[sgiitk]

Originally Posted by murugaveln

Don't MF houses have to provide details of investors investing 2L or more in a FY? Then even if we invest in tranches of under 2L, won't they get reported if the total amount is more than 2L?
Also is the threshold for investing in a fund or a fund house (say 1.5L each in 2 funds of a fund house)?

Yes, but the practice is only single investments of 2L or more are reported. One I had put in two cheques of 1L each in the same fund and folio on the same date, cashed together, but they did not show up on the AIR.

[nowwhat?]

Originally Posted by searacer932

Thanks. It looks to be a good fund as well. I did not have it in my shortlist as I was looking at performance of the last 10 years.

Do not be misled by 1/2/3/5/7/10-year performance figures.

For instance if you only sort by 10-year annualized gain, you have no way of knowing how many years in between the fund underperformed its index and what risk it took to make up and reach where it is today. In the past, I have seen underperforming large cap funds suddenly buy a lot of mid caps thereby increasing the risk to its portfolio and resulting in a rocky ride until they come back somewhere on top. Similarly I have seen a few mid cap funds suddenly buy small cap stocks. There are many who stumbled on this path and hence we do not hear about them as much these days.

A better way to evaluate MFs is using the quartile method. In this, you check how many times the fund remained in the top 25% in terms of its ranking within its category for each month or quarter in the past so many years. A good fund will be consistent and therefore be more often in the top 25% compared to others.

Looking at the funds you selected, all are large cap oriented and going by market sentiment, this may be the year for large caps and @MaxTorque has suggested well. However one never really knows and if you are investing in only one, then you should consider a diversified fund or if you want lower risk, a balanced fund.

Originally Posted by sgiitk

Yes, but the practice is only single investments of 2L or more are reported. One I had put in two cheques of 1L each in the same fund and folio on the same date, cashed together, but they did not show up on the AIR.

Not sure what implications the AIR Rule has for an ordinary tax-payer, but most Equity MFs wait 3 business days to allocate units for amounts over Rs. 2 lakhs and this is yet another reason to buy or switch for an amount slightly below that threshold. For instance if one switches for Rs. 2.5 lakhs, the redemption will happen on Day T, but the allocation will happen only on Day T+3. Better therefore to do a switch of Rs. 1.95 lakhs on Day T and the balance 55K on Day T+1 -- Both are then allocated on the same day when they were transacted. As you can see, depending on the amount this may even turn out quicker and one doesn't have to be too concerned with the vagaries of the market especially in the case of a switch.

[S_U_N]

While setting up a new SIP with Franklin via my regular HDFC account I see an option to pay via NetBanking, Debit Card and also via Credit Card.

So, obviously this a good way to use free money, but what happens when I try to redeem the units? Will the money go back to my credit card account?

[nowwhat?]

Originally Posted by S_U_N

While setting up a new SIP with Franklin via my regular HDFC account I see an option to pay via NetBanking, Debit Card and also via Credit Card.

I have seen that option many times before and clicked on it out of curiosity, but it has never worked for me.

By the way, buying MF units on borrowed money is never a good idea.

[searacer932]

Originally Posted by nowwhat?

Do not be misled by 1/2/3/5/7/10-year performance figures.

A better way to evaluate MFs is using the quartile method. In this, you check how many times the fund remained in the top 25% in terms of its ranking within its category for each month or quarter in the past so many years. A good fund will be consistent and therefore be more often in the top 25% compared to others.

Thank you for your response . I will explore further on the quartile method. Please allow me to explain how I chose some of my funds. I picked this technique from freefincal.com website. I think it's a excellent site passionately maintained by an individual. The below is what I did.

1. Identified the consistently top ranking funds of the past 3/5/10 years from valueresearchonline.com. I picked up only large cap funds.

2. Then from the above list did the analysis on capture ratio and ulcer index.
I believe if the capture ratio is >1 or if the ulcer index of the fund is < ulcer index of the benchmark then the fund is a pretty good fund and less volatile.

Would like to get views from everyone on what approach they follow to choose funds.

[nowwhat?]

Originally Posted by searacer932

I believe if the capture ratio is >1 or if the ulcer index of the fund is < ulcer index of the benchmark then the fund is a pretty good fund and less volatile.

People obviously have divergent approaches to MF investments, otherwise we would all end up investing in the same MFs.

However it is also interesting that sometimes different approaches end up with the same few funds.

In addition to the capture ratio and the ulcer index, there are many quantitative and non quantitative factors which are also important. To each his own, if you have faith in a data driven approach and it works for you, then great.

