Shall I exit Now?

I have invested in HDFC Long Term Equity Fund (G), HDFC Prudence Fund (D) , ICICI Pru Infrastructure (D), ICICI Pru Services Industries (D), SBI Blue Chip Fund (D) , Tata Pure Equity Fund (D), UTI Leadership Equity Fund (D), and UTI Wealth Builder Fund (D). Should I exit any of these funds or hold them?
Kajal

SRIKANTH SHANKAR MATRUBAI advises :

Not only you have too many funds in your portfolio but also you have too many Sector funds, that too those funds which have been underpeformer since launch.
Your portfolio needs a major rejig.
Even though HDFC long Term Equity fund and UTI Wealth Builder Fund, I suggest you to switch immediately from the above funds to HDFC Prudence Fund and UTI dividend Yield Fund at once.
You also need to switch from both the ICICI funds you are now holding to ICICI Dynamic fund
You can retain your existing investment in HDFC Prudence, Tata Pure Equity and UTI leadership Funds.
This is not right time to sell. You should instead consider starting a sip in HDFC Prudence Fund and DSPML Equity fund.
These funds should provide you good returns over a period of 2 years.
You can also visit my blog goodfundadvisor.blogspot.com for detailed information and advise.
REgards,
Srikanth shankar Matrubai
Also visit my other blog goodtouradvisor.blogspot.com

Ulips to have uniform fees

This letter was published in Financial Chronicle on November 19, 2008

POOR STRATEGY

This refers to the news “Ulips to have uniform fee structure” on November 13.

Competition from peers and mutual funds as well as relentless media bashing has led the life insurance companies to reduce the exorbitant commissions paid to their agents. Ulips is a good concept but badly sold by agents.

As Ulips have higher commission structure, agents do not disclose the pitfalls of premature withdrawal and equity exposure limits.

With this issue resolved to some extent, investors will be able to compare various products and then decide.

Srikanth Matrubai,
Bangalore

Lesson learnt in this Market Meltdown

This Blog by me was printed in Financial Chronicle. You can visit http://www.mydigitalfc.com/stock-market/lesson-learnt-market-meltdown for details
You are here Home Blog
Lesson Learnt in this Market Meltdown
Nov 09 2008

By Srikanth Shankar Matrubai

The five year Big Bull run made everyone that there will always be sunshine. We tended to ignore warning signs and just brushed them aside as an aberration. I was no exception. Have I lost money?. Yes and no. Yes, because I am stuck with an asset which at a given point of time would fetch a lower valuation. NO, because, the loss is only notional.
I have seen two Bear Runs. First, post the Harshad Mehta Scam in 1992-93, next the Technology Meltdown in 2001. I learnt two Different Lessons in these Bear Runs.

In the first Meltdown, I learnt that "Never Invest All your Money at one go, it may the peak you are investing". In that Meltdown, where I burnt my finger as speculator, I qualified to become myself as an Investor. Lesson Learnt : Invest regularly at periodic intervals.

In the second Meltdown, I learnt that "Never Overexposure yourself to One Particular Sector". Lesson Learnt : Do not put all your eggs in 1 Basket. And the Biggest lesson which I learnt from this Bear phase is that I sold Good Stocks to protect my Huge losses in my Bad Stocks. So, ultimately, I was left with Dud Stocks and devoid of Blue Chips. And it took nearly 3 years to get my portfolio on the right track.

And in this present Meltdown, I have learnt not one but Two Big lesson, First, Book Profits Periodically.
Second, Spread Your Investment across Asset Classes including Debt.

I have taken these losses as tuition fees that I have paid to learn from the Markets.

The Biggest Reason why investors lost heavily in this market was due to the prolonged Bull run of 5 years, which made people invest without doing any research due to stocks going up almost every other day.

For me, the market is like an ocean. Anything you throw into the ocean always come back. Whatever you throw into the market will ultimately come back, provided you follow the market discipline.

