Birla Sunlife Dividend Yield Fund

Mr.SINHA asked :
Can you tell me something about Birla Sunlife Dividend Yield Fund?

SRIKANTH SHANKAR MATRUBAI'S answer :
Dear Sinha,
Dividend Funds, as a norm, invest in High Dividend Yielding Stocks. Which means, they invest in Fundamentally Strong companies. However, they will be unable to invest in BlueChips, as BlueChips do not have a High Dividend payout Ratio, which makes these companies unattractive to this fund.
High Dividend Yielding Stocks tend to fall slower and lower than the rest of the market and likewise, tend to rise slower and lower than the rest of the market. Thus, the Dividend Funds will underperform in a Rising Market and Underperform in a Falling Market.
So, this fund is neither suitable to a Aggresssive Investor nor a Passive Investor. Dividend Funds were introduced to cater to investors who looked at protecting their Capital as a priority and Appreciation only as Secondary.
Rather, one can look at investing in Large Cap Funds. Large Cap Funds like Dividend Funds fall less than the Rest of Market, but the difference here is, Large Cap Funds rise Faster than the Dividend Fund in a Rising Market.
Thus even for a Risk-Averse Investor, it is advised to invest in Large Cap funds rather than a Dividend Funds.
Regarding Birla Sunlife dividend Fund, The Fund has been an underperformer over a period of 1, 3, 5 years. So, clearly an Underperformer. The only good point is, that the fund fell less than its peers. So, Mr.Sinha, better look to invest in Diversified Equity Funds with a Large Cap Focus like Birla sunlife Frontline Equity Fund
DSPML Top 200 fund
HDFC Top 200 Fund
Kotak K30 fund
Sundaram Select Focus fund

What is an Fixed Maturity Plan? (FMP)

Mr.N.KRISHNAPRASAD asked :
Mutual Fund expert, can you explain to me, what exactly is Fixed maturity plans.
krishnaprasad

SRIKANTH SHANKAR MATRUBAI 'S ELABORATE REPLY :

Dear Krishnaprasad,
Fixed Maturity Plans are the flavour of the season and the bug seems to have caught you.
What are fixed maturity plans?
FMPs, as they are popularly known, are the equivalent of a fixed deposit in a bank, with a caveat. The maturity amount of a fixed deposit in a bank is 'guaranteed', but only 'indicated' in the FMP of a mutual fund. The regulator does not allow fund companies to guarantee returns, and hence the 'indicated returns' in FMPs.
Typically, the fund house fixes a 'target amount' for a scheme, which it ties up informally with borrowers before the scheme opens. Since the fund house knows the interest rate that it will earn on its investments, it can provide 'indicative returns' to investors.
FMPs are debt schemes, where the corpus is invested in fixed-income securities. The tenure can be of different maturities, from one month to three years. They are closed-ended in nature, which means that once the NFO (new fund offer) closes, the scheme cannot accept any further investment.
These FMP NFOs are generally open for 2 to 3 days and are marketed to corporates and well-heeled, high net-worth individuals. Nevertheless, the minimum investment is usually Rs 5,000 and so a retail investor can comfortably invest too.
FMPs usually invest in certificate of deposits (CDs), commercial papers (CPs), money market instruments, corporate bonds and sometimes even in bank fixed deposits.
Depending on the tenure of the FMP, the fund manager invests in a combination of the above-mentioned instruments of similar maturity. Say if the FMP is for a year, then the fund manager invests in paper maturing in one year.
The fund received is for a pre-specified tenure and the exit load from this plan is high (usually 1 per cent to 3 per cent, depending on the time of redemption). So, the fund manager has the liberty to deploy most of the funds mobilised under the scheme.
The actual return can vary slightly, if at all, from the indicated return. Against that, a bank fixed deposit exactly prints the amount which is due to you on maturity on the FD receipt. However, FMPs do earn better returns than fixed deposits of similar tenure.
Another Advantage with FMPs is the Indexation Benefits available to it.

Regards,
Srikanth Shankar Matrubai









The information and views contained on this blog are personal and believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. The information on this website is updated from time to time. The blog however excludes any warranties (whether expressed or implied), as to the quality, accuracy, efficacy, completeness, performance, fitness or any of the contents of the website, including (but not limited) to any comments, feedback and advertisements contained within the Site.Use of this service is at the sole risk of the user / client. The blog may at any time be edited, altered and or remove any information in whole or in part that may be available on this blog and that it shall not be held responsible for all or any actions that may subsequently result into any loss, damage and or liability.

Student's 1500 sip investment

Ajay Kumar wrote :
hello sir,i am a student new to mutual funds and dont know any thing
about it.i saw ur blog which was helpful to know something.in the blog
u suggested equity funds more,so i want to invest 500 each in three
funds(Hdfc top 200,Reliance growth fund and Fidelity or Birla equity
fund) every month because my pocket money is 2000 only so i can invest
only 1500.my main aim is to make the money double or improve in 3-5
years.will it be possible?i choose these funds bcoz u repeatedly
suggesting these funds in ur blog.presently i have 24,000 in my
savings account(canara bank) and i get monthly 2000 pocket money.plz
give me any options to improve my money.i didn't withdrawed the amount
from past 4 years(25000).i use my savings account only for
deposit.so,plz give me suggestion that how can i use this 24000 to
make some profit.thank you :)


SRIKANTH SHANKAR MATRUBAI'S REPLY ::::

Dear Ajay Kumar,
Thank you for your kind words on my blog.
Your 1500 monthly investment is definitely not a small sum of amount. And it is heartening to note that you are intending to invest 75% of your monthly income(pocket amount) in mutual funds. I appreciate your resolve towards saving and congratulate on choosing the right avenue for savings.
Regarding doubling your money in 3-5 years may not be possible, simply because, the markets are not in the bullish mode (which it was for the past 5 years). However, 18% returns should be considered as achievable.
For your age, with practically no BIG expenses coming up in foreseeable future, you can go slightly aggresive with your fund choices. My choice of investment would be
500 * 1 in Fidelity Equity Fund
500 * 1 in Birla Sunlife Equity Fund
200 * 2 in Reliance Growth Fund
100 * 1 in Reliance Natural Resources Fund

Also, for your 24000 lumpsum amount which you have in your SB Account, you can consider investing in a Large Cap Fund like HDFC Top 200 Fund.
Keep at least 3 months expenses in SB Account as Emergency Fund and balance remaining keep investing in Mutual Funds to make maximum revenue.
Best of luck,
Srikanth Shankar Matrubai.

Review of Investment

Dear Mr.Shrikant,

I have started the following investments through the SIP route with effect from August,2008.Kindly advise if any changes need to be made in my potfolio.My time frame is 5 years.

1.HSBC Equity(G)-Rs.3000 per month.

2. DSP ML Top 100 Fund(G)-Rs.2000 per month.

3. Kotak K-30(G)-Rs.2000 per month.

4. HDFC Top 200 (G)-Rs.2000 per month.

5. HDFC Prudence Fund-Rs.3000 per month; and

6. DSP ML Balanced Fund-Rs.3000 per month.

My age is 44 years and my risk appetite is good.

Regards,
Ravi





SRIKANTH SHANKAR MATRUBAI'S REPLY :::::

Dear Sinha,
Your portfolio is very very good. You are absolutely on the right track with the right selection of funds. If anything, the fund is too Defensive to begin with. With your time frame of 5 years, and your age of 44, you can afford to invest in Opportunities Fund to give some spice to your otherwise bland portfolio.
You do not need two Balanced Portfolios. You can reduce your sip in HDFC Prudence to 1000 per month and invest the saved 2000 into Reliance Growth Fund. Same way, You can reduce your sip in DSPML Balance Fund to 1000 per month and invest the saved 2000 into DWS Investment Opportunity Fund.
Your portfolio is very good but Ultra Defensive and though your portfolio will earn you good returns, you need to effect the two changes I have recommended to maximise your returns without comprising the "Safety" Aspect in your portfolio.
Your portfolio after the two changes will look like this :

1.HSBC Equity(G)-Rs.3000 per month.

2. DSP ML Top 100 Fund(G)-Rs.2000 per month.

3. Kotak K-30(G)-Rs.2000 per month.

4. HDFC Top 200 (G)-Rs.2000 per month.

5. HDFC Prudence Fund-Rs.1000 per month;

6. DSP ML Balanced Fund-Rs.1000 per month.

7. Reliance Growth Fund - Rs.2000 per month.
8. DWS Investment Opportunity Fund - Rs.2000 per month.

While going for sip, stagger your sip dates to take maximum use of NAV Volatility.
Best of luck,
Srikanth Shankar Matrubai.

