[Jaguar]

Originally Posted by mav2000

With the new rules of entry load, direct probably makes less sense now. Anyway, since it's only a code change basically, I don't think the mutual fund would be sold and re bought. So no, you don't have to pay tax.

I think this question is relavent in this thread and not the IT thread. Can you please elaborate why direct doesn't make sense anymore? I am in the process of converting my MFs from ICICIDirect to Direct route.

[ghodlur]

Experts,

I have a query.

Before the direct option was available, I used to have SIP in few MF's. Even since the direct option started, there is a noticeable difference in the direct vs normal MF unit prices with direct ones higher than the normal. Now I intend to switch from Normal units to direct option units which will mean I will have to sacrifice some units to buy at a higher price. Is this beneficial? Or should I continue holding in normal units.

the MF in question are:
1) Birla sunlife Front line Equity.
2) HDFC Top 200

[carboy]

Originally Posted by ghodlur

Now I intend to switch from Normal units to direct option units which will mean I will have to sacrifice some units to buy at a higher price. Is this beneficial? Or should I continue holding in normal units.

Direct is better. So you should switch. Unless you prefer the convenience of holding different mutual funds from different companies at one place, then you shouldn't switch. But you should not stop switching because you are getting lesser units.

[RiGOD]

Originally Posted by sgiitk

1. Large Cap: FT Blue Chip. Conservative but steady.
2. Multicap: PruICICI Dynamic, or HDFC Equity
3. Balanced : HDFC Prima has been the king for a long time. PruICICI Bal Adv is another possibility. These are both Equity oriented funds.
4. Mid/Small cap: IDFC Premier Equity or Templeton Equity Income. IDFC is only accepting SIP.
5. ELSS: You are fine with FI Tax Advantage. You have to balance this with PPF/PF so as to hit the 150k annual limit.

Originally Posted by Parth46

I think you've got a pretty good split here in terms of various MF categories and the funds are good as well. If I were you, I'd choose Tata Balanced instead of HDFC but I'm just nitpicking, HDFC is also right up there in balanced funds. In ELSS, if you're aggressive can also consider Reliance Tax Saver as well along with FIT.

Really appreciate the response. After confirming the consistency of performance of your suggestions, I thoroughly checked all combinations for any significant overlap (40% or more) and this is what I've zeroed down on.

ELSS : Franklin India Taxshield Fund

Balanced: ICICI Prudential Balanced Fund

Multi Cap: Franklin India High Growth Companies Fund

Mid & Small Cap: HDFC Mid-Cap Opportunities Fund

Left out Large Cap as FI Taxshield has greater than 60% overlap with them. Planning to go for SIP's of 4k each on the above funds
Planning to start SIP's of 4k each on these funds. Any final thoughts?

[Parth46]

Originally Posted by RiGOD

Any final thoughts?

Go ahead and all the best.

Hit me up if you have any questions at all, not that I'm any expert but been investing for more than 8 years so can surely share my experiences. Happy investing.

[mav2000]

Originally Posted by Jaguar

I think this question is relavent in this thread and not the IT thread. Can you please elaborate why direct doesn't make sense anymore? I am in the process of converting my MFs from ICICIDirect to Direct route.

Simple because the upfront revenue and total costs of running the funds have been cut drastically. The price differential between the two (direct and thought broker) is now extremely low. The advantage of using the broker method is that you can transact online and also have a single site to access all your funds. If you go direct, then you have to do all the leg work.

[carboy]

Originally Posted by mav2000

The advantage of using the broker method is that you can transact online

You can transact online in the direct method also.

[JMaruru]

Originally Posted by mav2000

Simple because the upfront revenue and total costs of running the funds have been cut drastically.

When was this done? Even then, the trailing commission is part of the expenses of a regular fund. This is paid annually to the brokers/intermediaries. The online brokerages like 'ICICIDirect' or 'HDFCSec' should provide option for direct investment, when the investor decides on his choice of funds and there is no advisory from these brokerages. Now, even if we decide on our choice of funds, they benefit coz it is invested through them.

Originally Posted by carboy

You can transact online in the direct method also.

+10

[mav2000]

Why would any broker give you a direct option, when they have to do all the back end work. If you are willing to do all the leg work, like going and getting your purchases and redemptions done by yourself and are OK with putting together your own portfolio on an excel or on money control or something, then you should go for the direct option. If, like me you don't have the time and energy to run around to 5 different amcs for five different investments, then don't bother about a small charge and go for an online option.

Please keep in mind that a lot of work goes into the back end for each purchase or redemption. It also takes money to run and update the site. I have used Icici direct for 12 years now and they are by far the best online service today. I can do any financial instrument from the comfort of my home. He'll, you even get a tax statement with Ltcg and stcg calculated for you. You can buy NSC's, take part in IPOs buy bonds, do f&o and direct equities and a lot more. I would rather pay a little extra and keep these benefits than go direct and run around for each and everything.

[madbullram]

Originally Posted by mav2000

]If you are willing to do all the leg work, like going and getting your purchases and redemptions done by yourself and are OK with putting together your own portfolio on an excel or on money control or something, then you should go for the direct option. If, like me you don't have the time and energy to run around to 5 different amcs for five different investments, then don't bother about a small charge and go for an online option.

