[GTO]

Originally Posted by born_free

I took one big exercise last week to select and rank all categories of equity diversified funds based on consistent return over long period of time.

Dude, this is just what I was looking for! Thanks. If you were in Mumbai, I'd give you a treat for the post .

@ Everyone: Please treat this like a newbies what car query for a 10 lakh sedan.

- If you had 100 bucks to invest right now in mutual funds, which would be your top 5 picks? And how would you split that 100 bucks up across these funds?

- There is no need for short-term liquidity. Can be 2 years, and over 3 years also.

Thank you!

[born_free]

Originally Posted by GTO

Dude, this is just what I was looking for! Thanks. If you were in Mumbai, I'd give you a treat for the post .

had 100 bucks to invest right now in mutual funds, which would be your top 5 picks? And how would you split that 100 bucks up across these funds?

- There is no need for short-term liquidity. Can be 2 years, and over 3 years also.

Thank you!

Thanks GTO for your kind words.

Coming to your your query, for a time horizon of 2-3 years investing in equity mutual funds would be risky, as the returns can be unpredictable. If you see the analysis I had done, 3 years returns have been amazing, and precisely for this reason I would not expect similar returns in next 3 years from equity mutual funds though I can be wrong. Equity mutual funds are great choice for period of 7 or more years and that too in SIP mode.


For your needs debt fund would be ideal choice with mix of 3 funds, ultra short term, short term and dynamic bond fund. If you manage to hold them for 3 years you can get benefit of lower tax rate of 20% with indexation.
A lump sum investment is recommended in equal amounts


Franklin India Ultra Short Bond Fund - Super Institutional Plan :
https://www.valueresearchonline.com/...hemecode=16854

HDFC Short Term Fund : A good alternative to fixed deposit with good credit quality and low interest rate risk
https://www.valueresearchonline.com/...hemecode=16156

ICICI Prudential Long Term Fund: This is dynamic bond fund which can change its asset allocation based on interest rate conditions.
https://www.valueresearchonline.com/...hemecode=17120

I hold 1st and 3rd fund in my portfolio for my 3 year investment horizon.

If you are little adventurous and can digest the possible risk of loss in short term, you can add two equity funds which should form no more than 30% of total amount to be invested and preferably in SIP mode.

Quantum Long Term Equity Fund: A large cap fund with low beta to protect from downside.
https://www.valueresearchonline.com/...chemecode=3181


ICICI Prudential Value Discovery Fund: A multicap fund which aims to invest in undervalued companies.
https://www.valueresearchonline.com/...chemecode=2310

Finally I had calculated rolling returns for HDFC TOP 200, a good large cap equity fund . Its clear that for 3 year period the returns are unpredictable, but for 7 year and more the returns are consistent.

[S_U_N]

I can share some personal experience on the 'long term' aspect.
I started SIP in equity MF for my son from October 2012 and it is still ongoing.
As of today, after 4.5 years, I see the gain is 17.5% per annum.

This is not bad at all considering I am taking less risk in this portfolio with 55% of the portfolio is in large + giant cap. This is via FundsIndia, by the way, so the returns would be a bit higher had I gone with the direct option instead.

[sgiitk]

@S_U_N; I agree with you. One must balance the risks with the gains. For the past year and a half I have been with Arbitrage Funds due to the volatility and unpredictability of the markets. If one analyses my portfolio, I being 65 plus am more into Larger Cap, and Balanced funds than my son (I manage his investments also). One can observe a distinct pattern emerging.

[techcoze]

@born_free
It's really inspiring to see your research in MF area. Can you suggest me if I am investing wisely in following funds. I have started SIP + some lump sum investment in following 5 MF (money invested in equal proportion)

• Motilal Oswal MOSt Focused Multicap 35 Fund - Regular - Growth
• Kotak Select Focus Fund - Growth
• Mirae Asset India Opportunities Fund - Regular - Growth
• Invesco Contra Fund - Growth
• SBI Magnum Multicap Fund-Growth

How it your take on these funds?

[born_free]

Originally Posted by techcoze

@born_free
Can you suggest me if I am investing wisely in following funds. I have started SIP + some lump sum investment in following 5 MF (money invested in equal proportion)

A thumb rule to decide whether your fund is good enough to continue invested or its time to switch should be based on the factor whether your fund is beating the category average for 3 year, 5-year period etc.