ULIPs v/s Mutual funds

Insurance is NOT an investment. ULIPs are definitely NO-NO.
because ULIPs are being mis-sold (mis-sold being a polite way of saying con job) like no financial product has ever been mis-sold in this country. In India, ULIPs are a product which have been cynically designed to maximise profits to insurance agents and insurance companies while hiding the true numbers from investors. Nominally, a ULIP is a product that combines insurance and investment characteristics. In reality, they combine an extraordinarily high cost structure (meant primarily to feed agent commissions) with a non-standardised revelation of expense so that any meaningful comparison of investment performance between different ULIPs or between ULIPs and mutual funds is impossible. In other investment products, either there are no agent commissions (as in bank FDs) or agent commissions range from 0.25 per cent to 2 or 3 per cent (as in case of Mutual Fund Advisors). In ULIPs however, commissions range from 15 per cent to (hold your breath) around 70 per cent and are typically 25 per cent. And for some bizarre reason, this is considered acceptable by everyone concerned

Basically, ULIPs are expensive and opaque mutual funds disguised as insurance. This permits insurance companies to circumvent the strict transparency, expense, and commission-related laws that govern mutual funds. It also enables them to escape the scrutiny of SEBI, which has historically been a tougher regulator than IRDA.
Insurance is a great idea and most of us need it. But we need real insurance, which is to say term insurance. Here's what you should do. Make a liberal estimate of how much money your family will need if you die suddenly. Shop around and buy the cheapest term insurance you can find. You'll be stunned at how cheap term insurance is and also at how difficult it is to buy (The quickest way to get rid of an insurance agent is to say that you're interested only in term insurance). You probably won't be able to think logically about insurance as long as you don't realise that it's an expense. It's a necessary expense, like buying a helmet or going to a doctor, but it's not an investment. You need both insurance and investment. To get the best deal in both, don't mix them up.
Best of luck,
Srikanth Shankar Matrubai







The information and views contained on this blog are personal and believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. The information on this website is updated from time to time. The blog however excludes any warranties (whether expressed or implied), as to the quality, accuracy, efficacy, completeness, performance, fitness or any of the contents of the website, including (but not limited) to any comments, feedback and advertisements contained within the Site.Use of this service is at the sole risk of the user / client. The blog may at any time be edited, altered and or remove any information in whole or in part that may be available on this blog and that it shall not be held responsible for all or any actions that may subsequently result into any loss, damage and or liability.

Shall I stop SIP and invest in FDs?

Ms.SUMA wrote :
this is what i have done in the past month.
1. discontinued SIP in franklin flexicap growth...i would prefer to remain invested for now.
2. discontinued SIP in hdfc top 200, would prefer to remain invested.
3. discontinued SIP in reliance diversified power fund...would prefer to remain invested.
4. continuing SIP in DSPML TIGER growth
5. remaining invested (relatively small amounts) in hdfc equity, reliance vision, and tata infrastructure.

i plan to put the discontinued SIP money in FDs for now.

Is all of the above on the right track, given my low appetite for risk and the current market conditions? i cannot invest directly in equities as my employment contract forbids it.

Thanks.

SRIKANTH SHANKAR MATRUBAI'S REPLY ::::::



Dear Suma,
Your stoppage of sips in Franklin Flexicap and Reliance Diversified Growth Fund are very good investment decisions and did deserve to be done. But stopping in HDFC Top 200 Fund was not such a wise decision. Reverse your decision at once and continue the same.

You should also stop your sip in DSPML Tiger Fund, as you already have a Infra fund in TATA Infra. Please avoid Sector/Theme Funds. These funds tend to underperform Diversified Equity Funds over long term.

Investing in FDs instead of SIP is an absoulte disaster. FDs will eat your principal itself when you consider Inflation. People buy more Gold, more Real Estate when their prices go down, but When Stock Prices/Fund NAVs go down, people do the reverse, instead of buying more, they not only stop buying but even SELL! What an irony.

Bearish markets are the best time to buy stocks/funds. The basic lesson in investment is BUY when valuations are attractive and sell when they are not. When markets fall, when problems in economy are temporary in nature (like they are now), they provide an opportunity to accumulate stocks at attractive levels. These are one of those times.

Please do start your sip in Good Diversified Equity Funds as early as possible.

Best of luck,
Srikanth shankar Matrubai

Investment in Tax Saving funds

MANOJ wrote :::
I want to know which ELSS is best for SIP SBI tax gain or principal personal tax... or any other ?

SRIKANTH SHANKAR MATRUBAI'S REPLY :::
Dear Manoj,
Invest in ELSS only when have to save tax via Sec 80C. Otherwise, always invest in Diversified Equity Funds. Your choice of investment through SIP is laudable.
My recommendation for ELSS funds are as follows:
Birla Sunlife Tax RElief 96 Fund
DSPML Tax Saver Fund
DWS Tax Saving Fund (Free Life Insurance of 5 times your investment is an added bonus)
Fidelity Tax Advantage Fund
HDFC Tax Saver fund
Kotak Tax Saver Fund
Lotus India Tax Plan
Prinicipal Personal Tax Saver Fund
Sundaram Tax Saver.

Sbi Magnum Tax Gain had a terrific past. But its bloated corpus may come in the way of superlative returns in future. Of the above, my personal favourite has been Birla Sunlife TAx Relief 96 for Aggresive Investors and Fidelity Tax Advantage for passive investors. Sundaram Tax Saver is a 'Must Have' in every ELSS portfolio.
Best of luck,
Srikanth shankar Matrubai

Daughter's Education

Mr.SARABJEET SETHI wrote ::


Hi
Would like to invest for my daughter education should I invest in ULIP children plan from HDFC/ICICI or SIP in MF investment horizon is for 10-15 yrs. Requesting if someone can advise by illustration, that which is more beneficial for my child future.
I will really appreciate

I will you need Atleast 1.5 - 2 Lacs for Graduation and If she goes for MBA then at least 6-7Lacs as per today scenerio.
Presenly she is 8 yrs and studying in Third standard
I Am 35 yrs Please suggest Good diversified fund for 7-10 Yrs horizon and also about Present SIP+INSURANCE MF and which is good is good
Presently Have 90000 already invested in Below Mutual Fund
1. Magnum Contra
2. Reliance Growth
3. HDFC Equity
4. Reliance Power Diversified
5. ICICI - INFRA
6. Magnum Tax Gain
7. HDFC Prudence

Regards,
Sarabjeet


SRIKANTH SHANKAR MATRUBAI'S REPLY :::

While investing in mutual funds - try and avoid putting too much money in thematic / sector funds. Your core investment of 60-70% must be in large caps.
Please avoid ULIPs. They are very expensive and not transperant. Go for good Diversified Equity Funds. Preferably through SIPs. For your need of 16 lakhs in 10 years, at a assumed return of 18% per annum, you need to invest monthly 5200.
Your present portfolio is good and you can stay invested. However, it lacks Solid Large Cap Funds and you can consider investing in the same through SIPs, which will help achiever your goal faster.
While combining insurance and investment is definitely not advisable, you can certainly consider investing in DWS TAx Saving Fund, which has given a good account of itself in its short history. Investment in this fund will get you 5 times Free Life Insurance of your Investment Amount.

You can also consider investing through Century Sip Plan in Birla Mutual Fund schemes. This offers your upto 100 times Free Life Insuance of your monthly Investment.

With the above in mind, I recommend you to invest in the following funds
Birla Sunlife equity Fund
DWs Tax sAving Fund
DSPML Natural Resources and New Energy Fund
Fidelity Equity Fund
Sundaram Select Focus Fund

From your present portfolio, you should
HDFC Equity - Switch to HDFC Top 200 Fund
ICICI Infra - Switch to ICICI Dynamic Fund

Before committing to any sip, first insure yourself adequately with TERM Insurance, which is cheap and effective way of insuring yourself.

Best of luck,
Srikanth Shanakar Matrubai











The information and views contained on this blog are personal and believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. The information on this website is updated from time to time. The blog however excludes any warranties (whether expressed or implied), as to the quality, accuracy, efficacy, completeness, performance, fitness or any of the contents of the website, including (but not limited) to any comments, feedback and advertisements contained within the Site.Use of this service is at the sole risk of the user / client. The blog may at any time be edited, altered and or remove any information in whole or in part that may be available on this blog and that it shall not be held responsible for all or any actions that may subsequently result into any loss, damage and or liability.

Portfolio Advise

RITESH wrote back ::
Let me give my full portfolio to you, Please look at the profile and suggest me that how it is? Actually my goal is to generate around 11 to 12 Lac Rs after 5 to 6 year to purchase home.