I may sound naive, but I don't think I've lost anything. That is I have lost money on paper, which I had bought long long time age, and I am sure they will be back up sooner rather than later. The stock market going down doesn't mean the end of the world. The compaines I hold still continue to rake in profits.

But, yes, my faith to be completely invested in equities has been ripped to shreds, as the even the bluest of blue chips have got hammered. So, while I have not changed my current holdings, I will be looking to change my future asset allocation with a provision for debts and a bit of cash reserves to go with.

But, thankfully, I am not even 40 yet, so retirement is still a long way. I am sleeping peacefully, for I know I do not need this money for another 15 years at least.

My advice would also be on the same lines. It is always wise to have a properly diversified investment strategy based on your risk tolerance and as you age, you should become more conservative and shed your aggressiveness and shift towards debt and Large Cap Mutual funds.

I also plan to diversify further by investing in some International Funds.

I also plan to invest through SIPs to take advantage of NAV volatility (and indirectly time the market!) and restrain myself from making Lumpsum Investment.

I also plan to diversify further by investing in Other Asset Classes too like Gold, Silver and commodity funds by committing a small percentage.

I have decided not to borrow funds for investing. (this lesson I learnt in 1992-93 bear run).

I have decided to avoid ULIPs.

I intend to invest only for Long Term.

I`d like to end with some quotes that are defining my behaviour on the market these days -'Be fearful when people are greedy and be greedy when people are fearful.' - Warren Buffet

“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell,” - Sir John Templeton (founder of Franklin-Templeton).

'buy when there`s blood in the streets'


Visit http://www.mydigitalfc.com/stock-market/lesson-learnt-market-meltdown

Obama win

This letter was published in Deccan Chronicle on 11 Nov 2008

OBAMA'S WIN

The win of Barack Obama in the US has spurred Dalit leaders like Ms.Mayawati to think aloud that India is ready for a Dalit Prime Minister. Mr.Obama won the election not because he played the race card but because Americans considered him the right man for the job. His campaign was inclusive which was why even the whites voted for him.
It will be naive to expect Indian politicians, who thrive on divisive politics to take a stand that they are Indians first and not members of a particular caste. One hopes our politicians learn a lesson from Mr.Obama's victory.
Srikanth Shankar Matrubai

How to Build a fund portfolio

What should your first step be after you decide to invest in a mutual fund? Call up a broker for application forms? No, that comes much later. Look up the “Best Mutual Funds” issue of a Finance magazine? you’re wrong again. In fact, the first step of investing process should not be about investment at all. Instead, it should be about what you intend to do with the money. You need to define the purpose of your investment and the amount you need to achieve this goal.

Perhaps you are planning to upgrade to a bigger car, in which case, you’ll need about Rs 1 lakh as down payment next year. Or maybe you want to send your daughter to a foreign university when she finishes college? It costs about Rs 10 lakh, but you have 15 years to go. Building a nest egg? Or just saving money to buy a home theatre system? Whatever your financial goal and its tenure, you can achieve it through a well-diversified mutual fund portfolio. Here are the three stages to help you create one:

STEP 1: DEFINE YOUR GOALS
As a first step, categorise your financial goals under three broad heads. Anything less than three years is short term, between three and seven years is medium term and everything beyond seven years is long term. The time available for each goal defines the kind of fund used to reach it. A short-term goal requires a fund that does not invest in volatile instruments such as shares. A long-term goal does not need low-yield bond funds.

STEP 2: ASCERTAIN RISK TOLERANCE
The type of investor you are also plays an important role. If you are easily unnerved by stock market ups and downs, it won’t do any good to take on a large equity exposure. But if you can stomach risks, an equity fund can help you reach your financial goal faster than a debt fund. It all depends on how comfortable you are with the risk.

The type of financial goal also has a bearing on the choice of fund. Within each category, there will be flexible goals that can be postponed, and rigid ones that allow absolutely no compromise. A foreign holiday can be pushed back by a few months, even by a year, if necessary. So you can take a little risk.