Motilal Oswal MOSt Focused Multicap 35 Fund - Regular - Growth
A good Multicap cap fund, continue investing
Kotak Select Focus Fund - Growth
A multicap fund, and is among top 30% rank wise, continue.
Mirae Asset India Opportunities Fund - Regular - Growth
A Large cap fund with great returns over all periods of time. Continue
Invesco Contra Fund - Growth
A multicap, though not among top performers but better than average , continue but keep watch on it.
SBI Magnum Multicap Fund-Growth
3-year and 5-year returns are good, but 1-year and 10-year returns are below average. You can continue invested and switch only if 3 year and 5-year performance start to deteriorate.

Overall its a great portfolio with mix of Large cap and Multicap Funds, which will limit the downside risk in case of market crash.

A mid small/cap fund is missing in your portfolio, but its ok to continue with existing portfolio for now as the mid and small cap stocks have become overvalued . In case one of your multicap fund start doing bad you can replace it with a mid cap fund later.

Also I noted that you have invested in regular plans, which may be costly compared to direct plans by 0.5% to 1% on annual basis. In long term this has big impact on overall returns.

Slowly and steadily you can think of converting your holding to direct plans.
I have also started doing same and managed to convert 50% of my portfolio in direct plans.

[.sushilkumar]

Here are my investments via SIP route.

Mrae Asset Emerging Bluechip Fund - Direct Plan - Growth
Mirae Asset India Opportunities Fund - Direct Plan - Growth
Mirae Asset Tax Saver Fund - Direct Plan (G)
Axis Equity Fund - Growth
Axis Long Term Equity Fund - Direct Growth - Growth
Franklin India High Growth Companies Fund - Growth
HDFC Mid-Cap Opportunities Fund - Direct Plan - Growth

I am bit disappointed with axis for average performance but happy with rest. I hope i am not putting all my eggs in single basket although i have great faith in fund manager. suggestions welcome

Originally Posted by pradkumar

Low NAV doesn't mean cheaper fund
The net asset value of a fund makes no difference to its returns. Consider a fund for its performance, not its NAV

I think NAV does matter a bit after all.

I invested in one particular fund of principle mutual fund at NAV of 168.00 rupees thinking about above principle. Post great crash of 2008-09, leave alone returns i am struggling to recover invested principle in 2017. Now NAV do play on my mind while i invest in a new fund. i could be wrong as well but i would resist from investing in high NAV funds.

[C300]

Originally Posted by born_free

ICICI Prudential Value Discovery Fund: A multicap fund which aims to invest in undervalued companies.
https://www.valueresearchonline.com/...chemecode=2310

Finally I had calculated rolling returns for HDFC TOP 200, a good large cap equity fund . Its clear that for 3 year period the returns are unpredictable, but for 7 year and more the returns are consistent.
Attachment 1620207

Thanks a lot. This is good research.
One quick observation on the ICICI Value Discovery Fund. I think, it now holds mostly large caps. Also, I see slight dip in returns over the last year or so. Is it because of its large AUM?

[SilentEngine]

Originally Posted by .sushilkumar

I think NAV does matter a bit after all.

I invested in one particular fund of principle mutual fund at NAV of 168.00 rupees thinking about above principle. Post great crash of 2008-09, leave alone returns i am struggling to recover invested principle in 2017. Now NAV do play on my mind while i invest in a new fund. i could be wrong as well but i would resist from investing in high NAV funds.

High NAV means that fund has been in the market for quite long time since its inception, given that most funds start with NAV of 10. Only thing that matters is how much percentage does the NAV move compared to peers in category or the category average, in other words the performance of the fund.

[pradkumar]

If I had Rs. 100 to invest, my current picks would be:

• 20 in Mirae Asset India Opportunities Fund or Quantum Long Term Equity fund (being large caps, they give some stability to my portfolio)
  
• 20 in Franklin India High Growth Companies, ICICI Prudential Value Discovery, or Kotak Select Focus Fund (being multi caps, they have 35%, 20%, and 22% exposure respectively to mid caps and small caps and give some stability and zing to my portfolio)
  
• 20 in Franklin India Smaller Companies, Mirae Asset Emerging Bluechip and DSPBR Micro Cap (being mid caps and small caps, they are risky and I would not put all the Rs. 20 in one of these funds, but split among all the three and pray perhaps!)
  
• 20 in HDFC Balanced (being a hybrid equity or balanced fund, it has 67% and 31% exposure to equity and debt respectively and it should provide some downside protection to my portfolio when the markets turn bad)
  
• 20 in ICICI Pru Long Term (being a debt fund, it will give me real stability when the markets turn bad)

Looks like I am watching too much T-20 cricket matches!

Thanks,

Pradeep

Originally Posted by GTO

Dude, this is just what I was looking for! Thanks. If you were in Mumbai, I'd give you a treat for the post .