1. DSP-ML India T.I.G.E.R -RP (G) (7) – Feb 2008 Lumsum-40000/-, April 2008 SIP 2000/-
2. HDFC Top 200 Fund (G) – Feb 2008 Lumsum-20000/-
3. ICICI Pru Infrastructure (G) (6) April 2008 SIP 2000/-
4. Reliance RSF - Equity – April 2008 SIP 2000/-
5. SBI Magnum Contra Fund (G) – Feb 2008 Lumsum 20000/-
6. Tata Infrastructure Fund (G) - feb 2008 Lumsum 20000/-

Looking forward for your suggestion
Ritesh Kumar



SRIKANTH SHANKAR MATRUBAI'S REPLY :::

Dear Ritesh, You should have given your portfolio with your first query itself. Anyway, Right now, your lumpsum investment is Rs.1 lakh. Your monthly outgo via sip is Rs.6000. Your target amount is 12 lac in 6 years time. Your 1 lac @ 15% returns (conservative) will get you around Rs.2,30,000. Still leaving a balance of Rs.10 lacs. Your 6000 sip will @ 15% returns earn you around 6,80,000 still leaving a gap of nearly 3 lacs. For you to get 10 lacs in 6 years @ 15% returns (I am being conservative), you will need to invest Rs.8819 per month. Say @ 18% returns, you will need to invest Rs.8060, which means you have to either hike your sip from 6000 per month to at least 8000 or extend your time horizon from 6 years to 7 and half years. The choice is yours. And also remember, your 12 lacs worth home will also have risen to more than 12 lacs due to inflation, etc. I hope you have taken that into consideration while arriving at your goal of 12 lacs. Best of luck, Srikanth Shankar Matrubai

Investing for Daughter

a GUEST wrote :
I would like to start a SIP of Rs3000 per month for my year old daughter. Pls suggest if I should go in for a childrens plan, ULIP or MF & which one. I also want to invest a sum of Rs one lac for her. Pls help as I am confused with all these investment plans.


SRIKANTH SHANKAR MATRUBAI' S REPLY :::
Dear friend, First of all Insure ur life thru pure term plans as per ur requirement say 10L or 15L or 20L to avoid derailment of ur planning for ur daughter if anything mishappens to u. the money received from Term insurance 'll be there to fulfill ur dreams in ur absence.

Plz. for ur own sake, don't buy any so called Child Ins. plans. Plz. keep the insurance & investment things distinct from each other. For Insurance I already advised to take Term plans.

You can consider investing in the following funds for maximum returns after you have adequately covered by Term Insurance.
500 * 1 sip in fidelity Equity Fund
500 * 1 sip in HDFC Top 200 fund
500 * 1 sip in Reliance growth fund
500 * 1 sip in sundaram Select Focus fund
1000 * 1 sip in Birla sunlife Equity Fund.

Start all your sip for 1 year. Take a review at that point of time and then start your sip all over again, after effecting any changes, if required.

You can also consider investing in DWs TAx Saving Fund, which has given good returns and also offers Free Life Insurance.

For your Rs.1 lakh, you can invest in a Debt/Arbitrage Fund and go for STP.
Best of luck,
Srikanth Shankar Matrubai

Please Advise

A GUEST wrote :
Dear Sir,
I have following MF\\`s in my portfolio and I have been investing from last 1.5 years through SIP.I think I need to revisit the portfolio and hence need your assistance. Please advise.

1)DSP ML India Tiger Fund -Growth Regular
SIP = 5000/-

2) RELIANCE DIVERSIFIED POWER SECTOR FUND RETAIL GROWTH PLAN - GROWTH OPTION
SIP = 5000/-

3) 1001 / HDFC Prudence Fund - Growth
SIP = 2500/-

4) MIRAE ASSET INDIA OPPORTUNITIES FUND REGULAR GROWTH PLAN
SIP = 3000/-



SRIKANTH SHANKAR MATRUBAI'S REPLY ::

I am always in favour of Diversified Equity Funds and would adivse all investors to avoid Sector Funds at all costs except in case of exceptionally good opportunities.Out of your funds two are sectoral/thematic funds.I dont know your risk appetite and your investment horizon, but I would advise you to:

Kindly stop all your sip (excluding HDFC Prudence Fund) immediately. Now, with this Rs.13000, kindly consider investing as follows: 1000 * 2 sips in Birla Sunlife Equity Fund (2000) 1000 * 1 sip in DWS Investment Opportunity Fund (1000) 1000 * 1 sip in DSPML Top 100 Fund (1000) 1000 * 1 sip in DSPML Natural Resources and New Energy Fund (1000) 500 * 4 sips in Fidelity Equity fund (2000) 500 * 4 sips in Reliance Growth Fund (2000) 1000 * 2 sips in Sundaram Select Focus Fund (2000) 1000 * 1 sip in Templeton India Equity Income fund (1000) 1000 * 1 sip in sundaram Rural India Fund (1000) Stay invested in your existing investment. Do review all your investments every 6 months or so. Best of luck, Srikanth Shankar Matrubai

What to do with DSPML Tiger Fund

RITESH wrote :
Hi,
I had invested Rs 40000/- in DSP-ML India T.I.G.E.R -RP (G) mutual fund on Feb 2008 and started SIP for Rs 2000/- from Apl2008, my investment goes to around 52000/- till date, but when I am seeing the value of fund today, its showing only Rs 39000/- only :( (Big Pain) so my worry is that I should continue with the SIP or should I stop the SIP and stay invested in this fund for another 5 year, actually my horizon was to stay with this for 5 year and SIP will go till 2011. Please advice. One more thing if I want to stop SIP how can I do?

SRIKANTH SHANKAR MATRUBAI'S REPLY ::::

Dear ritesh,
Your investment is showing a loss only because you had invested such a big lumpsum just after the Bull Run, when the valuations of infrastructure stocks were still very high.
It's good that you have started a sip. Do continue the same. But reduce the sip amount to 1000 and the balance 1000 invest in DSPML Top 100 Fund to provide stablility to your portfolio. ]
For your time horizon of 5 years, both the funds should give you decent returns.
One more thing, if this fund is the only one in your portfolio, please stop you sip immediately. Just a note for stoppage of sip on a plain paper would suffice. And split your 2000 into the following
500 * 1 in Reliance Growth Fund
500 * 1 in Fidelity Equity Fund
1000 * 1 in HDFC Top 200 Fund.
These should give decent return

Best of luck,
Srikanth Shankar Matrubai

Portfolio Advise

From: CHANDRA SHEKHAR
To: sharesher@indiatimes.com, goodfundadvisor@yaho
o.com
Sent: Mon, 25 Aug 2008 09:14:32 +0530 (IST)
Subject: Portfolio Advise

I had invested in Some funds in Growth Option.(
Pl. See Attached file for details) Due to lack of Knowled
ge earlier I had invested in many N.F.O.s Pl. advise ho
w is My portfolio and what will i take necessary action to
better My portfolio for good returns in 5-6 years.



I also plan to invest in Sundaram Select focus & Relianc
e Diversified Power sector Fund for 1000 through S.I.P.
for 2 years.


Thanks & Regards
Chandra Shekhar


SRIKANTH SHANKAR MATRUBAI'S REPLY ::::
Dear Chandra Shekar,
Yes, indeed, you do have too many NFOs in your po
rtfolio and some of them are really duds.
My take on each of them.
Fidelity Tax Advantage ::: Hold. Has been a steady
performer. Take a call after lock in period is over.
Pru ICICI Fusion Fund 2 ::: Hold. Though has been a
n underperformer. Its stock selection has been very g
ood. Infact, it also holds upto 5% of its assets in Subhi
ksha Retail, which should give a good spike in NAV, as
and when it is listed.
Birla Long Term Advantage Fund ::: No other alternati
ve but to hold till Lock in Period is over.
HDFC mid Cap Fund ::: Not a good investment.
Could have invested in HDFC Capital builder. Hold till loc
k in is over.
SBI Infrastructure Fund ::: Hold. could turn out to be a g
ood one by the time its lock in period ends.
Tata Indo Global Infra ::: Hold. Its mandate to invest
overseas could save it from being a underperformer. H
old for another 2 years or so.
Reliance Equity Advantage Fund :: Switch to Reliance Gr
owth Fund
Sundaram Energy Opp Fund :: Not a wise investment. No
other option except to wait for its completion of lock in p
eriod
SBI Magnum Tax Gain 93. :::: OK. But as you already
have an Lumpsum. I advise you to stop further SIP as I
do not expect the fund to give as good returns as it gav
e in the past, due to its bloated corpus. You can conside
r rather Birla Sunlife Tax Relief 96 or DWS Tax Saving
Fund.
Kotak Tax Saver ::: Good investment.
HDFC Tax Saver :: Again a Very Good investment.
HDFC Top 200 Fund :: The Best fund in your portfolio.
Hold on.


As for your future investments, you can definitely go for
Sundaram Select Focus. In fact, this is a must have in ev
eryone's portfolio.
Regarding, Reliance Diversified Power Sector Fund, plea
se avoid. You already too many sector funds. Also, powe
r sector may struggle to give returns as good as in the p
ast, due to rich valuations and concerns on raw materials
prices. Instead consider investing in DSPML natural Reso
urces and New Energy Fund.

Regards,
Srikanth Shankar Matrubai.

shall I invest in ICICI Infrastructure Fund?

From: Mevi
To: kentshershare@gmail.com
Sent: Wed, 20 Aug 2008 01:01:21 +0530 (IST)
Subject: Need advise on investing in SIP

Hi Srikanth,

I came across your blogspot thru moneycontrol.com.

I am a newcomer here and want your advise regarding investments in SIP.

I am 25 and want to invest monthly around 2000rs in SIP. I was looking at ICICI Prudential Infrastructure RetailPlan (G) as a start for around 3 years.

