Advise on My Portfolio...

My old friend Akhil sharma wrote :


Hi Sir,

Hope you are doing really well and your Family and loved ones are in the Pink of Health.
I've finally thought of starting a new SIP in Fidelity Equity Fund.

As of now i'm invested in the following funds:
Sundaram Capex Opportunities - Rs.5500 ( Latest Value :Rs. 3156 )

Reliance RSF Equity - Rs.5000 ( Latest Value :Rs. 2753 )

Reliance Diversified Power - Rs.5000 ( Latest Value :Rs. 2434 )

Kotak Indo World(Closed Ended)- Rs.5000 ( Latest Value :Rs. 1982 )

ICICI Pru Infrastructure Fund -Rs.5000 ( Latest Value :Rs. 2407 )


This is as per My Portfolio On MoneyControl Website.

My question is should i redeem from all of these Funds and invest at a single place or should i stay Invested in them and wait for recoveries.

The thing i'm thinking here is even these funds will have to come to that NAV on which i invested(which have actually fallen by 50%) to give me a NO Profit- No Loss situation.Then my Funds will start giving me returns.That may take a lot of time.Although i have long term horizon of minimum 3-4 years but still should i redeem from these funds and invest the whole lumpsum amount(whatever i finally get!) in a good fund like DSP BR TOP 100 Fund.

NOTE: It has been 14 months approximately that i have invested in these funds.


SRIKANTH SHANKAR MATRUBAI replied :

Dear Akhil,


Well Akhil, better late than never. It is indeed good news that you have thought of starting a SIP in Fidelity Equity fund. This Fund has been a favourite since its launch and it has not disppointed me.
I am surprised by your existing investment. Inspite of being in touch with me, I wonder why you have had so much exposure to One Sector (Infra)???. In fact, expect for Reliance RSF Equity, all your other investments is in those Funds which are directly investing in Infrastructure related stocks. You need to diversify and diversify soon. Thankfully, all your investments have around 5000 and not more.
I will analyse each of them one by one :
Sundaram Capex Opportunities Fund : Even at loss, prefer switching to better performing Sundaram Select Focus Fund.

Reliance RSF Equity : Continue for now

Reliance Diversified Power : Again a Sector Fund. Consider Switching to Reliance Growth Fund

Kotak Indo World : Being Close ended, no option but to continue your investment. Take a call when the Fund becomes Open Ended.

ICICI Pru Infrastructure Fund : Among the Better Performing Infrastructure Funds. I would have had no hestitation in suggesting you to switch to ICICI Dynamic Fund, but for your Age profile (24) and Risk Profile, I suggest you to Continue your holding in the same for the time being.

No need to take hasty decision like Selling all the Funds at one go and investing the whole proceeds into other funds (your choice DSPBR Top 100 fund, by the way, is good), would not be such a Bright Idea.
Instead, consider the above switches and wait for better times. In future, invest only in Well Diversified Equity Funds and preferably invest through SIPS.
Best of luck,
Srikanth Shankar Matrubai.


Visit my blog
http://goodfundsadvisor.blogspot.com


Visit http://goodfundsadvisor.blogspot.com for Mutual funds
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NOT ALL NFOs ARE BAD

This letter written by me was published in Outlook Money Magazine.

In the 9 April 2008 issue of the Outlook Money magazine, the article "Why have NFOs lost their lustre"? made interesting reading. However I beg with the author with some issues. Avoiding all NFOs would not be a very wise thing to do. You have to invest in some NFOs which are exceptions to the existing schemes like DSPML World Gold Fund, etc especially if they are Close-ended funds because you may not be able to invest in the fund for another 3 years.
Also, the author says that some fund houses give even upto 8.5 percent commission to distributors. I myself being a distributor have never come any fund house giving even 5%!!!! He should be careful before writing such non factual informations.