@ Everyone: Please treat this like a newbies what car query for a 10 lakh sedan.

- If you had 100 bucks to invest right now in mutual funds, which would be your top 5 picks? And how would you split that 100 bucks up across these funds?

- There is no need for short-term liquidity. Can be 2 years, and over 3 years also.

Thank you!

[saket77]

Originally Posted by pradkumar

20 in ICICI Pru Long Term (being a debt fund, it will give me real stability when the markets turn bad)

Are you sure about this? It is a long term plan and with the economy now settled with inflation under control and the change of stance of RBI on (falling) interest rates after Rajan's exit, I would stay away from long term debt or gilt funds for now. In my opinion, the dream run for long term debt funds is now past.

Instead, go for ultra short term bond funds, like Franklin ultra short bond fund or Birla cash manager. I prefer the latter due to quality of the holdings in current scenario. Else pure liquid funds.

Also, all investors should surely look into exit loads of funds before taking a leap in. The Quantum long term fund has a 2 year exit load. Many debt funds (including ICICI long term fund) have it too. Although, advisable to keep invested in equities for at least 5 years for some real gains, but still if the exit load doesn't give me any substantial gain, I will stay away from such funds.

Rest of the equity funds suggested by you are fine.
Also look into Franklin Prima Fund & HDFC Mid cap oppotunities fund.

And yes, not connected to any of the above AMCs.

Regards,
Saket.

[pradkumar]

Hi,

From an annual return of around 14% last year, ICICI Pru Long Term has come down to around 10% now. It is still a shade better than short term plans. Value Research still gives it a 4 star for the regular plan and 5 star for the direct plan. Let us see if the ratings go down.

I have some short term goals for the next 3 years. I started this long term debt plan 2 years back with a goal around that. Nobody, expected this turn of events on the interest rate front. Then, there is the tax angle on debt funds to think about. I have to hold it for at least another year before I decide what to do with it.

BTW, ICICI Pru Long Term has an exit load of 0.25% for redemption within 30 days.

Pradeep

Originally Posted by saket77

Are you sure about this? It is a long term plan and with the economy now settled with inflation under control and the change of stance of RBI on (falling) interest rates after Rajan's exit, I would stay away from long term debt or gilt funds for now. In my opinion, the dream run for long term debt funds is now past.

Instead, go for ultra short term bond funds, like Franklin ultra short bond fund or Birla cash manager. I prefer the latter due to quality of the holdings in current scenario. Else pure liquid funds.

Also, all investors should surely look into exit loads of funds before taking a leap in. The Quantum long term fund has a 2 year exit load. Many debt funds (including ICICI long term fund) have it too. Although, advisable to keep invested in equities for at least 5 years for some real gains, but still if the exit load doesn't give me any substantial gain, I will stay away from such funds.

Rest of the equity funds suggested by you are fine.
Also look into Franklin Prima Fund & HDFC Mid cap oppotunities fund.

And yes, not connected to any of the above AMCs.

Regards,
Saket.

[saket77]

Originally Posted by pradkumar

Hi,

From an annual return of around 14% last year, ICICI Pru Long Term has come down to around 10% now. It is still a shade better than short term plans. Value Research still gives it a 4 star for the regular plan and 5 star for the direct plan. Let us see if the ratings go down.

Focus on recent performance. The drop in performance is mainly due to poor performance in recent months. All debt funds have given negative returns in last 2-3 months.
I don't see them giving higher than short term funds in near future with current conditions. Even if it does, not worth the risk, for me. A drop of over 1% in a day in debt funds is definitely a serious worry, unlike equity.

Originally Posted by pradkumar

I have some short term goals for the next 3 years. I started this long term debt plan 2 years back with a goal around that. Nobody, expected this turn of events on the interest rate front. Then, there is the tax angle on debt funds to think about. I have to hold it for at least another year before I decide what to do with it.
BTW, ICICI Pru Long Term has an exit load of 0.25% for redemption within 30 days.

Pradeep

Hope you got closer to your goal. However, decide based on the merit of fund/ market and not tax status.

Regards,
Saket.

Recently, I booked profit by selling some shares. Today, I invested ₹ 50 k each in DSP BR Tax Saver Fund - Direct - Growth [in addition to ₹ 1 lakh invested earlier in Franklin India Taxshield - Direct - Growth, thus exhausting the limit of Section 80 C] and Franklin India Prima Fund Direct - Growth.

[sgiitk]

As far as I am concerned, the one thing I avoid is the NFOs. Also, I do not invest in FMPs. I have enough fund houses, so no more for me or my family.