What is your opinion on this? Do let me know if you think any other fund schemes are good.

Thanks in advance,
Mevi.



SHANKAR SHANKAR MATRUBAI'S REPLY ::::::::::
Dear Mevi,
Your decision to invest in Mutual Funds is a wise one and through SIP is even wiser.
However, your choice of ICICI Infra Fund is not such a wise one after all. True, ICICI InfraStructure Fund has been a very good performer in the past. But, going forward, Infrastructure, as a Sector will not have as good time, it had in the past, and with rising interest rates and slowing demand may even struggle to give Average Returns.
Hence, I would recommend you to Avoid ICICI Infrastructure Fund at this point of time.
You should be better off by investing in diversified equity funds which tend to have stability in their returns and also perform better than Sector Funds (like Infra) over a longer period of time.
Hence, i recommend you to invest in Diversified Equity Funds. You split your 2000 into 2 and invest 1000 each in
Reliance Growth fund
Birla Sunlife Equity fund
These funds should give you more returns than ICICI Infra Fund

Best of luck,
Srikanth

Advise please

Dear,
I am Amit. Iam 23 yrs old,apart from other debt investments and my term insurance policy,i have invested in the following MFs,kindly have a look and suggest any modifications.
thank you in advance.
1.50,000 in SBI Tax 93- April 2008
2.15,000 in Principal personal tax- may 2008
3.20,000 in UTI infrastructure -jan 2008
4.20,000 in DSP ML TIGER- jan 2008
5.2000 SIP kotak 30 july 2008
6.2000 SIP Reliance growth july 2008
7.2000 SIP HDFC top 2000 july 2008
8.2000 SIP Sundaram select focus july 2008
9.2000 SIP Birla Sunlife Frontline- july 2008 equity.
I realised my mistake to not investing in SIP,hence have tried to follow it now,please comment.
Waiting in anticipation,
Warm Regards,
Amit,Mumbai

SRIKANTH SHANKAR MATRUBAI ' S REPLY ::::::

Dear Amit,

At the outset, you have done the right thing by going for a TERM Insurance rather than an Endowment or other policy. Hats off to you there.

Your Mutual fund portfolio is a picture of good and bad. Some very good and some outright bad. My take on each of the fund
1. 50,000 in SBI Tax 93- April 2008 (continue with the same till lock-in period and then take a call).

2. 15,000 in Principal personal tax- may 2008 (Good investment. Hold on. Can even add to it)

3. 20,000 in UTI infrastructure -jan 2008 (Redeem the same. I know you will lose, but it is better to put the money to better use than lay it in a rotting asset. So, invest the proceeds of the redeemtion into DWS Investment Opportunity Fund)

4. 20,000 in DSP ML TIGER- jan 2008 (This is one of the few Sector funds that I like. Continue to hold and review every 6 months. Right now, continue to stay invested)

5. 2000 SIP kotak 30 july 2008 (One of your best decisions. Not only in terms of the fund choice but also because of SIP. Continue)


6. 2000 SIP Reliance growth july 2008 (Again, a Very Good Decision. Continue with your investment.)

7. 2000 SIP HDFC top 2000 july 2008 (Yet, again, a Very Very Good Investment. Continue)

8. 2000 SIP Sundaram select focus july 2008 (Continue)

9. 2000 SIP Birla Sunlife Frontline- july 2008 equity. (Continue)

After the rejig, your portfolio will look like this.
50,000 in SBI Tax 93- April 2008
15,000 in Principal personal tax- may 2008
20,000 in DWS Investment Opportunity - August 2008
20,000 in DSP ML TIGER- jan 2008
2000 SIP kotak 30 july 2008
2000 SIP Reliance growth july 2008
2000 SIP HDFC top 2000 july 2008
2000 SIP Sundaram select focus july 2008
2000 SIP Birla Sunlife Frontline- july 2008 equity

Of the 10000 SIP that you have, 80% of the amount (8000) goes into Large Caps. For your age, this is on the higher side. Either reduce some of the SIPs to 1000 and invest in fund given below or Increase your SIP. For these my recommendations are
DSPML Equity Fund
JM contra
Fidelity Equity Fund
SBI Commodities Fund
Mirae India Asset Opportunities fund

If you are increasing your sip from 10000, it is very good. And in that case, split your 2000 sips into 1000 each in the same funds and invest in different dates to make maximum use of volatility in NAV and hence earn better returns.

Also consider investing in
DSPML World Gold Fund
Fidelity International Opportunities fund

Best of luck,
Regards,
Srikanth

What should I do with my ULIP?

From: Bala N
To: sharesher@indiatimes.com
Sent: Mon, 18 Aug 2008 23:24:59 +0530 (IST)
Subject: what should i do with my ULIP?

Dear srikanth,

This is ramesh,aged 25,from chennai..

First of all, i like to thanks for your kind advices and suggestions..you are doing a great thing..please carry on..

I have already invested 50k per annum in SBI ULIP life insurance....but once i paid my first premium only,i got to know i was fooled by the agent..the charges are very much high(his commision???)..


now, i realize even after 3 years its unlikely, i will recover my invested amount(3 * 50k=1,50k)..

should i continue the ULIP after 3 years(by partial withdrawing & re-investing it into the same)for a long term until i get a good return or should i exit after 3 years, even if the surrender amount is lower than my invested amount(which is very much likely?)..so that i can use this amount for a good investment after 3 years?


also, please suggest some tax saving mutual funds to invest thru SIP.

waiting for ur suggestion..

Thanks,
Ramesh



SRIKANTH SHANKAR MATRUBAI ' REPLY :::::

Dear Ramesh,
It pains me to read such letters. I only hope people realise faster that ULIPs are money minting machines for Insurance Agents and a BIG LOSS for Investors. I repeat again Insurance is NOT an Investment.
But thankfully, you have realised now, so, hopefully, you will not repeat the same mistake again. And also advise your well wishers about this ULIP confusion.
I am not an Insurance Agent. But to the best of my knowledge and analysis, it is adviseable to stay invested till the lock in period of 3 years is completed. At the end of this lock in, do sell/redeem your units and invest in some Good Diversified Equity Funds.

As for Tax Saving Funds, here is my Short List. Invest in them through SIP to maximise returns.
Birla Sunlife Tax Relief 96 Fund (Invest through Century SIP now and you will get Free Life Insurance Cover)
DSPML Tax Saver Fund ( A recent fund, but has good returns and comes from a Good Fund House)
DWS Tax Savings Fund (Good performer. Free Life Insurance of 5 times your investment is an added Bonus)
Fidelity Tax Advantage Fund
HDFC Tax Saver Fund
Lotus India Tax Plan
Principal personal Tax Saver
Sundaram Tax Saver

Preferably invest through sips with different dates to take maximum advantage of NAV Volatility
Best of luck,
Srikanth

Thank you letter

Ms.Shalini wrote back

Hi Shrikanth,

Thank you very much for your advice. I'll definitely invest in HDFC fund. Your advice have strengthen my research and boosted my confidence. This is the first time I've planned to invest all by myself and for that I'm trying to learn from pros like you. I regularly visit your blog and decided to invest in HDFC Top 200 through SIP. And as per your advice(to some other person) I'll use two SIPs in the month.

For ICICI Prudential also, you are 100% correct. For first year they charge somewhere around 12% and then 2.5% and 2%. And we get 100% money only after 5th year. So we are struck not just for 3 but 5 years.

Thanks again. I'll write to you again after researching and preparing my case regarding SIPs.

Shalini

Advice for Short Term Debt Funds

From: shalini
To: kentshershare@gmail.com
Sent: Sun, 17 Aug 2008 19:08:24 +0530 (IST)
Subject: Advice for short term debt funds

Hi Mr. Shrikanth,

First of all, I would like to praise you for your noble service to investors. Its great to see that still we have some people who work for others benefit without any crease.

Now my query,

1. I want to invest 50k in some short term debt mutual fund. My time horizon is 3-6 months. While researching, I came to know of some funds like Canara Robeco Income (G), ABN Amro Flexi Debt - RP (G), HDFC High Interest - STP (G) etc. But I can not figure out which fund to choose. Canara's fund has a very low asset size and HDFC's fund is having very large assets. Though return wise Canara's non ranked fund is best in last 6 months.

If you can suggest any other avenue, I'm open to that also.

For your information, i would like to tell you, we plan to buy a car in next year and this money is for that purpose.

2. I want to start an investment of Rs. 20000 per annum in ICICI prudential life stage regular premium plan (not for insurance) for long term. Is it a good decision or I should defer it.

Thanks in advance.
Shalini.


SRIKANTH SHANKAR MATRUBAI ' S REPLY ::::

At the outset, I must thank you for your kind words.
You have done a good job by doing some research before investing, which is a sign of a mature investor.

Canara Rebocco have given very good returns for the last year or so. The rising interest rates have been obviously helping them. The main reason for this could be that they have been deploying their money more in Call Markets and Money Markets rather than investing in Fixed Debt Instruments. This could be because of their low AUM. So, when the interest rates start reversing, they will underperform the Average Benchmark returns. So, I would rather avoid investing in the fund. And, as you have rightly pointed out, their low AUM also does not inspire confidence.