Thanking you,
Srikanth Matrubai


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- Retirement Planning and Son's education

Neha Agarwal wrote :
Dear Sir,
I Just came across your blog and read few suggestions and i really want to say thank you for all your valuable advise to the investors.
I am 32 years old and I have invested in mutual fund by starting from Rs. 500/- from one fund in 2005 and increased year by year. All the funds are having growth option. My investment horizon is +15 years.
I am having 3 year old son and I am investing for retirement and son’s education.
I am the only earning member of my family having 5 members including me.
I am having a housing loan of Rs. 12 lakhs outstanding as on today. I am repaying the principal of housing loan as an when possible.
Please analyse my portfolio and give me the feedback on the funds which I am having and suggest me if I am able to meet my goal.
I am having Life Insurance of Rs. 14, 00,000/-.
I am having following SIP.
The bold ones are the core portfolio as per my views.
Reliance Equity saving – Rs.500/- from 2008
Reliance Growth – Rs.1500/- from 2008 and Rs 500/- from 2006 to 2008
Reliance Vision – Rs.1000/- from 2008 and Rs.500/- from 2006 to 2008
Reliance Diversified Power – Rs.500/- from 2007
Sundaram Select Midcap – Rs.1000/- from 2008 and Rs 500/- from 2006 to 2008 Sundaram India Leadership – Rs.500/- from 2006
Sundaram Select Focus – Rs.1000/- from 2008
Sundaram Capex – Rs.1000/- from 2008 and Rs 500/- from 2006 to 2008
SBI Contra – Rs.500/- from 2005
DSPML tax saver – Rs.1000/- from 2008 and will discontinue as I don’t require any ELSS.
DSPML top 100 – Rs.1000/- from 2008
Kotak Tax Saver – Rs.500/- from 2007 to 2008
HDFC top 200 – Rs. 1000/- from 2008
ICICI Infrastructure Rs. 1000/- from 2007.


I had also invested in following NFO

Reliance Long Term Advantage – Rs. 5000/-
Reliance Natural Resources – Rs. 5000/-
DSPML Mid and Small Cap – Rs. 5000/-
Sundaram Select thematic Energy – Rs. 5000/-
Sundaram Equity – Rs. 5000/-
Sundaram Small Cap – Rs. 5000/-
J M Contra – Rs. 5000/-
Birla Long Term Advantage Fund – Rs. 5000/-
HDFC Midcap – Rs. 5000/-
SBI Tax saver series I – Rs. 15000/-
SBI Blue Chip – Rs. 5000/-
UTI Contra – Rs. 5000/-
UTI Infrastructure Series I – Rs. 5000/-
My question is am i too much betting on Sundaram BNP Paribas</span>?The core portfolio which i indiacted in Bold is it correct ?
I am planning to shift my equity MF investment to balance fund at the age of 45. if this is correct ?
Regards
Amit & Neha





SRIKANTH SHANKAR MATRUBAI advised :

Dear Amit and Neha,

First of all, I thank you for your kind words on my blog.
It is good to see that your faith in Mutual Funds has not diminished even after the mauling the Stock Markets has received in 2008.
Before analysing and commenting on your portfolio, I take pleasure in appreciating on your foresight for creating a Buffer for your Retirement and Son's education.

ANALYSIS AND COMMENTS:
Shockingly, you have got 27 funds in your portfolio. You seem to have become a "collector" of funds. Your portfolio needs a complete overhaul. Some funds are outright sell, even at a loss.
I will go through each fund one by one.
1. Reliance Equity Saving (Sip 500 from 2008) :
Probably you mean to say Reliance Regular Savings Fund (Equity). This fund has had a terrific 2007-08 and since then like other funds, has taken a big beating. This fund focusses on Mid-caps and Samll Caps. I advise you to STOP your SIP in this fund immediately.

2. Reliance Growth :
This fund has been a Star Performer since inception. Though it faltered in 2008, looking at its portfolio, I continue to maintain a positive view on the Fund. CONTINUE.

