[Thebat]

The belief that larger Mutual Fund houses are safe seems to waning off.

In lue of recent developments of Zee not able to service their LASS and ADAG group companies bringing in a monitarium for their loan repayments, many Mutual Fund houses including HDFC and ABSL two of the largest in the country have given a haircut to their debt fund investors.

With ADAG group in major trouble and RCap as a company being in shaky grounds many Institutional Investors have also stopped or are about to stop their investments in Reliance Mutual Funds.

With these developments wouldn't it make more sense for us as investors to be cautious and actually look at the portfolio quality and the fund pedigree rather going on the brand name?

These developments have also exposed the lie that larger fund houses would absorb the losses and would not pass them on to their investors.

[hothatchaway]

Originally Posted by Ranabegins

Currently i am investing iin one ELSS fund that is Sundaram Diversified Equity Direct Growth. I need to invest 50K more in lumpsum in one fund before the end of the financial year, i wanted to check if i should invest in the same fund i am investing in or is there any other ELSS fund i should choose for my lump sum investment.

The Sundaram ELSS fund seems to be a laggard in terms of both 10 and 5 y performance ranking in the bottom quartile. It also seems to be more volatile in its category. You may consider Axis LT equity as someone has suggested. Also consider Mirae Tax saver, its only 3 years old but is doing well. Both the Axis and Mirae ELSS have a large cap bias FYI

Originally Posted by SoumenD

I am invested in L&T emerging business fund(growth) since around 1.5 years and it stands at around -12% currently. I know we should be patient with MFs , so I have no intention of exiting the fund as of now. But was wondering should I continue the monthly SIP? I understand when the fund is in red, the same amount will buy us more units compared to what it did when the fund was in green, but its been in red for almost a year now so am not sure if I should continue to pump in funds every month in this or should I redirect the SIP amount to some other fund? Any suggestions?

L&T emerging business is a small cap fund and that explains why its in deep red. Moreover its ~3 years old so a long enough track record is not available to judge performance. I wont recommend a small cap fund especially if you are new to equities. Small caps are more volatile than other categories and also suffer from liquidity issues. They are not suitable for risk averse folks so please evaluate that. I suppose if you have a very long horizon (15-20 years) some exposure to small caps would help else its better to stick to large, multi and/or even mid caps. Please evaluate your overall equity portfolio and then decide the mix.

[DigitalOne]

Originally Posted by Thebat

The belief that larger Mutual Fund houses are safe seems to waning off.

...

These developments have also exposed the lie that larger fund houses would absorb the losses and would not pass them on to their investors.

You have not mentioned the worst action by a MF house in recent times - ICICI Mutual fund propping up their group firm ICICI Securities IPO; Also some of their funds invested in Bharat 22 ETFs issued by them which was against the funds' individual mandate.

Having said that it is still better bet to go with larger fund houses just for the sheer size of the funds and the diversification benefit it offers. I remember last year during one of the debt defaults (by Amtek Auto, I think) some of the JM funds fell 10% or so.

[Thebat]

Originally Posted by DigitalOne

You have not mentioned the worst action by a MF house in recent times - ICICI Mutual fund propping up their group firm ICICI Securities IPO; Also some of their funds invested in Bharat 22 ETFs issued by them which was against the funds' individual mandate.

Having said that it is still better bet to go with larger fund houses just for the sheer size of the funds and the diversification benefit it offers. I remember last year during one of the debt defaults (by Amtek Auto, I think) some of the JM funds fell 10% or so.

ICICI is a text book example of what not to buy when you are running a fund. The ISec IPO would have been a disaster if not for IPRU pitching in with their deep pockets.

JM is too small and is anyway a fund house with questionable performance.

All I wanted to convey was that larger funds houses are no saints and that even they are vulnerable in certain scenarios.

[DigitalOne]

Originally Posted by SmartCat

The stock picking philosophy is very sound - low PE, high dividend yield and high ROE. It roughly follows the guidelines laid out by a value investor called Joel Greenblatt
https://en.wikipedia.org/wiki/Joel_Greenblatt

Remember that this ETF manager will probably never invest in "hot sectors" of the year. So in a roaring bull market, this fund will grow at a much slower pace than other mutual funds. But over a longer time frame, this ETF is likely to be a top quartile performer primarily because of its proven investment philosophy

5 months down the road, both the Nifty NV20 ETFs (ICICI and Reliance )seem to be doing quite well in the large cap space. The AUM has also increased but it is still very low.

I have started small investments into this ETF. These could be good long-term investments in the large-cap category.

[SmartCat]

Originally Posted by DigitalOne

5 months down the road, both the Nifty NV20 ETFs (ICICI and Reliance )seem to be doing quite well in the large cap space. The AUM has also increased but it is still very low. I have started small investments into this ETF. These could be good long-term investments in the large-cap category.