I would go for HDFC High Interest STP, as they have a pretty decent track record for a long time. Their AUM is not too large. In fact, some funds have 5 times to 10 times the AUM which HDFC has right now. Do consider investing in HDFC High Interest.

About your planned investment in ICICI Prudential Life Stage Regular Premium Plan.
My advise is a firm "NO". Because this investment is an ULIP. and an ULIP is strict "NO-NO" for me. ULIPs are very costly affair, they are forcefully sold by agents because the agents get Maximum Commission from these ULIPs. Either way you are not investing for Insurance, which obviously means that you are investing for "Returns". Then why do you want to go for ULIP when the charges are very high, not only the first time you invest but also on annual premium.
Another drawback, withdrawal charges are very high and also you are struck for 3 years.

You are better off investing in Good Diversified Mutual Funds. They are cheap, transparent, easy and offer good diversification.

10 lakhs in 3 years

From: lalitesh kumar
To: sharesher@indiatimes.com
Sent: Sun, 17 Aug 2008 09:46:46 +0530 (IST)
Subject: Please suggest me .

Hi Srikant,

This is lalitesh here aged 30yrs and currently i dont have any laibility (loans) to me , but i am planning to book a flat by next 3 yrs. And the budget is around 60L , out of which 10L i will be paying as down payment and rest 50L will get though any bank as Loan.

Now i need your suggestion to accumulate those 10L in next 3 yrs, what i hav planned ,i'll investing around 24-25k /month in any of the debt /hybrid fund from Jan 2009. so could you please suggest me if my planning looks fine.

Or pls suggest me how shall i plan to collect these 10L, and also suggest me about the funds where shall i invest.

Your help will be appreciable as always. Looking forward for ur reply.

Best Regards.

Laitesh



SRIKANTH SHANKAR MATRUBAI' reply :::::
Dear Lalitesh,
Hi, nice to see your mail again.
Actually, with your savings of 24-25k per month, it should not be very difficult to achieve 10L by end of 3 years.
Let's calculate
24000 * 12 = 2,88.000
2,88.000 * 3years = 8,64,000
Even if you keep in FD@ 8%, your investment will get you 9.75.000. so, you will have absoultely no problem in achieving your 10Lakhs.
If you invest in "SAFE" Funds, like Arbitrage Fund, MIP funds, you will get (on an average) around 10% post tax, so your investment of 24000 for 36 months, should get you about 1004000. which is your target amount.
I would suggest you to invest in FMPs, a bit, (FMPs nowadays assure you 10.5%), but go for Arbitrage funds, you will achieve your target very easily. I would have preferred you to invest in Large Cap Funds and also Balanced Funds, but maybe you prefer "safe", so I am going for Arbitrage Funds. Otherwise, you could go for Large Cap Funds (Birla Sunlife Frontline Equity / HDFC Top 200 / Sundaram Select Focus / DSPML Top 100), with Dividend Payout Option, And whatever Dividend you get, you could shift to Arbitrage Funds and also keep booking Profit at regular intervals and shift the amount to Arbitrage Funds.



Regards,
Srikanth

Financial Planning Advice

Mr. Ritesh Shah wrote :::
"Hello

I need your help to plan my investments. The background....

I am 32 and I started investing regularly since this year. I invested through
SIP on a monthly basis.

Please advise if I need to stop any of these SIPs / switch to other funds.

Kotak Opportunities - Growth - Rs 5000 Per Month
Birla Sun Life Frontline Equity Fund-Growth - Rs 5000 Per Month
DSP India T.I.G.E.R. Fund - Growth - Rs 5000 Per Month
Prudential Infrastructure Fund - Growth - Rs 5000 Per Month
Reliance Vision Fund - Growth - Rs 5000 Per Month
Reliance Growth Fund - Growth - Rs 5000 Per Month

Ritesh Shah"


SRIKANTH SHANKAR MATRUBAI 's reply ::::
"Dear Ritesh,
Your portfolio is neat, compact and nearly perfect for your age. There is very little change required, in fact, if any.
But still, you could switchover from Prudential Infrastructure Fund to ICICI Infrastructure or DSPML Tiger Fund, in the infrastructure Space.
Also, you could stop your sip in Reliance Vision Fund, for now as it's performance has been below average recently. You could invest in HDFC Top 200 fund or Sundaram Select Focus fund. This will not only maintain your large cap bais, but also reduce your slight overexposure to Reliance Mutual Fund House.

And, one more thing, split your 5000 into 2000 (2) and 1000 (1) sip over three different dates to maximise the advantage of volatility in the movement of NAVs.
Other than the above, I would like you to take a small exposure (say 1000 per month) into an International Fund (Templeton India Equity Income Fund/Birla Sunlife Intl fund) and also into a Commodity Fund like (DSPML World Gold fund / Mirae Asset Global Commodities Stock Fund).
These would compliment your portfolio perfectly.
After 5 years or so, gradually shift away from Sector/Commodity Funds into Diversified Equity Funds.
Best of luck.
Regards,
Srikanth'

Please Advise on my investments

Mr. S Reddy wrote ::::

Hi Srikanth,

I came to know about you from moneycontrol.com and thereafter through your blog goodfundadvisor. Thanks for maintaining such a blog. You are doing a great job by helping people make money the right way!

I need your help to plan my investments. The background....

I am 24 and I started investing regularly since last year. I invested through
SIP on a monthly basis. The SIPs started last year got expired in May

this year. My portfolio (2.5 Lakhs) break-up resultant of my investments for
the past 1 year and other Lump sum investments (LS) made before start
of SIP looks as follows:

DSPML Technology.com (SIP) (G) - 5.6%

DSPML Tax Saver (LS) (G) - 4%
Franklin India Tax Shield (LS) (G) - 4%
ICICI Pru Infrastructure (SIP) (G) - 11%
JM Basic (SIP) (G) - 5.6%
Principal Tax Savings (SIP) (Div) - 12%
Reliance Div. Power (SIP) (G) - 12%

Reliance Growth (LS) (G) - 4%
SBI Infrastructure (LS) (G) - 12%
Magnum Contra (SIP) (G) - 5.6%
Magnum Global (LS) (G) - 4%
Magnum Tax Gain (LS) (Div Reinvest) - 12%
Sundaram Capex Oppourtunities (SIP) (G) - 8 %

Sundaram Energy Oppourtunities (LS) (G) - 4 %

Additionally, I'm having a 30000 P.A ULIP with Aviva and 10000 P.A
Pure insurance.

My portfolio is down 11% as on today from 35% up in Jan. From my previous investments and the current Bear rally I understood that my portfolio is kind of too agressive and lacks proper diversification, which is very well evident from the 11% negative returns


I plan to invest Rs 10000 every month through SIP from Aug. Through this I plan to bring diversity that would hold my portfolio retuns from falling more than beanchmark during the fall.

The planned breakup looks as follows:

Templeton India Equity Income (2000) - Mainly for International
Diversification
Reliance Banking (2000) - To take advantage of Banking sector Growth
Sundaram Tax Saver (3000) - To take advantage of Tax exemption & good

diversification
Sundaram Select Focus (2000) - To take advantage of growth in Largecaps
DSPML World Gold Fund (1000) - For Diversification

Whatever I am investing since last year is for long term (5-10 Years

Horizon). That is the reason why I took little risk of investing in
sector funds - which I feel give very good returns over long term (Esp
Power, Infra - Huge investments in which started to flow since last
year and to get the returns out of these huge investments it taken

approx 4-5 years).

Please advise of any restructuring needed in my existing portfolio.
Also please advise on my plan to invest 10000 every month through SIP.
Is the fund selection and allocation good ? Please advise of any

changes required in fund selection / allocation for SIP to start next
month. From the current bear rally I'm maily looking to invest in
stable diversified funds without compromising too much on growth so
that the portfolio doesnt go too much into Red during a bear rally at

the same time it beats the benchmark with good returns during Bull
run. If required I can invest additional 2-3000 (May be JM Moving
Sector Fund ? Because of excellent track record of star fund manager
Sandip Sabharwal and advantage of sector + Diversification). Please

advise.

Thanks a lot in advance.

Sincerely,
S Reddy

SRIKANTH SHANKAR MATRUBAI' s Reply ::::


Dear S Reddy,
First of all, I must thank you for your kind words. They are a great fillip to me. Thank you once again.

There is no need to worry about your investment being down by 11%. It is natural to have a loss in a Bear Market especially when you have invested during the end of the Bull Period and also the fact that you have too many sector funds.

Regarding your investments, it is shocking to note that you have more than 30% in one Single Fund House, SBI Mutual Fund. Do reduce the same by following what I have advised.
DSPML Technology Fund : Even at a loss, I recommend a switch to DSPML Equity Fund, a more diversified fund. I know that you are willing to stick with the fund for another 5/6 years, but still it is in your benefit to switch out at the earliest.