“Since this goal can be postponed in extreme cases, having an equity exposure makes more sense,” says Chandigarh-based certified financial planner Jaideep Lunial. But paying for your son’s admission to an engineering college can’t be pushed beyond the deadline. In this case, stick to safe and steady fixed maturity plans (FMPs).

STEP 3: DECIDE ASSET ALLOCATION
Once you have the goals in place and have assessed your risk level, you can work out an allocation plan for your investments. Remember, your most important investing decision is not which fund to buy but how to split your money among different kinds of funds. Asset allocation is vital to any financial plan and effectively regulates the volatility and returns of a portfolio.

For each financial goal, there should be a core group of funds, which should typically account for 70-80% of your investment under that head. This core group should comprise steady performers that deliver modest, but consistent, returns. There should be debt funds and FMPs for the short term, and diversified equity, balanced and index funds for the long term.

The balance 20-30% goes into a satellite group of funds that can add zing to your portfolio. These funds would carry a higher risk and would include mid-cap, sectoral and smallcap funds. They have the potential to deliver extraordinary returns but are riskier than diversified equity and index funds. However, as long as you do not allocate more than 20-30% to the satellite group, this risk will not threaten your overall portfolio returns.

The composition of the core depends on the tenure. If your goal is short-term, you can have 100% of your investment in the core, which can comprise just one or two funds. But for long-term goals, the core group would be fairly diversified, with as many as four or five funds.

Once you have worked out the asset allocation plan and decided on the kinds of funds, picking the right scheme is fairly easy. Magazines like The Money Today, Outlook Money, etc regularly give ranking of the best mutual funds tells you about the best schemes across six categories. Or rather, look at other posts in this blog.

The process does not end here, especially if you are investing for a long-term goal. With time and as you approach your goal, rejig your portfolio’s composition to reduce its exposure to risky assets like equities and shift to more steady debtbased funds. But don’t do this too often. Rebalance the portfolio every 6-12 months and you should reach your financial goals comfortably.

Always check your Fund Manager

There are several factors that should be considered before investing in a mutual fund, one of the most important being its risk-return potential. One way to ascertain the returns that a fund might deliver or the risk it entails is to analyse its past performance. While it may not be completely indicative of its future performance, comparison with a benchmark or similar funds helps gauge its prospects. More importantly, the past performance helps to determine the expertise of the fund manager. In fact, a good fund manager is critical to assessing the risk-return potential of the fund. Which is why you should pay greater heed while choosing your fund manager.

Importance of a fund manager: If you want to invest money in the financial markets, you look for advice from an expert. You seek a financial planner or broker who will help you pick a good stock and decide the amount you need to invest. If he goes wrong, you lose your money. So you choose your financial planner with care, studying his track record to make sure that the chances of your losing money are minimised.

However, when it comes to a mutual fund, the fund manager is often ignored even though he plays the same role as a financial planner. He handles your money and takes all decisions related to investing it. The returns and risks of your investment depend on his skills. He picks the stocks, switches between them or holds cash depending on the market conditions. A wrong move by him can adversely affect your returns. So it is imperative to have a good fund manager.

Check his profile: Before you invest in an MF scheme, check the fund manager’s record along with the fund’s past returns and risk. If he has been changing jobs too frequently, it might not be a good sign. The longer a person has managed a fund, the better it is for the scheme. If he has taken over a particular fund recently, check his past stints, the funds he has handled, the returns those funds have delivered and the manner in which they were rated.

Study his style: It is important to tune in to the investment style of your fund manager. So study his approach to picking a stock, the extent to which he researches the companies, the frequency with which he churns the portfolio and his skill in interpreting market moods. You also need to know if his choice of stocks is in sync with your investment objectives. This information is present in the fact sheets available with the fund houses and posted on their Websites.

