[Fordmanchau]

Originally Posted by joslicx

NAV less than 10 does not mean it is a bargain

I meant in comparison with the price during the NFO. If there's good fund that's beaten during the downfall, then it's a good time to pick it up. I have seen some funds during recession 2008-09 when NAV's of fund were quoting below the NFO price.

[joslicx]

Originally Posted by Fordmanchau

I meant in comparison with the price during the NFO. If there's good fund that's beaten during the downfall, then it's a good time to pick it up. I have seen some funds during recession 2008-09 when NAV's of fund were quoting below the NFO price.

Well my friend, if you see the price of any fund during a recession period it would be below than what it was pre-recession. But that price itself has no meaning!

What you are saying is (analogy here), a 4 rupee stock is cheaper than a 400 rupee stock! Not always! You have to look at why a stock is priced at Rs. 400 and another at Rs.4! The 400 one might be cheaper instead.

With mutual funds, the statistic to look for is their returns in a particular period. So you should look for information like their last 1-Month, 6-Month, 1-year, 3-Year, 5-Year returns. If all these are as good as their benchmark (or beat benchmark figures) then that fund is well managed and can be considered. The NAV itself has no meaning at all and shouldnt factor while deciding upon getting into the fund!

[vina]

Originally Posted by Fordmanchau

I meant in comparison with the price during the NFO. If there's good fund that's beaten during the downfall, then it's a good time to pick it up. I have seen some funds during recession 2008-09 when NAV's of fund were quoting below the NFO price.

I don't follow - correct me if I'm wrong but NAV for a mutual fund is the mark-to-market value of its assets (debt, stocks etc.) calculated daily at market close.

Given that is the case, any fund that went NFO 6 months before the crash (height of NFOs) would have its NAV less than 10 (let us say it becomes 8 for a given "fund X" on a certain day). At the same time, another "fund Y" that started several years before and had NAV of 100 on the day NFO of X closed happened to fall to 80 in the seem period

How would X (or Y) be a better bargain than the other?

Also if Y felt to 85 - you might think X is a better bargain, but given that by investing in mutual funds you are essentially entrusting your money to somebody else to manage, I would say X is run by (bigger) fools compared to Y.




While past performance doesn't guarantee future results - there is no other indicator to look at when evaluating fund managers. And looking at 3, 5 or even 10yrs returns is not the thing - you must lear about stock markets in general, look at the fund managers' investment decisions and rational (all decisions are in public domain after a while) and then decide to invest.

[Fordmanchau]

Guys, don't stretch it too far.
Mayankjha1806 in his post mentioned, if it was good buying during NFO?
So in that context I mentioned(and meant) that even if one miss the NFO bus, and the fund is new, then he can get some good bargain if in case the market is down and NAV of those newer fund turn lower.
I obviously didn't mean that a 5 year old fund whose NAV is 100 and more will come down to below 10. But even if it falls to 85 , isn't it a bargain Vina ?

I hope you get my point.
And as you rightly said NAV is marked to market every day after the close of market.
And thanks for advising me to learn more about the markets. Will do!!

[diptimanraje]

Sir, kindly comment & advice on my portfolio.

I am 36, my wife is 33 & our son is 7 years old.

For myself :
1. Reliance growth fund - growth option Sip of rs.2500/- tenure 20 years from which completed 1 year.
2. Ppf contribution rs.70000/- per year tenure 35 years from which completed 8 years.
3. Endowment assurance policy of rs.500000/- term 35 years, *from which completed 11 years, yearly premium rs.13268/-.
4. Jeevanshree policy of rs.500000/- term 20 years, from which premium paying term was 12 years which is completed, premium was rs.35748/-.
5. Endowment assurance policy of rs.2500000/- term 25 years, from which premium paying term is 20 years from which I have completed 10 years, yearly premium rs.126440/-.
6. LIC health plus policy of rs.500000/- term 35 years, from which completed 3 years, yearly premium rs.24000/-.
7. LIC profit plus ulip single premium paid rs.850000/-, term 20 years from which completed 2 years.