DSPML Tax Saver Fund ::: A good performance in its history. Continue.

Franklin Tax Shield Fund :::: Has been an underperformer. Infact, the whole universe of funds from the Franklin stable has been underperforming. Take a call as soon as your lock-in period in the fund ends.

JM Basic Fund ::: Continue your hold. You can expect the fund to outperform the markets in the medium to long term.

Principal Tax Savings :::: Continue and take a call when your lock-in period ends.

Reliance Diversified Power Sector Fund ::::: I am never in favour of Sector Funds. And with your exposure of 12%, it is a definite a Switch Call from me. Atleast, switch 50% of your holdings immediately to Reliance Growth Fund. Either way, Reliance Growth Fund will hold stocks that Reliance Diversified Power Fund holds. You can just check the portfolio of both the funds.

Reliance Growth Fund ::::: One of the most consistent performers in the Indian Mutual Fund industry. continue and can add the switch from Reliance Diversified power Sector Fund.

SBI Infrastructure Fund ::::: A close ended fund. Take a call when the fund becomes open ended.

SBI Magnum Contra ::::: A more of Diversified than a Contra Fund now. Continue to hold the same.

SBI Global fund ::::: Switch to better performer like SBI Magnum Balanced Fund. Will also bring some stablility to your fund.

Sundaram Capex Fund ::::: A good fund. But as already hold Infrastructure Fund like SBI Infra and proxy Infra like Reliance Diversified Power Fund, a switch is recommended to Sundaram Select Focus Fund.

Sundaram Energy Opportunities Fund ::::: A close ended fund. Take a call when the fund becomes open ended.

You have age on your side, so you can afford to make mistakes. But please ensure that you avoid as much as possible your investments in Sector funds.
You are planning to invest in
Templeton India Equity Income (2000) - Mainly for International
Diversification
Reliance Banking (2000) - To take advantage of Banking sector Growth
Sundaram Tax Saver (3000) - To take advantage of Tax exemption & good
diversification
Sundaram Select Focus (2000) - To take advantage of growth in Largecaps
DSPML World Gold Fund (1000) - For Diversification

Here, I would like you to make some modifications. Reduce your exposure to funds like Reliance, Sundaram, SBI, as you already have high exposure to them. Also, you have already too many sector funds, so please avoid investing in Reliance Banking Fund.

Your exposure to Large Caps is very little, inspite of switch from Sundaram Capex to Sundaram Select Focus. So, my recommendations would be:
Templeton India Equity Income fund :: 2000
Sundaram Tax Saver :: 1500
DWS Tax Saving Fund :: 1500 (Fund has had a great performance. Free Life Insurance is an added bonus)
DSPML World Gold Fund :: 1000
Birla Sunlife Equity Fund :: 2000 (This too had a terrific past and a promising future. Free Life Insurance is an added bonus)
Fidelity Equity Fund ::::: 1000 (A Go-Anywhere Fund. Stable performer)
HDFC Top 200 Fund ::::: 1000 ( A Large Cap Fund with a great past and stable performance)

Final word, you can go for JM Multi Strategy Fund through Sip.

Regards,
Best of luck,
Srikanth Shankar Matrubai

Good Funds at this time

Mr. nitesh wrote back
Thanks for your reply.My age is 25.time horizon-Not decided (jab tak paise ki jaroorat na pade),Risk-80:20(Equity:Debt).

Details of my investments are as follows:
1)One ICICI endowment policy premium@25k
2)One ICICI ULIP premium@24K
3)One Term MAX New York premium@5K
4)F.D of 1L(got from my father Life insurance)
5)Stocks of 1L

As you figure out from the above facts My Payout is 55K.I still left with 45K income tax discount.Does premium paid in mutual funds are counted in tax free category?

Also,I want to know :

1) If I go for ELSS(SIP) option with diversified equity funds than which funds are good for me?
2) Does the premium is tax free or the Income coming after selling the funds is tax free?
3) For how much time should I opt for the Premium period?
4)If I go
for Sip +insurance for 3 years then If something happens to me after 3 years then there is insurance benefit.what do you say upon this?

I aslo want to take Rs.2000 monthly on my mother's name.Her age is 53.She is an govt. employee.which funds are suitable for her(ULIP/Pension plans/Mutual funds etc.)?

SRIKANTH SHANKAR MATRUBAI's reply








Dear Nitesh,
As told to you earlier, it is better you try to stop your ULIP and start investing in Mutual Funds., the earlier the better.
First of all, let me clarify your doubts.
I could not understand your question "Does premium paid in mutual funds are counted in tax free category? ". Probably, you may mean whether the premium paid for ULIPs are counted in tax free category (sec 80c). yes, they are.
And ALL your investments in ELSS are Tax Free. If you sell your mutual funds after 1 year, they are completely TAX FREE. Regarding your 4th question about sip insure, Yes, in Reliance and Kotak Sip Schemes, you will not get any insurance after 3 Years, if anything happens to you.
But, if you have invested in Birla and DWS Tax Saving Fund, then the Insurance will continue till you are 55 years of age.

After knowing your age and risk profile, I am recommending the following funds, do invest in them, preferably through SIPs.
Birla Sunlife Equity Fund
DSPML World Gold Fund
DWS Tax Saving Fund
Fidelity Equity Fund
Jm Contra Fund
HDFC Prudence Fund
Reliance Natural Resources Fund
Mirae Asset India Opportunities Fund
Sundaram Select Focus Fund

Best of luck.
Srikanth


----- Original Message -----

Which Tax Fund to Invest?

Hi this is gopal, I am interested in buying MF for my tax reduction come profit
What are the MF u suggest me to invest for a locking period of 3 years.

SRIKANTH SHANKAR MATRUBAI's reply ::
Hello Dear Gopal,
Mutual Funds are the best avenue for Tax Saving Purpose as well as to Earn Above Inflation Returns. Please note all your investments in Equity Linked Savings Scheme (ELSS) are locked for 3 years. Though you have not provided your time horizon, risk capability, goals, targets, etc. I am recommending the following as a Thumb rule which I normally give without any hesitation.
Birla Sunlife Tax Relief 96 Fund (Right now it is offering Free Life Insurance as additional benefit, if you invest through sip. Make full use of it)
DWS Tax Saving Fund (It too offers Free Life Insurance 5 times your investment and has also been consistent in its performance since launch)
Fidelity Tax Advantage Fund
HDFC Tax Saver Fund
Lotus India Tax Plan
Principal Personal Tax Saver (offers Free Personal Accident Insurance Cover)
Sundaram Tax Advantage.

Never invest in ULIPs for Tax Purpose. Insurance is NOT investment. Always invest in Mutual funds. As far as possible, invest through Sips.

Regards,
Best of luck,
Srikanth

JP Morgan Alpha Fund

‘Too many cooks spoil the broth’ is an old saying that holds true today as well. Incidents of too many people worsening a situation have had the saying being repeated again and again. And that’s something that the fund managers of the JP Morgan India Alpha Fund have to try and not prove true. Why? Because the said fund has not one, not even two, but four fund managers – Mr. Harshad Patwardhan and Mr. Amit Gadgil to look after the equity component of the scheme and Mr. Nand Kumar Surti and Mr. Namdev Chogule to manage the debt portion.

And that’s not the only thing ‘different’ about the fund. An equity-oriented fund, JP Morgan India Alpha, has a unique strategy of aiming to wipe off market risks by adopting various market neutral strategies. Confused? Here’s how the strategy works… The strategy the fund will adopt is one that is being used by hedge funds. A market neutral strategy is one where the fund manager takes a long position (buy) and a short position (sell) at the same time. The idea is to generate returns over and above the market returns through superior stock selection skills and thus, reducing the market risk to nearly zero.

For example, if we look at the current hike in oil prices, it is beneficial for the oil companies but is not good for the airline industry. If the fund manager believes that the oil price hike would continue, he would buy the shares of an oil company and short sell the shares of an airline company, thus giving rise to two situations. The first situation is when the oil prices go upward and the market goes up, the oil companies would benefit from the strong market sentiments and strong oil prices. The second situation is when the oil prices start falling or a market situation indicates the decline in the oil prices, then the fund manager will close out the trade and thus the market neutral strategy is safely used.

But the success of this strategy lies in the competence of the fund manager and whether or not he is able to rightly capture the correlation and risk factors. Any incorrect estimation by the fund manager may lead to heavy losses. Although JP Morgan Asset Management Company has a considerable experience in handling similar funds globally, whether their experience would succeed to be a key factor in taking the Indian investors into confidence remains to be seen.