Reputation of a fund: The fund manager’s proficiency determines the fund’s reputation. Take the HDFC Equity fund. Fund manager Prashant Jain pulled out all the money from the IT stocks just before the dotcom bust in 2000. His move saved the investors’ money—and is one of the reasons the fund is still a favourite with distributors despite there being better funds in the market.
thanks to money today

Also visit my other blog goodtraveladvisor.blogspot.com

SIP to continue or NOT

Mr.vikas wrote :
Hi there

Got your contact on Good fund Advisor and need your views on my investment thru SIP as below


1. SBI Contra --10000

2. Reliance Growth --10000

3. UTI --10000

4. Reliance Diversified --3000


I have been in this investment since September 08.Would it be advisable to continue with the SIP or withdraw to avoid further losses.The funds overall have lost almost 35-40%.

I am told by various colleagues that we must stop (without encashing) and invest money in a Fixed Deposit.

I do not have a problem of waiting for 2-3 years but need to get a professional guidance on which is a better option to move ahead

Cheers

Vikas Milhoutra

SRIKANTH SHANKAR MATRUBAI advised :

Dear Vikas,
True, you have lost money, but you are not alone, whoever has invested has lost in the Bear market. Your funds seem to be good and there is no reason why you should not continue with the same. You have not given as which fund in UTI, your sip is going. It would have made my job easier.
With your horizon of 2-3 years, these funds should give you returns MORE than Fixed Deposits. Whoever advised you to stop this Sips and invest in FDs need a lesson on how Inflation and Taxes eat away your FD returns. You are better off investing in Mutual Funds through SIPs.
You do have good set of funds (I am counting only 3, as I do not know which UTI fund you have invested in), however, you do need to have a Good Solid Large Cap Fund to compliment your existing portfolio. For this, you can look at
Birla Sunlife Frontline Equity fund
DSP Blackrock Top 100 Fund
HDFC Top 200 fund
Sundaram Select Focus Fund
among others.

Either you add another 10000 monthly to any of the above funds, or reduce your existing sip from 10000 to 5000 in both SBI Contra and Reliance Growth and invest the saved 10000 in the above fund.

Best of luck,
Srikanth Shankar Matrubai

UTI Gold-Equity Fund

Mr.Sridhar wrote
"sir, I like your blog goodfundadvisor very much. Can you please throw light on the new fund UTI Wealth Builder Fund which has a combination of Gold and Equity"

SRIKANTH SHANKAR MATRUBAI replied :
Dear Sridhar,
UTI-Wealth Builder Fund - Series II, is an open-ended equity oriented scheme. The objective of the Scheme is to achieve long term capital appreciation by investing predominantly in a diversified portfolio of equity and equity related instruments along with investments in Gold ETFs and Debt and Money Market Instruments.
The fund aims to invest about 65% in equities and 35% in Gold ETFs and debt instruments.
This combination of equity, debt and gold is an innovative scheme and looking at the asset allocation and large cap tilt, it should be a conservative offering with low volatility.
Gold has been one asset that has been counter-cyclical in nature and hence an ideal asset in portfolio diversification.
Thus this fund will be a Low risk and Low Return Fund as it be investing mainly in Large Caps.
This Fund is for Ultra Conservative Investor with a view to have slight exposure to Equities. Sure, invest in this fund, if you want to have a Low Risk Low Return Fund. I do not expect this fund to give you returns more than 12% on an average. Even in Super Bull Market, the fund could give a max of 15-18% return.
Instead you can consider investing in Good diversified Equity fund and some allocation to Gold ETfs.
Best of luck,
Srikanth Shankar Matrubai,
Bangalore

Franklin India Smaller companies fund

Franklin India Smaller Companies Fund is a closed-end equity fund. The fund invests 75 per cent of its portfolio in shares of small companies. The fund had a good run since its launch in Dec 2005 and gained 77 per cent till January 2008 but has lost all its gains in past six months. The NAV is marginally below its face value in August 2008.

