What is your portfolio strategy?

[swama694]

I got some info about building an all weather portfolio
Can anybody please review this and give comments with a sample portfolio created like this
Core equity funds – Here you should have two sets of funds : one a bottoms up stock picking type with a large cap bias and will usually be stable in their returns and move with the Sensex or Nifty. The second should be a good growth fund that bets on the growth stocks. Remember although growth stocks tend to be the mid cap/ small cap stories, a growth fund targets returns and not capitalization. This should be a large chunk of your portfolio maybe ~40%. In case you are investing for the sake of tax saving in ELSS funds, then add them here.

b. Index funds / Exchange traded funds based on the index – This will allow you to ride the market direction with a lower expense load. Choose from a wide range of index funds or ETFs available. Keep in mind that if the core equity fund you chose has a largely the same companies as the index fund then you are losing the benefit of an exchange fund and losing on the expense. This should be ~20%-25% of your portfolio

c. Contra fund – This takes bets on stocks which are currently out of favour with the market. Use these funds to give that occasional punch to the portfolio and this should be about 15% of the portfolio.

d. Thematic / Go anywhere funds – These are funds with a mandate to go anywhere, invest in any story and take concentrated bets or diversify. In a volatile market like India these are funds which, if nimble, will make money due to emerging themes. This should be about 15%of the portfolio

e. Sector funds – These take concentrated bets on a particular sector. Ride the momentum and languish when the sector goes out of flavor. Send in 10% of the portfolio here.


I added a sample

Fidelity Equity 20
DSPML Equity 20

UTI Master share 20

MAgnum Contra 15

DSPML Tiger 15

Reliance Div Power 5
DSMPL .com 5

[mrindia]

I feel 'Index Funds' are recieving extra weightage in this portfolio!
Other seniors' views are welcome.

Originally Posted by swama694

I got some info about building an all weather portfolio
Can anybody please review this and give comments with a sample portfolio created like this
Core equity funds  Here you should have two sets of funds : one a bottoms up stock picking type with a large cap bias and will usually be stable in their returns and move with the Sensex or Nifty. The second should be a good growth fund that bets on the growth stocks. Remember although growth stocks tend to be the mid cap/ small cap stories, a growth fund targets returns and not capitalization. This should be a large chunk of your portfolio maybe ~40%. In case you are investing for the sake of tax saving in ELSS funds, then add them here.

b. Index funds / Exchange traded funds based on the index  This will allow you to ride the market direction with a lower expense load. Choose from a wide range of index funds or ETFs available. Keep in mind that if the core equity fund you chose has a largely the same companies as the index fund then you are losing the benefit of an exchange fund and losing on the expense. This should be ~20%-25% of your portfolio

c. Contra fund  This takes bets on stocks which are currently out of favour with the market. Use these funds to give that occasional punch to the portfolio and this should be about 15% of the portfolio.

d. Thematic / Go anywhere funds  These are funds with a mandate to go anywhere, invest in any story and take concentrated bets or diversify. In a volatile market like India these are funds which, if nimble, will make money due to emerging themes. This should be about 15%of the portfolio

e. Sector funds  These take concentrated bets on a particular sector. Ride the momentum and languish when the sector goes out of flavor. Send in 10% of the portfolio here.


I added a sample

Fidelity Equity 20
DSPML Equity 20

UTI Master share 20

MAgnum Contra 15

DSPML Tiger 15

Reliance Div Power 5
DSMPL .com 5

[life2007]

Thanks Vicky for the input.

I dont know why Birla Sun Relief is not offering Growth Option. As I am investing for capital appreciation, I have to stick to Magnum Tax Gain, I guess.

Thanks again

Regards

Jeet

Originally Posted by Vicky78

this looks ok life2007. At the most you have only 2 funds from the same fundhouse. Swama's query was building a portfolio of funds all from the same fund house. So your portfolio is a well diversified among various fundhouses

I personally would go with Birla sunlife tax relief and discard Magnam Taxgain. Again that depends as both of them are good funds.