The scheme is an interval scheme that opens for sale and repurchase of units at fixed intervals.
Source : Value Research

I for one, feel that this could give a return of just about 10% simply by looking at its Benchmark, which is, surprise, surprise, Crisil Liquid Index, so investment is not recommended for long term. Much better to stay put and watch the fund\'s performance for about 6 months or so, and then take a call.
Regards,
Srikanth Shankar Matrubai

Letter in Deccan Chronicle

Dear

Read my letter in today's Deccan Chronicle , Bangalore edition on Page 2 on 11.30pm deadline on closure of pubs
The letter goes like this ::
MOVE WILL CHECK CRIME
Sir,
I wholeheartedly welcome the 11.30pm deadline on pubs and other night spots. I am sure crime graphs will come down drastically with the deadline. It should have been implemented long back. The opponents of the ban say Bengaluru is an international city and metro. But for whose sake is the deadline fixed?. Bengaluru is not a city of pub-hoppers. They just form a miniscule part of the population and they don't have any right to decide the city's fate. With this deadline, I am sure Bengaluru will become a safer place to live as more crime takes place after 11am.
Srikanth Shankar Matrubai,
Bengaluru

Nothing to beat Mutual Funds

History has shown that equities have been the best investment vehicle over any long-term period. However, ask any investor and most of them will say that they have lost money on the stock markets. Why this anomaly? The reason is that successful investing requires many things. The first is the discipline to follow the chosen investment strategy. Next comes the ability to choose the proper stocks by doing research or using the services of professionals in the field of investments. Finally, and most importantly, we need to understand that stock prices in the short run are more a function of people's emotions than the fundamentals of the underlying companies.

This is where most investors lose out. They fall prey to their own and sometimes others' mistakes due to the use of emotions in financial decision-making.
Investing in individual stocks can be fun because each company has a unique story. However, it is important for people to focus on making money. Investing isn't a game. Your financial future depends on where you put you hard earned rupees and it shouldn't be taken lightly.

With just Rs.5000, invested in a mutual fund, you can have a Diversified Portfolio of the entire Sensex or Nifty.
What's more, you do not need to daily monitor your stocks and keep track on them. The Professional Fund managers do it for you.
they do provide ample liquidity by offering to buy/sell units on a daily basis with minimum of charges.
Mutual funds are excellent for the new investors because you can invest small amounts of money and you can invest at regular intervals with no trading costs
And do not forget, if you are in the right fund, you make more money than Sensex/Nifty.

All these with minimum of efforts.
Go ahead. Invest in Mutual Funds.
Best of luck,
Srikanth

Where to Invest?

akshaych21 on ( 09-Aug-08 17:59 )
Iam akshay ,23yrs of age from chennai. i have invested about 40000 in reliance mutaul funds i.e, 5k in vision fund growth , 5k in equity fund growth, 30k in natural resources growth. what should i do with it now. i can wait for 2 more yrs on all. iam also willing to invest another 50k for about 5yrs. my goal is to double or more my investment in this time, so where can i put these funds SRIKANTH SHANKAR MATRUBAI'S reply ::: Dear Akshay, You have age on your side. So, time should not (in normal circumstances) be a problem for you, to stay invested. All your investments right now are in 1 single Fund House, Reliance, which is not a good sign. But all the three funds are good investments, may be a bit on the higher side in Reliance Natural Resources Fund. As you are willing to wait for another 2 years, there is no need to worry about these investments. Your willingness to invest another 50k (for about 5 years) is a good sign. And your return of double in 5 years should not be a problem. With these in mind, I recommend the following 5 funds for you, invest 10k in each of them Birla Sunlife Equity Fund DSPML Top 100 fund DWS Opportunities Fund Fidelity Equity Fund Sundaram Select Focus. In future, do try to invest through SIPs. Best of luck, Srikanth

31 yr old's investment dilemma

Hi,
First of all thank you very much for your advices on the
goodfundadvisor blog. Please give me some suggestions to improve my
port folio
Before going further, I request you not to post my email id on your
blog. You may post the content of the mail but not mail id.
I am 31, working in IT field in an MNC in bangalore.
My dependents are wife and kid. My parents have their own house and
they can manage with pension.
My investment goals are to have better life after retirement, children
education.
I am very new to Mutual funds and shares. I just started investing in
mutual funds.

Please comment on my following portfolio:

Earlier investments:
LIC endowment policy with premium Rs 9000 pa since 2001
LIC retirement policy with 10000 premium pa since 2004
LIC policy for my kid with 13000 Rs pa since 2006
Invested in Land for 20 lakhs
Bought gold ow worth 2 lakhs in 2007
Bought house with home loan 11.5 lakhs and principal 7.5 lakhs still
pending paying monthly EMI around 10000 Rs

Recent MF investments
SBI Tax Advantage Sr-1 (D) 31 march 2008 with Rs 40000
SBI Magnum Multiplier Plus (G) 22 july 2008 with Rs 20000

HDFC Growth Fund (G) 14th july SIP with Rs 2000 per month
Kotak Opportunities Fund (G) 14th july SIP with Rs 2000 per month
Reliance RSF - Equity 14th july SIP with Rs 2000 per month
SBI Magnum Contra Fund (G) 14th july SIP with Rs 2000 per month
Tata Infrastructure Fund (G) 14th july SIP with Rs 2000 per month

I want to invest some more money in MFs around another 10000 per
month. Please suggest some good funds, SIP / lumpsum.
Do I need to buy any shares also?
Do I need to buy some ULIP?
--
Regards,
Sridhar



SRIKANTH SHANKAR MATRUBAI's reply::::

Dear Sridhar,
At such an young age of 31, you have done a fair job of managing your finances. Congratulations.
As you may already be knowing, I am in favour of only Term Insurance. Insurance is NOT an investment. So, it does not feel good to see 3 LIC policies. But you have already taken them, so continuing the same is the best option.
Regarding your investments in Gold, buying ow is good only if you are actually consuming(using) it. If it is for investment purposes, then it is not a good decision, you are better off investing in Gold ETFs or Gold Mutual Funds.
You already have a house and have invested in a land. so I persume that you do not any BIG expenses facing you in the next decade or so. So, you can safely go for Long Term Investment without short term bother.
Both your recent MF investments could have avoided. I mean, it could have in much better schemes. Because SBI Tax Advantage is a close-ended, that 10 year close ended!!
Your existing SIPs are
HDFC Growth Fund (G) 14th july SIP with Rs 2000 per month
Kotak Opportunities Fund (G) 14th july SIP with Rs 2000 per month
Reliance RSF - Equity 14th july SIP with Rs 2000 per month
SBI Magnum Contra Fund (G) 14th july SIP with Rs 2000 per month
Tata Infrastructure Fund (G) 14th july SIP with Rs 2000 per month

All the above are very good investments especially since you are a long term investor. But keep reviewing your portfolio every 6 months or so, especially your invesment in Tata Infrastructure Fund and Reliance RSF - Equity Fund.
For your further 10000 sip, I would like you to go for 4 large Cap Funds and 1 Balanced Fund. My recommendation would be
Birla Sunlife Frontline Equity Fund (go for it through Century SIP and you will get additional Free life Insurance)
DSPML Top 100 Fund
Fidelity Equity Fund
HDFC Prudence Fund
Reliance Growth Fund (here also, you will get Free Life Insurance).

One more suggestion, stop the sip in Kotak Opportunities Fund immediately. Reinvest, i.e., Start fresh SIP in the same fund under Kotak Star Kid Facility for your kid, and you will get Additional Free Life Insurance!.

You can also stop Reliance RSF sip, and go for the Reliance Growth Fund. With 2000 savings, you could invest in either DSPML or AIG World Gold Fund.

You can think of investing in shares. But its a different game altogether. You need to spend more time tracking and monitoring your stocks, which is not the case with your investment in Mutual Funds.

Avoid ULIPs at all costs.
Best of luck,
Srikanth

Comment on my Portfolio

----- Original Message -----
From: Vishnu
To: sharesher@indiatimes.com
Cc: goodfundadvisor@yahoo.com
Sent: Thu, 7 Aug 2008 21:26:43 +0530 (IST)
Subject: investment advice needed

Dear Sir,

I am Vishnu, 29yrs old, below are my investment details, would you pl review and advise to enhance the same.

Insurance Details:

LIC - Jeevan Anand Since Jul 2004 with qtrly premium of Rs. 3172(Sum Assured: 3L)

LIC - New Jana Raksha Plan since Dec 2005 with qtrly premium of Rs. 2012 (Sum Assured: 2.1L)

LIC - Then Endownement Assurance Policy since Dec 2005 with qtrly premium of Rs. 3934 (Sum Assured: 5.5L)

LIC - Bima Gold since Dec 2005 with qtrly premium of Rs. 1650 (Sum Assured: 2L)

ICIC Pru Life (Life Time Supper) since Feb 2007 with monthly premium of Rs. 3333 (Sum Assured: 5L)

PORD - Since Jul 04 every month Rs. 500

Mutual Fund:

Franklin Templeton India Tax Shield (G) - Since Dec 05 SIP of Rs. 2000

SBI Mangnum Tax Gain (G) - Since Jun 08 SIP of Rs. 2000

and also started putting my hands in share markets since oct 07 and following are the share till now i had invested with a sum of 1 lac.

BHARAT HEAVY ELECT. LTD

HIND.UNILEVER LTD.

ITC LTD

M.R.P.L.