Small and mid-cap stocks generally do better than large caps in a rising market but also have larger downside in a struggling market. This is evident in the brief history of the fund so far.

If the market does not witness a sharp turnaround soon, the fund is unlikely to be in good health. Even in case of broad market turnaround the small and mid-caps follow with a lag. Given the state of the market and not very a rosy outlook for the immediate future, one cannot be very optimistic about this fund's performance.

This fund could be small part of a well diversified equity portfolio, but if this is the only fund you own then you should switch to a diversified equity fund.

Franklin India Smaller Companies Fund has a five-year term.

Tata Equity Opportunities Fund

Year after year, Tata Equity Opportunities has always been an outperformer. Its return of 48.77 per cent per annum since launch (as on August 31, 2008) bears testimony to that. The bull phase (June 15, 2006 to January 8, 2008) has seen the fund return 83 per cent in comparison to the category average of 70 per cent. But in the bear phase that followed (January 8, 2008 to July 15, 2008), the fund did not fall too hard and was in tune with the average, shedding 43 per cent against -42 per cent of the category average.

While the fund tends to stay almost fully invested in equity, ever since the market crashed in January 2008, there has been an increase in cash levels. This should be expected since it has the leeway to invest up to 100 per cent of its assets in money market instruments on defensive considerations.

While the fund has not fully availed of this opportunity, in the six months leading to July 2008, the average cash holding has been 13.53 per cent, going up to 15 per cent in March and June. Even then, it was not insulated from the fall.

Where aggression is witnessed is in the churning of the portfolio. The fund manager gets in and out of stocks quite frequently with 32 of them making an appearance for just three months or less. His favourite picks include Crompton Greaves, Bharat Bijli, L&T and BHEL.

Its performance last year of 76.36 per cent, as against the category average of 59.52 per cent, could probably be attributed to smart sector allocations. Financial services and basic-engineering stocks began to gain prominence in the portfolio last year.

Between July 2007 and March 2008, the fund pruned its exposure to computer software stocks. During this time (July 1 - March 31), the BSE IT index fell by 27 per cent.

What’s prominent about this portfolio is an allocation of 40 per cent to large caps. This, coupled with the large number of stocks held across various sectors, makes it a safer option compared to other mid-cap offerings.

Though the average portfolio now comprises around 50 stocks, down from 69 (February 2007), there has been a discernible change in the weight of the top five holdings. During the initial days (2003), its allocation to the top five holdings stood at 32 per cent. Last year, the top five holdings, on an average, accounted for 21.21 per cent. This year it has averaged at a much lower 16.48 per cent.

Valueresearch

Insurance for Women

this letter by me was published in Financial Chronicle on 4th October 2008

MUTUAL benefit ¦
INSURANCE is essential to secure a financially happy future and it is quite shocking, to say the least, that women have little or no choice when it comes to insurance policies.

Here’s where the mutual fund industry comes into the picture. Funds like DWS Tax Saving Fund offer group term insurance without any medical examination giving cover up to 60 years and maximum of Rs 5 lakhs. Recently several MFs such as Kotak Star Kid, Reliance Sip insure, Birla Century Sip also offered free life insurance cover. Actually this works out cheaper compared to ULIPs. so, women do have a choice but only need to be awared of.