[surfingminds]

Originally Posted by swama694

I got some info about building an all weather portfolio
Can anybody please review this and give comments with a sample portfolio created like this
Core equity funds – Here you should have two sets of funds : one a bottoms up stock picking type with a large cap bias and will usually be stable in their returns and move with the Sensex or Nifty. The second should be a good growth fund that bets on the growth stocks. Remember although growth stocks tend to be the mid cap/ small cap stories, a growth fund targets returns and not capitalization. This should be a large chunk of your portfolio maybe ~40%. In case you are investing for the sake of tax saving in ELSS funds, then add them here.

b. Index funds / Exchange traded funds based on the index – This will allow you to ride the market direction with a lower expense load. Choose from a wide range of index funds or ETFs available. Keep in mind that if the core equity fund you chose has a largely the same companies as the index fund then you are losing the benefit of an exchange fund and losing on the expense. This should be ~20%-25% of your portfolio

c. Contra fund – This takes bets on stocks which are currently out of favour with the market. Use these funds to give that occasional punch to the portfolio and this should be about 15% of the portfolio.

d. Thematic / Go anywhere funds – These are funds with a mandate to go anywhere, invest in any story and take concentrated bets or diversify. In a volatile market like India these are funds which, if nimble, will make money due to emerging themes. This should be about 15%of the portfolio

e. Sector funds – These take concentrated bets on a particular sector. Ride the momentum and languish when the sector goes out of flavor. Send in 10% of the portfolio here.


I added a sample

Fidelity Equity 20
DSPML Equity 20

UTI Master share 20

MAgnum Contra 15

DSPML Tiger 15

Reliance Div Power 5
DSMPL .com 5

Thats a well thought approach. Its similar to what thought process going through and trying to churn my portfolio mean while making notes to develope a clear strategy. I have a strategy but sometimes it seems a bit complecated while i would try to simplify and post here soon.
I lost 20-30 percent value of my portfolio and learned that I had invested a big amount in one go even i selected good funds.

Any way i have comments

1. where would you include JM emerging leader or ICICI emerging leader which category in your portfolio.

2. What about HDFC prudence.. funds more stable and can switch to debt when market crash..


regards.

[swama694]

I think in market like India a well diversified fund and well managed fund will be a better option that going for an index fund(even though the expense for index funds are less)

So if you want to replace index fund better replace the index fund with exchange traded funds from benchmark.(here also problem for SIP)
And in the above portfolio strategy, another option index fund weightage will be to consider a plain vanilla equity fund like Birla sunlife Equity.
Then have to remove the DSPML Equity and replace it with large cap fund like HDFC 200 or DSPML100 or FT Prima Plus and a place for funds like emerging leaders is to replace the bets on sector funds with JM emerging leader(which i prefer over icici).
i personally like to have separate rquity and debt investments than goign for a hybrid flavour.

In indian situation always better to go for plain vanilla equities than goign for midcaps and smallcaps as if you take the overall weightage of the portfolio, almost 30% will be midcap funds.

if need to try balanced fund assosciate it with debt and income portfolio.

smallcaps and midcaps depending on market fluctuations try STP instead of adding those to SIP based portfolio.

I am an NRI and in market like US a better portfolio strategy will be

1 Large cap value fund
1 Large cap growth fund
this adds to 45% of portfolio

1 Index fund 20%

1 smallcap(groth or value or both)8
1 midcap(groth or value or both)12

1 Global fund like BRIC or Japan market 15


But indian situation is different...here we have to see to fund management more into account and it also wont work out as fund managers ar jumping from amc to amc.

So I felt the all weather portfolio...which is not my creation ...I got from some blog...will be a one size fit for all equity lovers.

Comments solicited.

[dr_tejas_shah]

Originally Posted by swama694

I got some info about building an all weather portfolio
Can anybody please review this and give comments with a sample portfolio created like this

I added a sample

Fidelity Equity 20
DSPML Equity 20

UTI Master share 20

MAgnum Contra 15

DSPML Tiger 15

Reliance Div Power 5
DSMPL .com 5

Hi,

Looks a good portfolio. But, index funds in last one year have not tracked the underlying index.

I read an article at www.personalfn.com wherein they compared returns of index funds with underlying index and none of the index funds had comparable returns due to tracking error.