OPTO CIRCUITS (IND)

ORIENTAL BANK OF COMMERCE

POWER GRID CORP. OF IND. LTD

QUANTUM GOLD FUND -EXCHANGE

RELIANCE COMMUNICATION LTD

RELIANCE INFRASTRUCTURE LTD

RELIANCE NATURAL RESOURCES LTD

RELIANCE PETROLEUM LTD

RELIANCE POWER LTD.

SPICEJET LTD.

UNITECH LTD.

VALUE INDUSTRIES LIMITED

egarly waiting for your reply...

Regards,

Vishnu

SRIKANTH SHANKAR MATRUBAI's Reply ::

Dear Vishnu,
From your portfolio of investments, it is evident, a lot of changes is required to make it more balanced, so to say.
First of all, your investments in ULIPs is too high. Insurance is NOT an Investment. You seem to have missed the point. Have only Term Insurance, and rather go for Diversified Equity Funds.
Regarding your Insurance Portfolio, as soon as the mandatory 3 years of lock-in completed, come out of the ULIP investments. Rather go for Pure Term Insurance Plans.

Even your investments in Tax Funds leave a lot to be desired. SBI Magnum Tax Gain had a great run in the past, but because of its bloated corpus, it will be difficult for the fund to give Even Market Returns. And Franklin TaxShield has been an underperformer for some time and I see no reason how it will become an outperformer. You could look at s
Birla Sunlife Tax Relief 96 Fund
DWS Tax Saving Fund (Here you will get Free Life Insurance of 5 times of your investment)
DSPML Tax Saver Fund
Fidelity Tax Advantage Fund
HDFC Tax Saver Fund
Lotus India Tax Plan (its heavy Banking exposure will see it outperform, at least in medium term)
Principal Personal Tax Saver
Sundaram Tax Saver.

You could also look the following Equity Funds
Birla Sunlife Frontline Equity
DSPML World Gold Fund
Fidelity Equity fund
HDFC Prudence Fund
JM Contra Fund
Mirae Asset India Opportunity fund
Reliance Growth Fund
Sundaram Select Focus fund
DWS Opportunity fund


You should consider investing through SIPs for extracting maximum returns with minimum effort.

Regarding your equity portfolio, you seem to have a soft corner for Reliance Group. Never love your stock. Love only your money. Switch from Quantam Gold Fund to DSPML World Gold Fund
You could also consider completely exiting Reliance Natural Resorces ltd and Spice jet Ltd. I could not make out Value Industries.
You could consider investing in
GMR INFRASTRUCTURE LTD
FORTIS HEALTHCARE
WEBEL SL ENERGY

These scrips will compliment your existing portfolio. Overall, you have a balanced Stocks Portfolio. Quick changes is needed in ULIPs and Mutual Funds Portfolio.
Best of luck,
Srikanth

Investment Query from 25 yr old

----- Original Message -----
From: NITESH kATHPAL
To: goodfundadvisor@yahoo.com
Cc: sharesher@indiatimes.com
Sent: Sat, 9 Aug 2008 00:01:51 +0530 (IST)
Subject: Gd mutual funds at this time

Sir,

My age is 25 years and i live with my mother.she has a Ulip policy whose 3 years are over.Now,I am thinking of stopping that and invest the same amount into 2-3 Mutual funds through SIP.Can you tell me which are good MF on which one can rely upon?

I am very new to the mutual funds.kindly suggest which one to go for ELSS/Equity diversified/sectoral/larg cap/mid cap etc..Growth or dividend?

i m very confused into this?please help me out.

As i have read on many sites that there is a restriction of money withdrawal in ELSS scheme. But one financial planner told me that we can withdraw money in ELSS by paying the exit Load.Is it true?

I am also looking for a mediclaim of Rs. 2 Lac can you suggest that also?

Regards,
Nitesh Kathpal.


SRIKANTH SHANKAR MATRUBAI's reply :

Dear Nitesh,
First of all, it is good to see that you have realised the foolishness of investing in ULIPs.
Whoever told you that you cannot withdraw from ELSS, is completely wrong. Even your financial advisor is wrong when he says that you can withdraw from ELSS by paying exit load. There is no restriction from withdrawing your amount from ELSS after your investment has crossed the statutory period of 3 years. You need to get a financial advisor to avoid such glaring mistakes.

Regarding your confusion as to where to invest, viz.., ELSS/Equity diversified/sectoral/larg cap/mid cap etc..Growth or dividend. I think the answer can be provided when you give your time horizon, age, risk profile.

There is no difference between Growth and Dividend Reinvestment. In both cases, your fund value remain the same, only the no. of units increases in case of Div Reinvestment ( and the NAV decreases), and in case of Growth, though the no. of units remain the same, the NAV will not decrease when the Dividend is announced and paid.

Go for Dividend Payout option only if you are in the higher tax bracket (as the Dividends are tax free) or if you want a supplement to your regular income.

Regarding ELSS, invest in them more for the sake of tax saving option and convenience of very small lumpsum(500), rather than pure invesment. You could as well invest in Diversified Funds.
After looking at your profile, (age, no of dependents), I advise you to go for Good Diversified Equity Funds with a small percent of investments in Sector funds only as an asset diversification.

My pick of funds for you is as follows:-
1. Birla Sunlife Equity Fund
2. DSPML World Gold Fund
3. Fidelity Equity Fund
4. HDFC Prudence Fund
5. HDFC Top 200 fund
6. Mirae Asset India Opportunity Fund
7. Reliance Growth Fund
8. Sundaram Select Focus Fund
9. DWS Opportunities fund
10. Templeton India Equity Income Fund

Always invest sips and keep reviewing your portfolio every 6 months. If possible, invest in sip right now in Birla and Reliance, as you will the additional benefit of Free Life Insurance.

Visit www. goodfundadvisor.blogspot.com
Best of luck,
Srikanth

Diversified Equity Funds - Your Best Bet

Dear all,
" “..the best way to own common stocks in through an index fund..”
-Warren Buffett, 1997 (Berkshire Hathaway Inc. 1996 Shareholder Letter)""

When the World's richest investor says so, you have to accept without any second thought.
Index Funds, by definition, mirror the returns of the stock market (Sensex/Nifty,etc) they track. These funds typically invest in the index they track, in the same propotion and percentage in the stocks that the index has.

Index funds are perfect for the buy-and-hold investor - the kind of person who likes to sit back and let their investment grow, rather than moving in and out of the market in an effort to beat the market.

Index Funds are very popular in US and Europe. The trend is yet to catch up in India, mainly because some Index Funds have not only not able to match the Index returns but also lagged substantially in performance (ex. LICMF Index Plan).
Why is this so?.
This could be mainly because of the Tracking Error. The Fund Manager may not be track the stocks 100% as the Index has, leading to tracking error.

The obvious advantages of Index Funds are:
1. Index Funds Have Lower Fees
They should have lower fees simply the fund house do not have to hire costly Research Analysts to analyse stocks for them, the Index does it. And Being Passive, churning costs are down. These should typically lower costs to funds, which in turn passes to the investor.
2. Index Funds help you Achieve Diversification
The biggest benefit of investing in index funds is the fact that it helps in achieving diversification at no additional cost and time. The investor saves on the time and money required to do the research and analysis on selecting the stocks for a diversified portfolio. The diversification is achieved automatically as soon as the investor invests in an index which is nothing but a collection of diverse stocks.


The biggest disadvantage of Index Funds (especially in India) is that they tend to underperform the Markets and other Diversified Funds. Even though, research reports point out, that in US S&P 500 returns have beater 80% of Diversified Equity Funds, it is unthinkable in India, because of inefficient markets. Our indicies do not have the whole universe of Diversification. Even Real Estate was added to the Index only last year. At present, there is no place for Shipping, Textiles in the Index. So, in effect, Index Funds will not be able to invest in these sectors and many other sectors which do not have a place in Index and miss out on the opportunities available.



In fact, let me illustrate this with an example,.


====================================================================
====================================================================

Febraury 2000 December 2004
Sensex 5883 5961
Rel Growth 47.23 96.53
HDFC Prudence 22.30 52.16
HDFC Top 200 29.02 45.18
FT Prima 42.12 95.30
FT Bluechip 30.50 57.20
Rel Vision 29.88 72.61

====================================================================
====================================================================

So, the message is obvious.
If you had invested in Reliance Growth Fund in Feb 2000, when the Sensex was 5883, your value of money would have doubled in year 2004, though Sensex was nearly the same at that point of time.

The takeaway from the above illustration, is , Market Volatility should not be a concern for you, if have invested in the Right Fund.

And, another BIG lesson is, Don't try to time the market, invest in Diversified Equity Mutual funds.

Warren Buffet is not wrong. Obviously, the world's most successful investor can't be wrong. But in Indian context, his thoughts may not be relevant.

Of course, as an asset allocation, you should have an index fund, but don't have an over ownership of the same. Do invest across baskets and squeeze maximum returns on your investments.
Invest in the best Diversified Equity Funds and become a Passive Investor and see your money grow BIG.
Best of luck,
Regards,
Srikanth