Srikanth Shankar Matrubai
Bangalore

Religare takes over Lotus Mutual fund

Dear all,
The news of Lotus Mutual Fund taken over by Religare was expected as Several Fund Houses were hit hard recently due to heavy Debt Redemption triggered by concerns on quality of Portfolio and, of course, Liquidity Crunch.
Normally, any deal has a winner and loser, but here I feel both the parties are winners because Temasek's heart was never in the Indian Mutual Fund industry (considering the way it had trouble since launch), and Religare badly wanted a pie of the lucarative and Growing Indian Mutual fund industry and this acquistion will give it a headstart.
Lotus was a late entrant and struggled to gain foothold against established players like Reliance, Birla, etc. Their focus since beginning was on Debt/Liquid funds. True, they did launch Equity Funds on a monthly basis, one after another, even coming up with a unique concept of Quant Fund to India, but it was all to take advantage of "hot" markets. Except for Lotus India Tax Plan, all their funds have failed to perform even on par with the Benchmark.
However, Lotus Mutual fund continued to be plagued by losses. And the Stock Markets seeing a Meltdown, and Debt Market too going through a liquidity crunch, Lotus was facing the barrel and had very little option than to sell out in the face of future clouded with uncertainty.

The biggest beneficiaty in this deal, to me, would be the Lotus Mutual fund Investors. They can now be sure of their funds being managed better.
Regards,
Srikanth Shankar Matrubai

Is it the right time to invest?

this is the most common question asked now. There were less people asking this question when the sensex was over 20,000. This is sad.

Equity is for the long term. Investment in equity/ equity funds depend only on 2 things -

1) Your asset allocation

2) Your age

3) Your horizon.

Once you have made an asset allocation according to your age & risk appetite -
you should start investing in equity/equity funds. So any time is right time. Please do not look at the sensex level. If the sensex is lower, it is better for you and there is a more compelling reason to start investing. Ideally you should invest only via SIP.
When you are entering a fund - you should not look at the NAV of the fund. You should look at only the performance of the fund in the last 3 to 5 years.
Similarly, do not look at the sensex levels. With inflation over 11% - equity is your best chance to beat it. If you are young - you can afford to be more aggressive.

One more thing I would like to add here is;;; …
While investing, never ever invest Borrowed Money, Always invest your own money and most importantly your spare money.
In fact, for some who crib that they have practically no saving and even 1000 saving is difficult, my answer is, would you have not adjusted the 1000 if you had to give as interest on a loan taken?
And don’t forget that there is even 100 sip available with Reliance Mutual Fund and Lotus Mutual Fund.
I don’t think any other investment will allow you such flexibility.
Go for Mutual funds and see your money prosper.
Best of luck.

Srikanth Shankar Matrubai

NRI asking for advise

Dear Srikanth,

We(me and my wife) are frequent visitors of your blog and find it an interesting read.

We need your advice and improvement suggestions for our investment strategy.

We, currently, live abroad and intend to live abroad for next 2 to 3 years. I am 30 years old and my wife is 29 years old. We both are working and planning for kids in near future. So, we may end up with a single salary, if required, on a temporary basis.


Our current investments are as follows :

1) Residential plot in India. (We do not have a residential house in India. We plan to construct in another 2 to 3 years)
2) Investments in direct equities (Not organised and hit by the current trend)

3) Some NSC, PPF and ULIP investments
4) Gold

To sum it up, we have not invested in a very organised way given that we are novice investors and lack knowledge. Currently, we are doing extensive research to put us back on track. Also, we would like to make use of the current market situation for good returns in a period of 2-3 years (mid-term for house, second property etc) and longer term investment for retirement, child etc.


Also, we have a loan of around Rs 10 lakhs at 6%. We can easily settle
it with the current liquid cash we have. However, given the low
interest rate of the loan we are unable to decide if it would be a good idea to settle the loan or make investments in India continuing with the EMIs.

Going forward, we could invest around Rs 1 lakh per month. We have shortlisted some of the investment avenues (please find attached file). Other than the SIPs(mid and long term) and FMPs, we would like to invest the balance amount in FDs or Gold. Your inputs would be highly appreciated and helpful.


Also, could you give us more insight of FMPs with current market scenario. We are apprehensive after the liquidity crunch and negative speculations from experts in various forums.

Best Wishes and Regards,

Name withheld on request....




SRIKANTH SHANKAR MATRUBAI advised .............