[Vicky78]

Build your mutual fund portfolio with care
http://www.thehindubusinessline.com/...2050681300.htm

Allocation pattern: Before you begin to short-list funds, sketch your basic allocation pattern. Your portfolio of funds must have an allocation pattern that meets your return objective and is in line with your risk profile. Young investors with a moderate-risk appetite, for instance, can have a 60 per cent allocation to large-cap oriented funds and a 40 per cent allocation to mid-cap funds.

You could create a core and satellite portfolio. Your core portfolio of funds should typically be plain vanilla diversified funds that have outpaced markets consistently over a three-five year period. Hold these funds for at least a three-five year period.

You can allocate a small portion of your portfolio, say 20 per cent, to funds you would like to experiment with. For instance, sector funds or international investing funds or value or contra funds. These funds can help enhance the overall returns. But such funds also carry a higher risk profile and may outperform in short bursts. As such, they may require more frequent monitoring and you will have to be more active in booking profits on these funds.

Short-listing funds: Once you have decided your allocation pattern, you can arrive at a short-list in each category — large-cap, mid-cap, blended cap funds. A fund’s performance track record is probably the most important criterion for selection. But do not let your investment choices be guided completely by recent fund performance. Instead, choose funds that have outperformed their benchmark and the markets on a consistent basis.

There are now several Web sites that provide you with mutual fund options. Identify funds that figure in the top 25 per cent of the fund rankings across time-frames in each category. Once you short-list the funds, you can zone in, depending on your return objectives and risk profile.

Qualitative factors: Besides performance, you need to consider qualitative factors as well. This requires some more effort, but is necessary for those who are serious about building wealth. Visit individual fund house Web sites and take a look at the fund’s objective or mandate as defined in its offer document. The fund house can, at times, define these objectives rather vaguely. Try and identify funds that have a well-articulated strategy and that tend to largely stick to their investment objective. Conviction in ideas is something to be valued. If a fund has a loosely defined investment objective, it might stray from its mandate, which will defeat the purpose of your investment.

Diversify your portfolio well. Do not choose too many funds from the same fund house. Choose funds with different styles of management. For instance, some funds may tend to diversify their portfolios substantially, limiting individual stock exposures to 5 per cent. Others may take concentrated sector exposures.

Some funds may aggressively churn their portfolio. Ultimately, the fund must be able to compensate you for the risk taken. Invest in a mix of management styles to maximise your returns for a given level of risk. Read interviews with fund managers. It might give you a better idea of their conviction/ capabilities. Track changes in fund management.

Number of funds: Once you have identified funds that match your criteria, how many funds should you invest in? There is no ideal number. If your objective is purely diversification, even five funds with different styles should suffice. More funds may lead to significant overlap of stocks and sectors.

Tracking the performance of a large number of funds also becomes cumbersome. If you are using the SIP route and investing small sums, limit the number of funds to three to five. As your investment surplus swells, you may invest in up to 8-10 funds. But beginners may limit their holdings to a handful of funds.

Tracking portfolio performance: Once you begin investing in funds, do not constantly monitor or fret about it. Remember, the entire concept of mutual fund investing is based on you being a passive investor. However, do review the performance of your funds once in six months. Compare funds to their benchmark and then to their peers. There could always be temporary blips in performance. But this is no reason to re-draw your portfolio.

A mutual fund needs to be treated as a long-term investment vehicle and should be held at least over a two-three year period. Fund managers take a long-term view of the markets. Therefore, you need to stay invested with the fund for a long period to realise the full benefits of its investment strategy.

The usual caveats: Avoid investing in new fund offers, unless the offering is unique. Do not be lured into investing in funds by dividend declarations. They make no difference to your wealth. Do not choose a fund based on its relatively lower net asset value.

[akumanan]

Dear Financial Gurus,
I'm very new to mutual fund field. I request your valuable inputs for my Investment.
Thanks n' Regards,
Kumanan. A

[justsayraj]

Depends on your age and risk you are willing to take.

To start with go for equity-diversified funds.. pick 3 large cap funds, one mid cap fund and possibly one mixed cap fund, depending how much you can spare every month.

follow SIP method.

[Candiasg]

I am also in the same boat, Please suggest some of them in each type.
3-4 lakh in a year. Age 54,

50% Hi risk hi growth ( Equity Based growth)
30% mediam risk above average growth
20% Low risk and low return.

Expert advise will be appreciated.

Thanks