Help me narrow down from these mutual funds

#1
I intend to start SIPs in the following mutual fund schemes.

I intend to make SIPs at different dates like 1st, 5th, 10th, 15th ,20th & 25th so I wish to narrow it down to best six mutual fund schemes.

I am looking at a 5 year horizon for the best returns & I have no dependents as of now.

The schemes I have shortlisted with their last 3 year returns are as follows :

1) IDFC premier equity plan A (5.71 %)
2) Reliance equity opportunity (4.03 %)
3) Birla Sunlife dividend yield plus (8.66 %)
4) Fidelity India growth (4.65 %)
5) Fidelity equity fund (3.94 %)
6) Birla Sunlife frontline equity fund Plan A (3.24 %)
7) HDFC top 200 (7.7 %)
8) DSPBR top 100 (2.7 %)
9) Reliance regular savings fund (equity) (0.79 %)
10) HDFC prudence (8.74 %)
11) Reliance growth (10.08 %)


Also, my Father has been holding some units of reliance growth and reliance vision since inception (though he did redeem a few units about a few years back).
Should he continue holding these units or redeem or switch over to some other schemes as he is not in need of this money right now.:confused:
 

asterix24

Active Member
#2
Hi ris,

Your collection of funds is just fantastic. However, you have over-diversified (which yours truly had done sometime back). I have tried to prune your current portfolio to a portfolio of 6 funds as below

Large Cap DSPBR Top 100
Large & Mid Cap HDFC Top 200
Large & Mid Cap Fidelity Equity
Large & Mid Cap BSL Frontline Equity
Multi-cap Reliance Regular Savings Equity
Mid & Small Cap IDFC Premier Equity

To your other question,

Also, my Father has been holding some units of reliance growth and reliance vision since inception (though he did redeem a few units about a few years back). Should he continue holding these units or redeem or switch over to some other schemes as he is not in need of this money right now

These 2 funds have been very good performers over a long period of time. I presume your dad is sitting on a nice pretty profit. However, these funds are mainly Mid-cap oriented (Reliance Growth is a Mid & Small cap, where Reliance Vision is a Large & Mid cap). I am not sure if your father is risk averse or not. If he is fine with increased risk and volatility, you can consider holding these funds. However, if he has any apprehensions, I would suggest that you can consider a STP to Reliance MIP which is a good debt fund along with another balanced fund. Please note that you can withdraw the funds with no tax implications as all your profits will be considered as Long term (assuming your dad is holding the units from NFO period).

Happy Investing !!
 

yo!

New Member
#3
I intend to start SIPs in the following mutual fund schemes.

I intend to make SIPs at different dates like 1st, 5th, 10th, 15th ,20th & 25th so I wish to narrow it down to best six mutual fund schemes.

I am looking at a 5 year horizon for the best returns & I have no dependents as of now.

The schemes I have shortlisted with their last 3 year returns are as follows :

1) IDFC premier equity plan A (5.71 %)
2) Reliance equity opportunity (4.03 %)
3) Birla Sunlife dividend yield plus (8.66 %)
4) Fidelity India growth (4.65 %)
5) Fidelity equity fund (3.94 %)
6) Birla Sunlife frontline equity fund Plan A (3.24 %)
7) HDFC top 200 (7.7 %)
8) DSPBR top 100 (2.7 %)
9) Reliance regular savings fund (equity) (0.79 %)
10) HDFC prudence (8.74 %)
11) Reliance growth (10.08 %)


Also, my Father has been holding some units of reliance growth and reliance vision since inception (though he did redeem a few units about a few years back).
Should he continue holding these units or redeem or switch over to some other schemes as he is not in need of this money right now.:confused:
Investing in too many funds never really helps, even if all funds are very good. Ideally, one should have 3 good Funds for large caps and 1 for Midcap/small caps.

If I were you, I would have chosen -

1) IDFC premier equity plan A (25 %)
2) Birla Sunlife frontline equity fund Plan A (25 %)
3) HDFC top 200 (25 %)
4) DSPBR Midcap (25 %)

Over a very long period, it is easy to follow and in the event one fund does not perform well, then suitable switching can be carried out.
 
