Your comment about this portfolio is welcome.

[sks_12]

I am a new investor. I am trying to learn good ways to invest in mutual funds. Here is one portfolio I have prepared. Please comment if there are mistakes.


Birla sunlife dividend yield plus:7%

HDFC Equity:14%
HDFC Top200:21%
HDFC Prudence:7%

Fidelity Tax advantage:14%

IDFC Prem equity - A:14%

Reliance Regular savings equity:7%

UTI dividend yield:14%

I have read some posts in this forum. Apart from giving your suggestions, please clear my doubts: Why is it bad to have a tilt towards a particular fund house (I have weakness for HDFC)? Second, should I invest in DSPBR microcap, keeping IDFC as it is? I am 33 years old.

 

[asterix24]

Dear sks_12,

On the onset, let me commend you on a good set of funds. I will try to answer your questions at the end and will focus on your portfolio initially. Your current portfolio has the following distribution.


Birla sunlife dividend yield plus 7% Mid & Small Cap
HDFC Equity 14% Multi-cap
HDFC Top200 21% Large & Mid cap
HDFC Prudence 7% Balanced
Fidelity Tax advantage 14% Tax
IDFC Prem equity - A 14% Mid & Small Cap
Reliance Regular savings equity 7% Multi-cap
UTI dividend yield 14% Multi-cap


In your portfolio, there are too many small investments into multi-caps and hence, I am readjusting the skews and distribution across different caps. Also, I would recommend to remove the 2 multi-caps and replacing the same with a pure large-cap. The revamped portfolio would look like:


Birla sunlife dividend yield plus 10% Mid & Small Cap
HDFC Equity 14% Multi-cap
HDFC Top200 21% Large & Mid cap
Reliance Regular Savings Balanced 7% Balanced
Fidelity Tax advantage 14% Tax
IDFC Prem equity - A 14% Mid & Small Cap
DSPBR Top 100 20% Large cap

With this distribution, the distribution across different capitalizations are normalized and should augur well for your age profile.

The reasons for revamp are as below:

1) HDFC Prudence and HDFC Top 200 have very similar portfolios and hence, would appear to be a bit of repeat. Hence, I have recommended RRSF-Balanced as an alternative

2) I feel that you may still require ELSS as part of your portfolio and hence haven't modified the same.

3) I have recommended the removal of 2 Multi-caps and have suggested a single Large Cap DSPBR Top 100 as an alternative. '


Coming to your questions,

1) The reason why people advise not to stick to a fund house is because, in any system, over-dependence is always a liability and big risk. If the strategy of a fund house is bad or some high profile manager leaves the AMC, then all the schemes that he/she was managing have a turbulent phase. If the strategy is not good, then as an investor, it may not be in your best fiscal interest to be caught in the middle of it. Hence, it is always better to spread it across a bit.

2) Currently, you have a good set of investments into Mid & Small cap category. I have 2 suggestions.
a) I am not sure if you will be able to open a new SIP into IDFC Premier Equity as subscriptions were closed sometime back. If you are able to do so, you can consider DSPBR Microcap if you feel you have the risk appetite. It has delivered some fantastic numbers and there is an incentive as it's subscriptions will be closed shortly.'
b) If you can't open a IDFC Premier Equity SIP, then consider replacing the same with DSPBR Microcap and you should be fine.

Happy Investing !!

 

[yodlee99]

Good funds. All we can try is to bring down the number of funds to a manageable limit. Since you are just 33, you can take a sufficient amount of risk and have an aggressive portfolio.
Below is a list that has a dividend fund (with mid & small cap tilt), a balanced fund, ELSS, mid cap fund and a multi-cap fund, in order.
Birla sunlife dividend yield plus
HDFC Prudence
Fidelity Tax advantage
IDFC Prem equity - A or ICICI discovery
Reliance Regular savings equity

In this, what you would lack is a strong large cap fund which prevents volatility when markets run up or down. You can replace either fund #1 or 4 with IDFC Imperial equity or Franklin India Bluechip or DSPBR Top 100, because both of these have mid & small cap tilt.
Always invest using SIP on different dates of the month. You can give equal contributions 20% in each one.

 

[jatin_gala]

no offense !!
But
My theory is quite different ...
You have been deciding funds based on market caps fair enough, people are doing that for some time now...
I would rather prefer sectoral division, like banking, FMCG, power, etc.

banking and pharma sectors have provided best returns in last 5 years and will continue to do so.
FMCG, current high inflation will help these companies in long term.

you can go like this :
one all cap -- HDFC top 200
one pure mid cap -- IDFC premiere
Banking -- Reliance Banking
Pharma -- Reliance Pharma
FMCG -- Franklin FMCG
For tax savings go for bank 5 years recurring deposit as interest rates are high currently and ELSS are redundant from APR 2012.

As you are already 30+, I would suggest 80% equity and 20% debt.

 

[xxdiesel]

Hmmmm, and I was under the impression that the fund manager of a diversified fund would increase/decrease allocation to a specific sector based on the outlook.

 

[jatin_gala]

Hmmmm, and I was under the impression that the fund manager of a diversified fund would increase/decrease allocation to a specific sector based on the outlook.

yes they do ...
but in sectoral funds you are 100% in that sector
while in diversified fund you are max 25% in that particular sector ..

got the difference ?

 

[asterix24]

What is your rationale behind sectoral fund as compared to diversified equity fund? Why do you feel that Pharma or Banking would do better than say engineering or power or some other sector?

Can you explain the rationale behind your decision? Do you have any insights into these sectors that other's dont?

Happy Investing !!