Hopefully, AMFI should make it easy Then we wont have to goto multiple places for everything. It will be like using a broker like ICICI or FundsIndia

http://www.mfuindia.com/

[gaurav_chopra04]

Originally Posted by RiGOD

I'm new to the MF world and planning to invest 16k/month as SIP's in the same. I'm thinking about going for one each of Large Cap, Multi Cap, Balanced and ELSS.

Here are the funds I've shortlisted to go for:

Large Cap : ICICI Prudential Focused Bluechip Equity Fund or Franklin India Prima Plus Fund

Multi Cap : Franklin India High Growth Companies Fund

Balanced : HDFC Balanced Fund

ELSS : Franklin India Taxshield Fund or Axis Long Term Equity Fund

I am not sure about your age but if you are above 40 then:-


Large Cap : ICICI Prudential Focused Bluechip Equity Fund or Franklin India Prima Plus Fund or Birla Sun Life Frontline Equity Fund

ELSS : Axis Long Term Equity Fund (No FI because you will have Large cap), as I said earlier technically Axis is not large cap.

Balanced : HDFC Balanced Fund

Mid : IDFC Premier Equity


if you are under 40.. then

ELSS : Axis Long Term Equity Fund

Large : ICICI Prudential Focused Bluechip Equity Fund or Birla Sun Life Frontline Equity Fund or Franklin India Prima Plus Fund

Mid : IDFC Premier Equity

Small: Canara Robeco Emerging Equities Fund or DSP BlackRock Micro Cap Fund


If you are above 40, add multi-cap fund (Franklin India High Growth Companies) if and when you start another SIP in near future. If under 40, another mid-cap (HDFC Mid-Cap Opportunities Fund or ICICI Prudential Value Discovery Fund) will work fine.

My queries are :

1. How should I split up the 16k among these sectors? My time horizon is 10+ years.

10+ definitely makes sense. I would say increase it to about 15. Experts expect this bull market to stretch for next 3-4 years. Once there is slump, you should be looking at next bull to start tentatively between 2028 and 2033.

2. Will there be significant overlap if I go for both Large Cap and Multi Cap at the same time? Should I replace Multi Cap with with a Mid & Small Cap like Franklin India High Growth Companies Fund?

It depends on your age and your appetite for risk.

[Rachit.K.Dogra]

Hey Guys,

I have been having one confusion and I am still not sure about the answer.
I have 2 Tax Benefit Mutual Funds:
1) SBI Magnum Dividend
2) ICICI Prudential Tax plan

Both of them have a 3 year Lock In Period.
I did hear the government making Profits from these funds as taxable, not sure if it got implemented.

Can somebody please help me with this.

Thanks Regards

[gaurav_chopra04]

Originally Posted by Rachit.K.Dogra

Hey Guys,

I have been having one confusion and I am still not sure about the answer.

I did hear the government making Profits from these funds as taxable, not sure if it got implemented.

The answer is NO. If one holds any MF for more than 12 months, long term capital gains tax are except. ELSS anyways have lock in of 3 years, so your ELSS redemption amount will be tax free.

[RiGOD]

Originally Posted by gaurav_chopra04

if you are under 40.. then

ELSS : Axis Long Term Equity Fund

Large : ICICI Prudential Focused Bluechip Equity Fund or Birla Sun Life Frontline Equity Fund or Franklin India Prima Plus Fund

Mid : IDFC Premier Equity

Small: Canara Robeco Emerging Equities Fund or DSP BlackRock Micro Cap Fund

Thanks for the response buddy. I discarded Large Cap since FI Taxshield has 60-90% overlap with the popular Large Cap funds, So I'm assuming that ELSS will serve a 2 in 1 purpose for me i.e Large Cap + Tax Saving. So after thorougly checking for portfolio overlap and consistent performance of funds, this is the combination I've arrived at :

[1] ELSS : Franklin India Taxshield Fund
[2] Large & Mid Cap : ICICI Prudential Dynamic Fund
[3] Multicap : Franklin India High Growth Companies Fund
[4] Mid & Small Cap : HDFC Mid-Cap Opportunities Fund
[5] Balanced : ICICI Prudential Balanced Fund


The above mentioned combination has a least portfolio overlap of 8% and highest of 32%. Planning to go for a 5 x 3k = 15k/month scheme. Is there too much diversification? Any comments?

[Jaguar]

Originally Posted by mav2000

Please keep in mind that a lot of work goes into the back end for each purchase or redemption. It also takes money to run and update the site. I have used Icici direct for 12 years now and they are by far the best online service today. I can do any financial instrument from the comfort of my home. He'll, you even get a tax statement with Ltcg and stcg calculated for you. You can buy NSC's, take part in IPOs buy bonds, do f&o and direct equities and a lot more. I would rather pay a little extra and keep these benefits than go direct and run around for each and everything.

But aren't they getting paid twice? First from the invester, annual fees + brokerage for each investment. And also from the fund company in terms of commission?

I work for a company making trading portals and I know the work and the overhead involved. Believe me, the number of middle men (companies) involved is ming boggling.