks (nifty and nifty next). Invest the remaining in midcap stocks/funds and some in US/international funds. I don't understand why so much fixation with small cap funds. I think most people are looking at the last 1 year returns and getting excited which is the wrong thing to so. If you want to take some risk, invest in midcap funds which are less volatile and offers similar if not higher returns than smallcap funds over a rolling 5 or 10 year period.

A starter portfolio could be -
Nifty index fund / Largecap or flexicap active fund (35%)
Nifty next index fund (25%)
Midcap fund active (20%)
US/international fund or something like Parag Parikh flexicap fund (20%)

End of rant

[eyesice]

Originally Posted by adimicra

A starter portfolio could be -
Nifty index fund / Largecap or flexicap active fund (35%)
Nifty next index fund (25%)
Midcap fund active (20%)
US/international fund or something like Parag Parikh flexicap fund (20%)
End of rant

I own mostly the exact same funds except that Midcap fund (allocation is different). Mostly invest 50% in Equity MFs, 25% in Direct equity and the rest in FDs / Liquid funds.

Do you have any advice on investing in Debt funds that could earn higher returns than FDs but pose signficantly lower risk compared to equity funds? I am always a bit skeptical when it comes to Debt funds (mostly because I don't understand how returns are calculated). Ideally I would like to invest in Debt funds for 5 - 10 years with occasional portfolio re-balancing in the event of a market crash in which case I would be tempted to withdraw from debt funds and invest in equity.

[Latheesh]

Originally Posted by adimicra

A starter portfolio could be -
Nifty index fund / Largecap or flexicap active fund (35%)
Nifty next index fund (25%)
Midcap fund active (20%)
US/international fund or something like Parag Parikh flexicap fund (20%)

End of rant

Thanks! I just did a quick check of my MF SIP details, this how it stands
Large Cap Active Fund 28%
Nifty Next 50 index fund 17%
Mid and Small Cap active funds 21%
Multi Asset Fund 17%
US index fund 17% (newly added)

Edit: 50% of the Multi Asset fund SIP amount goes to large cap stocks, so total large cap investment ~ 55% of total SIP.
Total number of funds 6 (4 active, 1 Indian index, and 1 international index).
Forum members helped a lot in shortlisting/selecting funds.

[sunilch]

Originally Posted by fhdowntheline

And there may be some overlap between Flexicap, Small Cap and Emerging Equity funds too. You could have a Large Cap/Index , Mid and Small cap or have a Large/Index fund with a flexicap.

Thanks for the inputs fhdowntheline. I have skipped large-cap funds mainly because of two reasons: Other than the Small-Cap funds, all other equity funds do keep a good portion of their investments in Large-cap stocks for various reasons. So in effect, we do get some exposure to those anyways. For example, in both of my other funds - Large-cap equity allocation is more than 50% anyways.

Additionally, I also put a minimum amount each year into NPS Tier 1. They are inherently biased (or rather limited to) in favor of Large-cap stocks for their Equity Allocation. This is as part of their Mandate of 'Safety First'. So I do get some good exposure to Large-cap stocks indirectly anyways.

But yes, I will revisit the Flexi-Cap fund for sure since my investment into it is small.

Originally Posted by adimicra

Once you have decided your equity allocation, invest bulk of the amount (60% ) in largecap stocks (nifty and nifty next). Invest the remaining in midcap stocks/funds and some in US/international funds. I don't understand why so much fixation with small cap funds. I think most people are looking at the last 1 year returns and getting excited which is the wrong thing to so. If you want to take some risk, invest in midcap funds which are less volatile and offers similar if not higher returns than smallcap funds over a rolling 5 or 10 year period.

A starter portfolio could be -
Nifty index fund / Largecap or flexicap active fund (35%)
Nifty next index fund (25%)
Midcap fund active (20%)
US/international fund or something like Parag Parikh flexicap fund (20%)

End of rant

I agree with your rant adimicra 100%. You have recommended a good mix with safety in mind. My allocation towards Mid and Small-cap stocks is mainly for the reasons listed above. Allocation to Super-Large and Large-caps is usually more than 50% for all equity funds except pure Small-cap ones. Even there, they do allocate some money to Large-caps though that is quite low due to their mandate (about 5% or so).

Moreover, my investments into these stared a while back with a very small amount and so it is not based on recent 1 year performance only. I did get the benefit of the recent rally in the mid and small cap segment

But I agree, Small and Mid-caps have done great recently and one can easily get blinded by this performance.

I missed the bus with Asian equities when I started my investments into the US Blue-chip fund much before the Pandemic. I had both, the US and Asian equity funds in mind but for some reason I decided to take a slow approach to international funds. Moreover, I believe we will continue to see a depreciating rupee (against USD) for a while. Nonetheless, I am satisfied with the returns that the US Blue-chip fund has given so far.

For now, I am tilting towards an Index fund mainly for their low expense ratios and low churning too (though fund specific).

All this because I can't invest in markets directly on my own now :(

[DigitalOne]

Originally Posted by fhdowntheline

...What is your view on HDFC Balanced Advantage Fund? ....I have been given contrasting views on this as some believe that Dynamic Asset allocation by principle is volatile compared to other hybrid funds.....

Originally Posted by graaja

I don't know about the HDFC balanced advantage fund in particular.

Originally Posted by SmartCat

The biggest problem with Hybrid Equity fund is that they are forced to keep 65% in equities and 35% in debt.

Dynamic Asset Allocation funds are highly volatile. They have the flexibility to hold anywhere between 0-100% equity. There is a huge timing risk involved when the fund manager switches allocation from Debt <---> Equity. And then there are the normal risks associated with any Equity fund (stock picks) and debt fund (credit risk and interest rates).

Currently, HDFC balanced advantage fund is holding 75% equity, whereas ICICI and Kotak Balanced advantage funds are holding just 38%, and 36% equity respectively.

I have ongoing SIPs in HDFC and ICICI balanced advantage funds, but from overall portfolio perspective these are <1%. So I am okay with the risk I am taking.

[SoumenD]

Looking for some advice on selecting International equity fund. I see most available are FoFs. Is it better to invest in FoFs or funds which invest directly in international stocks like icici us blue chip(1.26% TER) or nippon india US equity opportunities fund(TER 1.08%). Alternatively how about an index fund like Motilal oswal S&P 500?

Currently am invested only in Indian funds and looking to just get some fresh allocation(10%) in international funds. TIA