3. Reliance Vision :
This Fund has been living on Past Glory. STOP YOUR SIP.

4. Reliance Diversified Power :
I am never in favour of Theme/Sector Funds. STOP YOUR SIP.

5. Sundaram Select Midcap :
A Great Performer which has gone off-track of late. AVOID. STOP YOUR SIP.

6. Sundaram India Leadership :
CONTINUE.

7. Sundaram Select Focus Fund :
A Truly Quality Performer and Must Have in everyone's portfolio. CONTINUE.

8. Sundaram Capex Fund :
Could struggle going forward. Best to Avoid and STOP YOUR SIP.

9. SBI Contra :
Not a Contra Fund in True Sense. More of a Diversified Fund with a Large Cap Bias. CONTINUE YOUR SIP.

10. DSPBR TAX SAVER :
As you do not require any ELSS, it is good that you are discontinuing.

11. DSPBR TOP 100 :
Excellent Performer in Both Bull and Bear Markets. CONTINUE.

12. KOTAK TAX SAVER :
Has been an average performer. Switch to K30 fund on completion of Lock-in period.

13. HDFC TOP 200 Fund :
One of my favourites. Has been a very very consistent performer. CONTINUE YOUR SIP AND ADD MORE IF POSSIBLE.

14. ICICI INFRASTURCTURE :
One of the best Infra Funds. But does not deserve to be a part of Core Holdings, especially since you are the sole earner. STOP YOUR SIP and switch to other funds suggested below. Under the Same Fund House, you can switch to ICICI Growth fund.

NFO :

Reliance Long Term Advantage – Rs. 5000/- (After Lock-in Period is over, switch to Reliance Growth)
Reliance Natural Resources – Rs. 5000/- (Retain your holdings. The fund should start delivering as it still holds significant cash and has invested in Quality Stocks)
DSPML Mid and Small Cap – Rs. 5000/- (Even at a loss switch to DSPBR Top 100 Fund)
Sundaram Select thematic Energy – Rs. 5000/- (Take a decision when the Lock-in Period ends.. which is still 2 years away)
Sundaram Equity – Rs. 5000/- (Continue to hold as the Fund has performed better than its Benchmark and has good holdings in Large Cap Blue Chips)
Sundaram Small Cap – Rs. 5000/- (Holds nearly 93% in Small and Mid Caps which do not promise a bright future. Better to switch even at a loss to SUNDARAM SELECT FOCUS).
J M Contra – Rs. 5000/- (Has a taken a huge beating. No Other option but to wait and pray for better times. )
Birla Long Term Advantage Fund – Rs. 5000/- (Close-ended. Take a call when the Fund becomes Open ended).
HDFC Midcap – Rs. 5000/- (Close-ended. Take a call when the Fund becomes Open ended).
SBI Tax saver series I – Rs. 15000/- (Close-ended. No other option to stay invested)
SBI Blue Chip – Rs. 5000/- (Even though invests in Blue Chip, has not had a great run. But its holdings do inspire some confidence. Continue to hold and take a call after a year)
UTI Contra – Rs. 5000/- (Even at a loss switch to UTI Dividend Yield Fund)

UTI Infrastructure Series I – Rs. 5000/-(Even at a loss switch to UTI Dividend Yield Fund)

Out of your existing ongoing SIP of Rs.11500, I have suggested you to stop Rs.5000 and Rs.1000 will be stopped from DSPBR Tax Saver.

For this 6000, I suggest you to invest in the following funds
HDFC PRUDENCE FUND (1000 * 2 sips at different dates)
FIDELITY EQUITY FUND (500 * 4 sips at different dates)
BIRLA SUNLIFE EQUITY FUND (1000 * 2 sips at different dates)

so, ultimately your CORE portfolio will look like this....