Dear S,
Thank you for your kind words.
Age is on your side, even then it is always a good idea to have a goal and plan your savings and investments accordingly. Thankfully, you have realised your lack of organised investments and looking for advise, which is a sure sign of mature heads working.

a). Residential Plot : You should consider constructing a house on the plot straightaway and give for rent till you actually decide on settling here. As and when your wife stops working (albeit temporarily), this rental income could supplement (at least partially) the salary she would have been earning.
b). Investment in Direct Equities : Not recommended. Unless you are buying for long long term and able to actively monitor your investments, you are better off investing through the Mutual Fund route for exposure to direce equities.
c). Sure go for NSC, PPF, ULIPs, but ensure they make just a token presence to your portfolio.
d). Gold. Gold is Gold. Invest. Preferably through ETFs as they are not only cost effective but also tax efficient. Make sure they do not make more than 10% of your overall portfolio.

Do continue your loan. At 6%, you are better off continuing and investing the liquid cash in other assets to earn more. I do hope your interest is a fixed one and not a floating one.

I went through your shortlisted Funds.

1. DWS Investment Opportunity Fund - Invest.
Has a good track record and is expected to be an outperformer.

2. DSPML Top 100 Equity Fund - Invest.
This too have very very good track record and has been very consistent in its performance. Expect it to be an outperformer.

3. ICICI Pru Infrastructure fund - Avoid.
This fund has had a great track record. But do avoid investing in Theme/Sector Fund. Going forward, I do not expect Infrastructure to outperform the Broader Markets. You are better off investing in some other Diversified Equity Funds.
You can consider
Birla sunlife Equity Fund
Fidelity Equity Fund
Reliance Growth Fund

4. Sundaram Select Focus Fund - Invest.
This fund is a "Must Have" in everyone's portfolio.


I also appreciate your pegging of growth expectation at 15% average. It is a definetly achievable target.

However, I am surprised at your Expected Growth of 15% to 20% in Debt and Gilt funds. Yes, surely, with the declining interest rates, these funds are expected to give returns in excess of 12% going forward. But, I do not expect them to maintain the same rate of returns for more than 2 years, maximum. You may scale down your expectation to a more realistic 10%.
Although I personally feel that the liquidity crunch will not affect the FMPs very much, and I also I do not approve the negative speculations from experts(?), I would rather have you invest in Long Term Income funds and also Arbitrage Funds (UTI Spread Fund) which do give returns in the range of 8-10%.

Best of luck,
Srikanth Shankar Matrubai

Recession for me

Dear all,
I found this very interesting article while browsing the net. Read and enjoy........




O n the day (October 17) Sensex lost 606.14 points or 5.73 per cent and closed at 9975.35, I met one of my friends in a birthday party. He loves giving advice on stocks.

He has been investing in stocks for the last seven years and believes that he understands the pulse of the market to perfection.

Unlike other days, he looked quite upset that day. He drank a lot in that party. When I asked him why was he looking so upset, he said that he had lost everything in the latest meltdown on the Dalal Street. As he is quite a fun-loving person, he related his saga of woes in a rather comic manner.

“I don’t know what to do now. Shall I consume poison or beg for food? After investing in stocks, today I am neither a bull nor a bear. In fact, I think I am a dog, who has no role to play in the market. Every day, my wife bursts out on me. I lost all her money and jewellery in the market, too. Leave alone the economy, I think my recession has already begun,” he said.

He said he had invested in many blue chip stocks, such as Pantaloon, Powergrid, Orbit, ITC, LIC Housing, Maruti, Reliance Communications, Ranbaxy, Reliance and Jet Airways, hoping that he might gain something somewhere in this volatile market. But everything went haywire.

True to his nature, he continued his sad tale in a comic vein. “I bought into Pantaloon, I lost my pants. I bought LIC Housing, I don’t have money to pay the EMI of my house. I invested in Maruti, I had to forego my car. I bought Jet Airways, now flying has become a dream for me, I bought ITC, I don’t have money to buy cigarettes.” Finally, he said, “I am still living, because I bought Ranbaxy, and am left with no money to buy poison.”