For my wife :
1.*Reliance gegular saving fund - growth option Sip of rs.2500/- tenure 20 years from which completed 1 year.
2. Ppf contribution rs.70000/- per year tenure 35 years from which completed 8 years.
3. Endowment assurance policy of rs.500000/- term 35 years, *from which completed 11 years, yearly premium rs.12595/-.
4. Jeevanshree policy of rs.500000/- term 20 years, from which premium paying term was 12 years which is completed, premium was rs.35651/-.
5. Endowment assurance policy of rs.200000/- term 30 years, from which premium paying term is 30 years from which I have completed 9 years, yearly premium rs.7003/-.
6. LIC health plus policy of rs.500000/- term 35 years, from which completed 3 years, yearly premium rs.24000/-.
7. LIC profit plus ulip single premium paid rs.850000/-, term 20 years from which completed 2 years.


For our son :
1. Reliance vision fund - growth option Sip of rs.2500/- tenure 40 years from which completed 1 year.
2. HDFC top 200 fund - growth option Sip of rs.2500/- tenure 42 years from which completed 1 year.
3. HDFC equity fund - growth option Sip of rs.3000/- tenure 25 years from which completed 1 year. For his higher education.
4. Franklin India blue chip fund - growth option Sip of rs.2500/- tenure 45 years from which completed 1 year.
5.*Reliance gold fund - growth option Sip of rs.5000/- tenure 52 years just started.
6. Ppf contribution rs.70000/- per year tenure 56 years from which completed 3 years.
7. Jeevan kishore policy of rs.500000/- term 35 years, *from which completed 7 years, yearly premium rs.11877/-.
8. Children's differed endowment vesting at 18 policy of rs.4000000/- term 45 years, from which completed 2 years, premium is rs.46432/-.
9. Children's differed endowment vesting at 18 policy of rs.4000000/- term 50 years, from which completed 2 years, premium is rs.40128/-.

The above investments are made considering our respective retirement ( in between both of us rs.6 cr. )requirements & our sons education ( rs.35 lacs) *& his retirement requirement ( about rs.30 cr.).

Is this portfolio o.k. And are our goals achievable by following the above investments.
Please anybody advice.

Kindly comment & advice,
Thanks
D. R. Nimbalkar Khardekar
E- mail : diptimanraje@gmail.com

[bond_bhai]

Any Mutual Fund is only as good as its Manager. Whenever somebody says, its a good fund, it indirectly means the Fund Manager is getting his strategies right.
How is this measured? usually by looking the at the past fund performance (6M, 1Yr, 2Yr etc...) In case of an NFO, you would not have any idea about the FM investment strategies and cannot predict how the fund would perform. So, some people would not prefer getting into an NFO.
Even for the existing funds, if the fund Manager changes then my view is its a new fund altogether since the strategies would be different!

Also, another factor which we can consider is the AUM (Asset under Management), more the assets the Manager has the more he can "play" around in the market, more risks he can afford and more rewards!

Reg considering NAV before buying, experts advice is "NAV doesn't Matter" when buying. Here's an example why -

Let's assume that you are looking at two funds. Further assume that both the funds have only one stock in their portfolio.

The NAV for Fund 'A' & Fund 'B' in our expample is, say, 100 & 1000. Now, you want to decide in which of the 2 funds to invest in. Your thinking goes this way."I have Rs.10000 to invest. If I buy Fund A, I would get 1000 units but if I buy Fund B, I would get only 100 units. Surely, I am better off investing in Fund 'A' because I get more units." Let's see what happens the next day.

The lone stock in both the funds appreciates by, say 10%. What happens to the NAVs? Fund A's NAV will now be Rs.110.0 while that of Fund B will be Rs.1100!

How much has your investment appreciated in one day? In both cases, it is exactly 10%, no more no less. It would have made no difference if you had invested in Fund A or Fund B!