Just pick one. Both will have similar returns profile because fund manager will try to replicate the performance of Nifty 50 Value 20 Index

[DigitalOne]

Originally Posted by SmartCat

Just pick one. Both will have similar returns profile because fund manager will try to replicate the performance of Nifty 50 Value 20 Index

I am investing only in the ICICI NV20 ETF. My sentence earlier was badly framed

[dpkbehera]

After getting battle bruised in the primary stock market and moving on the the wrong side of 40, i have decided to invest in Mutual Funds in SIP mode. I did a bit of research and have formed the following opinions. I would appreciate feedback from the "wise" regarding the same.
1. It is never late to start.
2. Minimum horizon to have significant returns should be at least 3 -5 years.
3. A portfolio of 4-6 MF's is good enough.
4. As the saying goes, do not put all the eggs in the same basket. Same is applicable in terms of Fund House and Fund category.
5. I did compare the option of relying on choice of MF's on a financial advisor versus self research. Incase you are following the markets even though not very frequently, i would suggest self research as the portal for where you order your MF's would validate/reinforce some of your research. Also you would save some money on commissions.
6. In the current market scenario, i have decided to allocate in the following ratio i.e.
Large Cap : 50
MultiCap : 30
Equity Hybrid : 20

[ghodlur]

Originally Posted by dpkbehera

6. In the current market scenario, i have decided to allocate in the following ratio i.e.
Large Cap : 50
MultiCap : 30
Equity Hybrid : 20

Good choice. Ensure that the multicap fund has a higher Mid Cap & Small Cap allocation. This way the portfolio will be balanced. How about your debt portfolio like PF, PPF, FD's etc.?

Just curios to know what are the goals for which you are intending to invest in each fund category.

[dpkbehera]

Originally Posted by ghodlur

Good choice. Ensure that the multicap fund has a higher Mid Cap & Small Cap allocation.

Thanks. In the current market, would it not be better to stick to a multi cap focused on Large and Midcap? Any suggestions for multicap fund having a higher Mid Cap & Small Cap allocation

Originally Posted by ghodlur

How about your debt portfolio like PF, PPF, FD's etc.?

My debt portfolio is quite bad. It is just restricted to the mandatory EPF and an FD for a rainy day.

Originally Posted by ghodlur

Just curios to know what are the goals for which you are intending to invest in each fund category.

I do not have specific goals. My aim is to get good returns on investment with minimum lock in period.

My planned portfolio looks like this i.e.
Mirae Asset Emerging Bluechip Fund (Large and Midcap)
ICICI Prudential Bluechip Fund (Large Cap)
Axis Bluechip Fund (Large Cap)
ICICI Prudential Equity & Debt Fund (Equity Hybrid funds)

Any thoughts?

[joslicx]

Originally Posted by dpkbehera

Thanks. In the current market, would it not be better to stick to a multi cap focused on Large and Midcap? Any suggestions for multicap fund having a higher Mid Cap & Small Cap allocation

Theres a picture I'd like to draw attention to



This shows two of our indices over last so many years, purple one is NSE small cap index and below one is the Nifty 50.

It's an interesting picture in so many ways. The small cap index is definitely much more volatile and the rise/fall is more drastic compared to Nifty. But the more interesting thing to note is that both broadly follow each other. Both go up (small cap index starts going up when Nifty goes up and vice versa) another thing to note is small cap rise is more steep (which means greater returns) and fall is also more steep (so greater losses in falling market)

To me, this might be the time to actually load up on small cap oriented funds. As and when recovery happens in market, the rise would be faster with small caps. When the divergence between the two indices is too great, that might be the time to switch to large cap funds as they protect the capital better.

[dpkbehera]

Originally Posted by dpkbehera

My planned portfolio looks like this i.e.
Mirae Asset Emerging Bluechip Fund (Large and Midcap)
ICICI Prudential Bluechip Fund (Large Cap)
Axis Bluechip Fund (Large Cap)
ICICI Prudential Equity & Debt Fund (Equity Hybrid funds)

Originally Posted by joslicx

To me, this might be the time to actually load up on small cap oriented funds.

Thanks. My portfolio was lacking a small cap. HDFC Small Cap Fund looks like a good option to cover that base.

[SmartCat]

Originally Posted by joslicx

It's an interesting picture in so many ways. The small cap index is definitely much more volatile and the rise/fall is more drastic compared to Nifty. But the more interesting thing to note is that both broadly follow each other. Both go up (small cap index starts going up when Nifty goes up and vice versa) another thing to note is small cap rise is more steep (which means greater returns) and fall is also more steep (so greater losses in falling market)

Excellent analysis. The technical term for this is beta (not Hindi, greek word beta )

In a strong market, small cap funds will 'show' higher returns. But when you look at its performance in a weak market, the returns will be more or less similar to that of a large cap fund.

There is a reason for this -> an average small caps stock tends to revert to its mean valuation of 12 to 15 times earnings. They might temporarily see 20 or 25 times PE ratio, but eventually falls back to its mean. The reason why small caps don't "maintain" their high valuation is because their earnings are usually not stable.

[condor]

A noob question
Is a SIP a type of Mutual Fund ?

I think the two are different products

I was at SBI today, asking to convert one RD to SIP. The "officer" asks SIP MF ?

[audioholic]

Originally Posted by condor

A noob question
Is a SIP a type of Mutual Fund ?

I think the two are different products

SIP is a method of investment. Mutual fund is one of the places you invest. But SIP in MF I guess is the most popular thing and hence the term SIP is generalized to mean SIP in MF. By converting an RD into SIP, did you want to move the installments to SIP alone or move the current amount invested as a one time investment to an MF and then the installments as SIP to the same fund?