#4
I must point out that I have only shortlisted these schemes but haven't started investing in them as yet.

@ asterix,
Thanks a lot.
I had shortlisted these funds based on their past performance and I intended to choose the one's based on their last three year returns.Is that a correct way of doing it since I see that the funds suggested out of the funds I have mentioned have not been done based upon their returns.

Should I also have some exposure to debt funds?

And yes ,my dad has been holding reliance growth & vision from the time of NFO.Growth has done much better than Vision.He was thinking of moving his investment from Vision to growth fund because of the better returns..or should he simply book out of both these schemes and invest in some other debt and balanced schemes as suggested by you.

@ Yo,

You mentioned investing in 3 large cap & 1 mid/small cap fund but the schemes you have suggested has two small/midcap funds & two large/midcap funds.Isn't it?
 

asterix24

Active Member
#5
Hi ris,

When you select scheme, don't just look at last 1 year. I would suggest have a look at last 5 years atleast. Ofcourse, the standard disclaimer is that past performance can't guarantee future returns. Other factors such as fund management, expense ratio, sectoral investments are critical in taking a decision.

Except for IDFC Premier Equity, I have investments in almost all the funds that you had captured earlier. Also, a disclosure is that I have personal SIPs ongoing in most of the funds.

If you are young (30 - 39) and have sufficient backup, I would suggest that debt fund may not be essential for you. I would definitely recommend locking in your reserve fund (3-6 month expenditure) in a good debt/liquid fund. My personal favorites are HDFC MIP or Reliance MIP, both of which give good returns.

Last few days, in financial circles, you may have read about potential increases in interest rate. Probably, you can consider saving some money into high return FDs when the rates are revised.

Regarding your father's funds, I would definitely suggest to move to a combination of Balanced fund (RRSF - Balanced) and Debt Fund (Reliance MIP). Please note that I am suggesting Reliance funds only as STP in same fund house will be far more easier. If you are open to move another fund house, you can consider HDFC Prudence as your balanced fund option.

Happy Investing !!
 
#6
I am thinking of putting in small amounts in liquid funds of the schemes suggested above and do a systematic transfer at regular intervals rather than going in for SIP.Will that be a good idea?If yes, then any pointers to good liquid funds of above fund houses.

More importantly, I am not too sure about the tax implications of investing in these short term liquid funds.If someone could provide details about the same, I would be thankful.
 

asterix24

Active Member
#7
My personal choices for Liquid or Debt oriented funds have been HDFC MIP Long term, Reliance MIP. BSL MIP Savings 5 is also good, but returns haven't been truly fantastic off late.

Taxation is an interesting part. Since Liquid funds have very little or no equity exposure, they don't pay STT. Hence, any profit earned within a year is treated as normal income and not STCG. Hence, you pay tax according to your tax bracket.

If you hold the liquid fund for more than a year, you would pay LTCG, where you can benefit from indexation. I am not too sure if it's 1 year or 3 years, but last I checked, it was one year.


Happy Investing !!
 
#8
Are you sure about the LTCG part?

They don't pay STT but they pay a dividend distribution tax in case of dividend option.A dividend distribution tax of 28.33% is charged on liquid funds, whereas 14.16% is charged for liquid plus funds.
 
#9
I am thinking of putting in small amounts in liquid funds of the schemes suggested above and do a systematic transfer at regular intervals rather than going in for SIP.Will that be a good idea?
Looks like it won't be such a good idea after all since the first switch in would have to be a minimum purchase of 5000 or so depending upon the scheme.
 

yo!

New Member
#10
@ Yo,

You mentioned investing in 3 large cap & 1 mid/small cap fund but the schemes you have suggested has two small/midcap funds & two large/midcap funds.Isn't it?
You are right. The corrected suggestion shall be :

1) IDFC premier equity plan A (25 %)
2) Birla Sunlife frontline equity fund Plan A (25 %)
3) HDFC top 200 (25 %)
4) DSPBR Balanced (25 %)

yo!
 

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