RELIANCE GROWTH FUND
SUNDARAM SELECT FOCUS FUND
SUNDARAM INDIA LEADERSHIP FUND
SBI CONTRA
DSPBR TOP 100 FUND
HDFC TOP 200
HDFC PRUDENCE FUND
FIDELITY EQUITY FUND
BIRLA SUNLIFE EQUITY FUND

If you observe, I have added a Balanced Fund HDFC Prudence Fund to your Core portfolio and your portfolio now looks tilted towards Large Caps, which is how it should be.

Continue to retain your existing holdings in the Funds where I have suggested to STOP YOUR SIP. Do try to reduce/sell out when the situation improves and shift to Quality Funds as suggested.

Your Life Insurance Coverage of 14Lakhs looks inadequate to me, especially when seen in the backdrop of you being the only earning member in a Family of 5.

Try to get a Term Insurance, as this is the Cheapest Form of Insurance.

Also while investing in Reliance Growth and Birla Funds, there is Free Life Insurance available, get the details about the same from your Mutual Fund Advisor and invest through them, which will also increase your Life cover.

Rebalance your portfolio periodically, ideally, every two years. Make a gradual shift from Equity Heavy to Balanced and then to Debt Heavy, without compromising on returns/risks.

Do consult your Financial Advisor before taking action on my suggestions.
Best of luck,
Srikanth Shankar Matrubai




Visit http://goodfundsadvisor.blogspot.com for Mutual funds
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SAFE DEBT FUNDS FOR AN NRI

Mr.Tyagi wrote :
HI, Mr.Srikanth,



First of all I cannot fin dout any space in your blog where I can ask questions. Can u educate me where am I suppose totype in my question?



My actual question is I'm a NRI and woul dlike to park my money in safe Debt funds. Can you suggest some safe Debt funds that I can invest in? Also let me know is it safer to invest in Long term debt funds or short term debt funds?



REgards

Thyagi

SRIKANTH SHANKAR MATRUBAI replied:

Mr.Tyagi,
I am not a Technical Person, hence there is no provision to type your question in my blog. My email is the only solution.
Your idea of investing in Debt Funds is very good considering the State of Equity Markets today. And moreover, Indian Debt Securities offer Higher Interest Rates compared to Developed Markets making the Debt Funds an attractive Option.
While investing in Debt funds, please note that the Currency Rate Fluctuations could also affect your returns. Another Caveat is that Debt Funds are not risk-free like Bank Fixed Deposits. However, an Appreciating Rupee would obviously work in your favour.
Considering the Falling Interest Rates, you would be better off investing in Long Term Debt Funds rather than Short Term as these would not yield much.
My Top Picks would be
ICICI Prudential Income Opportunities Fund
Birla Sunlife Income Plus
Canara Robecco Income(Growth) Fund
and my all time Favourite
HDFC Income Plan

You could also consider investing in TATA Capital NCD which is giving Attractive Rate of 12%. You can see more details about the same in my blog http://goodfundadvisor.blogspot.com
Best of luck,
Srikanth shankar Matrubai



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SHALL I INVEST IN TATA CAPITAL NCD?

Ms.Shalini asked :
Dear Sir,

What are NON-CONVERTIBLE DEBENTURES (NCDs)?
How safe are Tata capital's recently open secured NCDs? Is Income from them is taxable?

Shalini

SRIKANTH SHANKAR MATRUBAI replied :
Dear Shalini,
How are you?. I remember answering your query in August last year. Hope you are sticking to your investment in HDFC Top 200 Fund....
Non Convertible Debentures (NCDs) are those that cannot be converted into equity shares of the issuing company, as opposed to Convertible debentures, which can be. Non-convertible debentures normally earn a higher interest rate than convertible debentures do. NCDs have a fixed maturity.