So, its ideal to look at funds performance & portfolio rather than the NAV if you want to invest in the Growth Option. However, if its a dividend fund, it might be better to buy a fund with less NAV!

My 2paise! Comments welcome. Example flicked from - While buying MF, does NAV matter?

[sgiitk]

I will by and large avoid any NFO. The manager takes about 3 months to deploy the funds. So here you are in a limbo. I will rather buy after the public opening after the initial investments has been made.

How important is the Fund Manager. I hear that HDFC MF bought out Zurich India primarily to get Mr Prashant Jain. This should explain.

[vina]

Originally Posted by Fordmanchau

Guys, don't stretch it too far.
Mayankjha1806 in his post mentioned, if it was good buying during NFO?
So in that context I mentioned(and meant) that even if one miss the NFO bus, and the fund is new, then he can get some good bargain if in case the market is down and NAV of those newer fund turn lower.
I obviously didn't mean that a 5 year old fund whose NAV is 100 and more will come down to below 10. But even if it falls to 85 , isn't it a bargain Vina ?
...

Originally Posted by bond_bhai

Any Mutual Fund is only as good as its Manager. Whenever somebody says, its a good fund, it indirectly means the Fund Manager is getting his strategies right. ....

Originally Posted by sgiitk

I will by and large avoid any NFO. The manager takes about 3 months to deploy the funds. So here you are in a limbo. I will rather buy after the public opening after the initial investments has been made.

How important is the Fund Manager. I hear that HDFC MF bought out Zurich India primarily to get Mr Prashant Jain. This should explain.

@Fordmanchau

thanks for taking it in the right spirit. Regarding the NAV question, sg sir and bond_bhai have already mentioned my views more eloquently, but I can't resist writing more so here goes:

First whenever you are investing in a fund, you are essentially investing in the people running that fund (apart from industry focus, debt focus etc.). Now if the NAV of one fund goes down more compared to that of another fund in % terms - in the absence of any other information, the fund that went down more is the one I would avoid. It might seem like a bargain, but how do you know it is not being run by incompetent cranks and that is the reason it went down more?

The clincher is the stuff that is in bold above. Not only is it wrong to think more drop = better bargain (sometimes true for companies, but not for funds), assuming more rise over last few years = better bargain is also wrong.


A famous investor recently wrote in his much-read annual reports - it is only when the tide goes out that you find who was swimming naked.


The way to invest is - learn about markets, make your own "Style" then find a fund manager who follows that style closely. OR, look at the investment styles of different fund managers and then decide which one you like. This is one-time hard work with a little bit of annual review included.

The advantage of investing in mutual funds (compared to stocks) are -

1. diversification - even with small capital investment
2. less costs - funds pay far less in brokerage charges
3. chances of better informed decisions - you can make perfect decisions with hindsight, they have much more data in real time, and more importantly the tools to use that data in real time.
4. almost no hassle - somebody else makes decisions using methods you like. The means with similar information you might have made similar decisions - for the additional information and expertise (and the time you are free to then spend with your kids) you pay a little bit (try as low as possible) in fund management fees.

there may be a few more similar advantages, but funds are collective investments, so much more than the above they can not provide once you have decided the asset class (i.e. fund focus).

If you try more bargain hunting than the above, you may be unpleasantly surprised pretty fast.

[msdivy]

Suggestion required in selecting a online portal to manage mutual funds portfolio.
Criteria:
1) Must be a online portal
2) Must provide Buying, Selling, SIP, SWP, STP & Switch facilities.
3) Must have online transfer of funds between the portal and bank (please list which all banks are supported).
4) Must list all major mutual fund houses and most of the funds of each of these fund houses.

Others:
a) Demat (trading) account option is not required - this is *only* for MFs
b) Preferably the administrative charges of the portal must be low
c) Features like fund comparison, fund recommendation though preferred, is not required

Please suggest.