Additional quantitative factors could include a minimum fund size, a minimum track record, turnover ratio, etc. in addition to a plethora of other ratios and approaches. Non quantitative factors also play a role. For instance, when Kenneth Andrade quit IDFC, Premier Equity was already underperforming a bit, but that snowballed when investors left in droves and the fund was hit by redemption pressure.

I subscribe to FreeFincal and every once in a while I use their spreadsheets. They are a good site for someone who prefers a data driven approach and the complexity and work on each of their worksheets can be mind boggling. However it is important to note that they do not recommend individual MFs. It is also interesting for me to note that one of their prominent members invests primarily in PPFAS, a fund that does not have a long track record nor one that can be easily benchmarked to a particular category.

As for me, I keep my MF investing very simple.

[thoma]

Originally Posted by S_U_N

but what happens when I try to redeem the units? Will the money go back to my credit card account?

You can always link multiple bank accounts to your folio by filling up a form and submitting to the respective fund house. I guess this should be the same with an SIP folio too.

[deepv]

Originally Posted by S_U_N

While setting up a new SIP with Franklin via my regular HDFC account I see an option to pay via NetBanking, Debit Card and also via Credit Card.
...

Have you tried using CC option, I don't think that would be allowed for MF purchase transactions.

[naphill]

Originally Posted by S_U_N

While setting up a new SIP with Franklin via my regular HDFC account I see an option to pay via NetBanking, Debit Card and also via Credit Card.

So, obviously this a good way to use free money, but what happens when I try to redeem the units? Will the money go back to my credit card account?

Payment of MF SIP or bulk purchase cannot be done through credit cards. It is not permitted by SEBI. By the way HDFC banks own FAQ page informs that this is not possible. Please see the link below
http://hdfcfund.com/KC/ContentDispla...ShortCode=FAQs

[sgiitk]

I this highly volatile market I am realizing the benefit of Arbitrage Funds. The last dividend (almost monthly) on the ICICI Arbitrage is 0.0856, which adds up to about 9%+ on an annualized basis on a NAV of about ₹13. IDFC Arbitrate Plus is marginally lower. The NAV is holding and the returns are not bad considering one is only looking for FD level returns. These are tax free if held for over a year!

[mac187]

Originally Posted by sgiitk

These are tax free if held for over a year!

Hi Sgiitk,

I am taking the liberty of posing a question to you. I read your posts regularly and felt you can guide me on my dilemma.

I am looking for monthly investment instruments (need not be tax free) for purpose of Child education (child is currently 2 yrs old) and for retirement life (age 32).

Which instruments would you suggest?
What kind of mutual funds should I invest to maintain diversity?

Thanks,
Abhay

[sgiitk]

@mac187; I think the best option can be a decent balanced fund like HDFC Prudential plus a good diversified Equity Fund, like ICICI Dynamic. Even if you go pure equity your time horizon is long enough, since we are looking at ten years plus. Remember we dropped to 8000 or so in 2008-9 and are at 20,000+ today. Even if the sensex drops to 16,000 there is still a 2x gain.

Niow the main Equity categories will be Large Cap (FT Blue Chip), Diversified, Mid-ans small-cap (my favourite was IDFC Premier, not doing that well after the exit of Andrade, still good). Large cap - lowest risk and gain, Diversified - flexible, you are more dependent on the manager, small- mid-cap needs a really smart manager, potentially the highest risk and gain. Arbitrage is specialized and should give returns better than FD. I will not go for pure debt in any big way.

[nowwhat?]

Originally Posted by sgiitk

@mac187; I think the best option can be a decent balanced fund like HDFC Prudential plus a good diversified Equity Fund, like ICICI Dynamic.

Just a small correction, it is HDFC Prudence.

ICICI Dynamic also at times behaves like a balanced fund and shifts a significant portion to debt. This fund is good for someone who prefers a cautious approach to investment. Strangely, despite being categorized as a multicap, it gives slightly lower returns than ICICI Focused Bluechip.

[sgiitk]

Originally Posted by nowwhat?

1. Just a small correction, it is HDFC Prudence.

2. ICICI Dynamic also at times behaves like a balanced fund and shifts a significant portion to debt. This fund is good for someone who prefers a cautious approach to investment. Strangely, despite being categorized as a multicap, it gives slightly lower returns than ICICI Focused Bluechip.

1. Ye I stand correcte.
2. Remember the Focused Bluechip is a large/giant cap fund, while Dynamic is a diversified fund. I may have listed HDFC Equity and DSPBR Equity which are also diversified but they have not been doing that well of late. It is your choice! One can only look at classes then take the call. I will say, look at valueresearch and go for any 3* or higher fund.

[sgiitk]

Now the HDFC Prudence (Div) has become monthly dividend. I am not sure whether it is good or bad - more bookkeeping for sure,