Tata Capital has come out with a NCD issue of Rs.500 Crores with an option to retain oversubscription of upto 1000 crores. It offers an attractive interest rates : 11% for the monthly option, 11.25% for the quarterly option and 12% for the annual or cumulative option.
Due to Strong Promoters and Tax Benefits (due to listing in NSE), no TDS and relatively easy liquidity, I recommend you to consider investing in this NCD.
The NCD is secured and shall rank pari passi with other credit holders. Even Banks and Company FDs do not offer this safety. The Company also proposes to create a Debenture Redemption Reserve towards maturity. The NCD offer is also rated by ICRA at LAA+ indiciating Investment Grade.
The NCD offers Monthly, Quarterly, Annual and Cumulative Options. Of all the options, the cumulative option appears most attractive, as it allows investors to reinvest the interest proceeds at high coupon rates of 12 per cent. This instrument is shielded from the interest rate and re-investment risks. For Rs 10,000 invested today, a cumulative amount of Rs 17623 pre-tax can be earned at the end of five years.
Best of luck,
Srikanth Shankar Matrubai

Visit http://goodfundsadvisor.blogspot.com for Mutual funds
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ULIP/Mutual Fund, which is Preferable??

Mr.Badrinath wrote ;

Dear Friend,

I Saw your blogspot its realy very attractive. This year i am planning to invest 6,00,000 rupees every year for 20 years for my kid education, according to you which is most preferable ULIP Child Plan or Mutual Fund




Please send me if you have any comparisions about the Mutual fund and ULIP



Thanks and Regards,


Badarinath C.R.
Bangalore


SRIKANTH SHANKAR MATRUBAI replied :
Dear badrinath,
First of all, thank you for you very nice words on my blog.
Before answering your question, I happened to go through your blog (http://badrirathod.blogspot.com). I was shocked. You are aged 24-25, if I am not wrong. And you already have a kid!!!. Good.
And now, 6,00,000 per annum means a saving of Rs.50,000 per month. A Huge Saving Indeed for a Assistant Manager in a Bank. I was in a dilemma. It is not a big headache suggesting ULIP/Mutual Fund. But what stopped me, how come a person with MBA in Finance Specialisation is asking for my advise. Then it stuck me, Yes, you want to TEST my knowledge and maybe try to make a fool out of me.
So, sorry, Mr.Badrinath. I do not feel you are asking this question with any sincerety. You yourself are competently qualified to advise yourself and would definitely not need my advise. If you still feel you do, do visit my blog and under the tag "Financial Planning", you will find number of advises similar to your query.
Best of luck,
Srikanth shankar Matrubai


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SUGGEST BEST TAX SAVING FUNDS

Mr.Sumit Gupta wrote :
Hi,

I am looking to invest around 35-40k in MF to avail the tax saving as well.
searching the option around about now, i got SBI Magnum Tax Gain (Dividend), i can go with now.
could you please suggest some good investment now, looking the market scenario




Thanks & Regards
Sumit Gupta

SRIKANTH SHANKAR MATRUBAI replied :
Dear Sumit,
Mutual Funds are the best avenue for Tax Savings.
The Best ELSS/Tax Saving Fund is that which is not Baised towards any Sector or Theme and my Pick would be :
1. Birla Sunlife Tax Relief 96 Fund
2. DWS Tax Saving Fund
3. Fidelity Tax Advantage Fund
4. Franklin Tax Shield fund
5. Principal Personal Tax Saver
6. Sundaram Tax Saver
I am not in favour of SBI Magnum Tax Gain 93, which is everyone's favourite, mainly because of its bloated fund size.
My favourite in recent past has been DWS Tax Saving Fund, not only because of good performance since its inception but also because it offers Free Life Insurance upto 5 times your investment.

HDFC Tax Saver is also a good choice but keep in mind that it is a Mid-Cap Oriented Fund.
Franklin Tax Shield has not been performing very well since the last 2-3 years but due to its Focus on Large Caps, it should be a Good Performer going forward.