Need advise on my fund portfolio

Need advise on my fund portfolio
Mr.Sachin Dantulwar wrote :
Hi Srikanth,
I just gone through your blogs and thought of getting your expert advice.Please let me know if i need any change in my mutual fund portfolio. i started investing from dec 2007 and right now incurring loss of 60 k out of 143 k. i have SIP for SBI MAGNUM BALANCED FUND - GROWTH , HDFC EQUITY FUND - GROWTH PLAN & RELIANCE GROWTH FUND - GROWTH PLAN - GROWTH OPTION


Scheme Category Profit/ Loss %
HDFC PRUDENCE FUND - DIVIDEND PLAN Balanced -40.73
HDFC PRUDENCE FUND - GROWTH PLAN Balanced -42.93
SBI MAGNUM BALANCED FUND - GROWTH Balanced -32.76
DSP MERRILL LYNCH T.I.G.E.R FUND - GROWTH Equity Others -52.65
HDFC EQUITY FUND - GROWTH PLAN Equity Others -37.06
RELIANCE GROWTH FUND - GROWTH PLAN - GROWTH OPTION Equity Others -43.15
SBI MAGNUM GLOBAL FUND-GROWTH Equity Others -63.55
SBI MAGNUM TAX GAIN SCHEME - GROWTH$$ Equity Others -51.79
ICICI PRUDENTIAL INFRASTRUCTURE FUND - GROWTH Equity- Sectoral -51.23
SUNDARAM BNP PARIBAS CAPEX OPPORTUNITIES FUND - GROWTH Equity- Sectoral -56.54
--
Thanks & Regards,
Sachin Dantulwar


SRIKANTH SHANKAR MATRUBAI advised :

Dear Sachin,
You have started your investment right at the peak of the Bull Run, and it is no surprise that your investment is down by more than 50%.
This meltdown has left many investors scarred and your portfolio is no different. Your portfolio is a mix of good and bad funds. Continue with your good funds like HDFC Prudence Fund, HDFC equity, SBI Balanced, etc. And, even at a loss, switch from bad funds like Infrastructure funds. These are not bad funds, per se. But, in the foreseeable future, they may still continue to be underperformer. So, with this in mind, it is advisable to switch out even at a loss, as your recovery in the other funds will be faster than continuing with the existing funds.
HDFC PRUDENCE FUND - Continue
HDFC PRUDENCE FUND - Continue
SBI MAGNUM BALANCED FUND - Continue
DSP MERRILL LYNCH T.I.G.E.R FUND -
Switch to DSPML Equity Fund
HDFC EQUITY FUND - Continue
RELIANCE GROWTH FUND - Continue
SBI MAGNUM GLOBAL FUND-
Switch to SBI Bluechip Fund
SBI MAGNUM TAX GAIN SCHEME - Continue
ICICI PRUDENTIAL INFRASTRUCTURE FUND
Switch to ICICI Dynamic Fund
SUNDARAM BNP PARIBAS CAPEX OPPORTUNITIES FUND -
Switch from Sundaram Capex Fund to Sundaram Select Focus Fund.

Continue your existing sips, as they are all into good funds. As soon as your existing sip in HDFC Equity fund ends, add HDFC Top 200 fund. Also, As and when fianaces permits, add the following funds, either through lumpsum or sips, preferably through sips.
Birla Sunlife Equity fund
DWS Alpha Equity fund
Fidelity Equity fund
Templeton India Equity Income Fund
HSBC Equity Fund

for tax funds, invest in
DWS Tax Saving Fund (added bonus of Free Life Insurance 5 times your investment).
Sundaram Tax Saver

Do continue your sips and stay invested for at least another 2 years, when things will be difenitely better.
Best of luck,
Srikanth Shankar Matrubai