[sgiitk]

With the drop in NAVs over the last year, I have picked up some new types for hedging - Gold Fund and a Dynamic PE ratio management between debt and equity. You can do it yourself, but then the duration of holding may be shorter inviting short term capital gains. Here the negative is that the taxation is as per debt (choose Growth) and the plus is you can easily hold it for over a year, so as to attract only 10% CG tax.

[BaCkSeAtDrIVeR]

Best option 100% online management for MFs is the demat account. Paradoxically, in addition to KYC norms for the demat account, you need to comply with separate KYC norms for the MFs too.

Interestingly, I have not cleared the MF KYC norms for some inexplicable reason. SInce my personal exposure to MFs is less than 5K, I will not bother till I feel it is time to redeem - else if some new conditions are imposed in between, I will have to bother with that too. All my address proof documents are 10+ years old, and I have been living in this place for past 25+ years.

I literally had to "manufacture" documents for wifey - she has no proof of address at all - neither for her (father's) home and nor mine (not even a marriage certificate). She is now KYC compliant. And we anyway did not want her father's place as address. If genuine people like me had to do this, I wonder what the absolutely malicious people wound can "manage".

[faustus77]

SGIITK/others
Hi everybody
The fund manager is very important and the yardstick is the sensex or any other index.
A classic example SBI Magnum Taxgain:Under Mr Sanjay Sinha it was the best in its category.After he left it is nowhere near the top.Coincidence?No comment.
Another example
For my daughter bought BSL international equity and Tata Indo global at roughly the same time.BSL is down 18.47% and Tata is down 31.92% and the sensex is down by approx 7%
Regards

[Lalvaz]

Mutual funds are sold on the following premise.

1) Investment in the stock markets yield better returns than debt over the long run.
2) Investing in equity through the mutual fund route ensures that your money is in safe hands, since the fund management is knowledgeable, experienced, and they diversify your investments over multiple stocks.

Basically, its all bullshit.

IF you want to get better returns than debt, (to keep pace with inflation and all that blah...), invest in property or gold.

IF you want to look at options other than debt, and cannot invest in property or gold (not liquid, too much investment, fear of theft), and still want to invest in equity, then do so directly. But hey, you dont know too much about the stock markets, and you still want to participate, then ask your financial advisor or just look at the top cos in any sector, ensure that they meet certain criteria such as (management quality, profitability, dividend distribution record, tax payment record, etc...) and then, look around to see what the TV channels and business papers are saying, if they recommend buying the stock, dont touch it with a barge pole. Usually they discuss buying the stock when its already quite high, wait for a while, once you see the stock at a reasonable level, say around its 52 week lows, repeat the test, see all the same experts panning the stock, great time to jump in.

Warning: This tip is only valid for cos that are the market leaders in their respective segments, not for all the cos.

If all this sounds like to much work for you, then stick to debt, property, gold.

Happy Investing.

[androdev]

Originally Posted by Lalvaz

Mutual funds are sold on the following premise.

1) Investment in the stock markets yield better returns than debt over the long run.
2) Investing in equity through the mutual fund route ensures that your money is in safe hands, since the fund management is knowledgeable, experienced, and they diversify your investments over multiple stocks.

Basically, its all bullshit.

That is a strong statement. Can you please tell us why? For salaried folks, MF SIP is projected as the best tool of investment!

[sgiitk]

@androdev; 1. If you take the 10 year moving average you will see.
2. SIP is preferred since the prices are balanced out. In the month the price is high you get fewer units, when the price is low you get more units. say the prince is Rs.10 and you invest Rs.100. The price goes up to Rs.11 so you get 9.09 units. It drops to Rs.9 and you get 11.11 units. Total is 20.20 and not 20 as you may expect. Also, some banks (StanChart is one) charge a lower fee on SIP that on a lump sum investment. Furthermore, salaried prefer to invest on a monthly basis, so an SIP matches the money availability.