Best of luck,
Srikanth shankar matrubai,




Visit my blog
http://goodfundsadvisor.blogspot.com



Visit http://goodfundsadvisor.blogspot.com for Mutual funds
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GOLD CONTINUES TO GLITTER...

The Uncertain times, we are living in, is reinforcing that Gold as the Best Investment Option in times of Distress. Gold Share indices have nearly doubled from October 2008 lows, though Gold has been up by 35%. The strong investment interest in gold has been fueled by concerns about the falling health of the US financial system. US President Obama's stimulus package is not enthusing many.
In these times of tight liquidity, many were pleasantly surprised when Gold Major Newmont's $1.5 billion deal sailed through quite easily, indicating renewed interest in Gold Companies.

The increasing printing and supply of US Dollar will only make the Dollar depreciate further making Gold all the more attractive. Gold's limited supply, rising demand is only adding fuel to the fire. And with the Marriage Season on in India, the World's Largest consumer of Gold, Gold seems to be only on one direction, up.

GOLD FUNDS ARE A GOOD OPTION :
Instead of buying Gold Directly with its associated quality risks, you have the option of Buying Gold through Gold ETFs. Here you do not face the problem of either Storage Risk or Quality Risk as the Gold is bought and sold in Paperless Form. And moreover, it is tax efficient too.

Apart from Gold ETFs, you have the option of investing in Gold Equity Funds like AIG World Gold Fund and DSPBR World Gold fund, which invests in stocks of Gold Mining Companies worldwide. These Funds, however, tend to be more volatile compared to Gold as their fortune also depends on the Equity markets. And, as they invest overseas, they also face Currency Risk. Thus, invest in these Funds, only if you ready to ride out volatility. These Funds are for Medium Risk-Medium Return type of Investors. For others, there is always Gold ETFs like UTI Goldshare, Reliance Gold, etc.

Best of luck,
Srikanth Shankar Matrubai,
Bangalore

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SUGGEST ME GOOD TAX SAVING FUNDS

Mr.Naveen Ekbote Wrote :
Hi Srikanth,

Nice to know you work on mutual fund investments.

I have made two SIP investments of Rs.1000 each in HDFC Tax saver and Franklin templeton Tax saver from last 1 1/2 year. Unfortunately I have lost heavily due to fall in the stock market. Almost to the tune of 50%. Do you suggest to hold on for lock in period of 3 years? What is your suggestion.

I also want to take one Mutual fund SIP in my wifes name which gives tax benefit. Pls suggest.

Thanks

Naveen

SRIKANTH SHANKAR MATRUBAI replied :
Dear Naveen Ekbote,
Thank you for you nice words.

Both of your SIP investments, HDFC Tax Saver and Franklin Templeton Tax Saver are going into good funds. Though I am not so pleased with the performance of Franklin Templeton Tax Fund.
This Market Meltdown has not spared anyone and you are no exception. My sympathies are with you. You have got no other option but to stay invested till the lock-in period of 3 years. Unlike other Tax Saving Tools, Mutual Fund Equity Linked does not allow you prematural withdrawal. In a way, this is good as Equities tend to deliver better returns over longer periods of time.
Consider stopping your existing SIP in Franklin and starting a SIP in Sundaram Tax Saver which has been a very consistent performer.
To invest in your wife's name, I would have been happy if you have given your goal, term for the investment. If you wife does not have any Insurance and is under insured, start with investment in DWS Tax Saving Fund (offers Free Life Insurance 5 times your investment amount) or Birla Sunlife Tax Relief 96 (which too offers Free Life Insurance)

For details on the above schemes/offers, you visit my site http://goodfundsadvisor.blogspot.com

If Insurance is not an issue, but Returns are, then you should consider investing in Fidelity Tax Advantage Fund or Principal Personal Tax Saver or Sundaram Tax Saver Fund among others.
Best of luck,
Srikanth Shankar Matrubai,
Bangalore

Visit http://goodfundsadvisor.blogspot.com for Mutual funds
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