Templeton India Equity-SIP: Advice needed

SURESH wrote
Hi,

I am investing thru`SIP (for 12 months) Rs1000/pm in TEMPLETON INDIA EQUITY INCOME FUND DIVIDEND PLAN since Jan`08 but off late I have noticed that rating for this fund has gone down to 3* in money control and in value research on line it is unrated,kindly advice whether I can continue till Jan`09 or cancel and go for better MF.

Need your valuable advice.

Rgds
Suresh

SRIKANTH SHANKAR MATRUBAI advised
Dear Suresh,
Templeton India Equity Income Fund invests largely in International funds of High Yielding Dividend Stocks. This ia a good diversification and before the market termoil, the fund was doing exceeding well. Its performance lately has been lacklustre due to meltdown in stocks worldwide. Still, it has outperformed even in this downfall. And, more importantly, its recent underperformance has also been due to the Strong Dollar. As you may be aware, Dollar is expected to correct very sharply to sub 40 levels which would give a BIG boost to the NAV of the fund. As such, not only can you stay invested in the fund but also can continue the same when the time for renewal comes up.
However, it would have been better if you had given your full portfolio for a much deeper analysis.
Best of luck,
Srikanth Shankar Matrubai

Good Funds in these Crisis Times....

One blogger Mr.Kumar, queried :
"

Sir,

Your blog has really helped me gain a fair amount of knowledge about mutual funds.

In this time of crisis, please let me know which MFs are good to buy. After buying them, I can wait for a minimum of 3 years. I am new to MFs, about 7-8 months ago bought SBI's Tax gain and Tax advantage, each 25k worth, one time investment, both not doing well, and recently about 2 months ago bought 5k worth of Reliance Natural Resources growth fund units. I can invest/save about 10k per month. Please advise me as to which funds I can invest in at the moment. Thank you.

G S Kumar


SRIKANTH SHANKAR MATRUBAI advised :

Dear G,
Your present investments are not doing well in line with the market. So, there is no point in worrying about them. You seem to have invested during the peak of the markets and hence the decline. Out of your 3 existing funds, two, namely, SBI Tax Gain and Reliance Natural Resources Fund are good and can be held on. However, SBI Tax Advantage is not a good investment, moreover, it is a 10 year Close ended Fund. You have very little option, expect to hold on this fund also.
While 3 years is a good enough time for a fund to deliver above average market returns, it would be wise if you spread your investment into 5 fund with 2000 each. Go for different dates.
My pick of funds for you are :
1. Birla sunlife equity Fund
2. DSP Top 100 Fund
3. Fidelity Equity fund
4. HDFC Prudence Fund
5. Sundaram Select Focus fund
You can split your sips into 1000 each (500 in Fidelity and Sundaram) and invest on different dates to take maximum advantage of NAV Volatility and earn that extra. \
Best of luck,
Srikanth Shankar Matrubai

Negative Returns in Liquid Fund??????

Dear All,
Recently, Business Standard carried a article where it claimed that a Liquid Fund from Edelweiss Mutual Fund has posted a Negative NAV. I was stumped, how can this happen?. It was next to impossible.
Thankfully, Edelweiss People responded with a email clarifying things. This is how their email went :

From: EdelweissMF
Sent: Wednesday, October 15, 2008 11:43 AM
Subject: IMPORTANT: Clarification on today's article in Business Standard
Importance: High

Dear Sir / Madam,

With reference to the article on "Edelweiss Liquid Plus Fund Dividend Fortnightly " having seen negative returns in Business Standard today, please note that this data is factually totally incorrect and incomplete. While the source of data is valueresearch and from a factual point of view, the NAVs mentioned are right, the interpretation of data by the journalist is absolutely wrong and irrelevant. The journalist has first of all compared returns of the dividend option (instead of growth as is the industry norm). Moreover, he has incorrectly presented this incomplete data. The reason why there is a fall in the NAV is because of a declaration of dividend on Monday, the 13th of October on the Friday NAV. Obviously if a dividend has been declared in any scheme, the NAV will fall to the extent of the dividend declared and that is exactly what has happened in this case.

Please not that there has not been even a single day of negative returns in either the Edelweiss Liquid Fund or the Edelweiss Liquid Plus Fund till date.

Enclosed are the returns as on October 13th 2008 of both Edelweiss Liquid Fund and Edelweiss Liquid Plus Fund:

SIMPLE ANNUALIZED RETURNS FOR EDELWEISS LIQUID FUND
Scheme Name	NAV (13-Oct-08)	1 Week	2 Weeks	1 Month	Since Inception
Edelweiss Liquid Fund - IP - Growth	10.1109	11.7329	12.9828	11.9325	11.9054
Edelweiss Liquid Fund - Ret - Growth	10.1108	11.4223	12.7747	11.8958	11.8947
Edelweiss Liquid Fund - Super IP - Growth	10.1109	11.4739	12.9568	11.9202	11.9054
Crisil Liquid Fund Index		5.1966	7.854	8.1131
ABSOLUTE RETURNS FOR EDELWEISS LIQUID PLUS FUND
Scheme Name	NAV (13-Oct-08)	1 Week	2 Weeks	1 Month	Since Inception
Edelweiss Liquid Plus Fund - IP - Growth	10.1065	0.2152	0.4253	0.957	1.065
Edelweiss Liquid Plus Fund - Ret - Growth	10.1062	0.2152	0.4253	0.953	1.062
Indices
Crisil Liquid Fund Index		0.0854	0.2797	0.6446
Source: www.mutualfundsindia.com

Returns are computed of the growth options of the respective schemes. Past performance may or may not be sustained in future. Such information is not necessary indicative of future results and may not necessarily provide a basis for comparison with other investments.

Both Edelweiss Liquid and Liquid Plus Funds continue to outperform their benchmark across various time frames.

We look forward to your continued patronage of our funds.

Warm regards,

Marketing@EdelweissMF

And, wonder of wonders, Business Standard carried the Clarification the next day.
Thank God for small mercies.
Srikanth Shankar Matrubai

Want to have 2 crores in 10 years

Blogger Prathibha Mahesh asked :
Please review my portfolio and advice on my next financial move.

Age 30

Looking for a retirement kitty of 2 Crores by 40.

Current Investments:

SIP 25 K per month ( Current Value : 5.75 Lakh )

Fidelity Equity Fund - Gr 2500
HDFC Equity Fund - Gr. 10000
HDFC Prudence - Gr. 10000
Reliance Vision Fund Gr 2500

ICICI Life Time ( 30k Per Year Started in 2003 ) Current Value 1.9 Lakh

PF 2.9 Lakh
PPF 1.04 Lakh
401 K : 1.07 Lakh ( will be investing here for next 2 years to get company match as I am in US right now )
NSC : 10 thousand
Flat in Bangalore bought in 2004 for 15 Lakh. Current Price is around 35 Lakh. Loan Amount left 5.9 Lakh 13.5% interest

Fixed Deposit : 8 Lakh
Emergency Fund : 2.3 Lakh
Stocks : 30K

I want to invest another 10 K per month through SIP. Pls suggest some funds.

Thank you,
Pratibha Mahesh



SRIKANTH SHANKAR MATRUBAI advised :
Dear Pratibha Mahesh,
You seem to be on the right track to accumulate 2 crores in about 10 years time. Your present sip investments are all very good, a tad conservative I feel. However, because of this, you have been saved the pain of the BIG downturn other funds had to face. Going forward, you should consider switching your 10000 sip of HDFC Equity into two sips of 5000 each in
Sundaram Select Focus Fund
Birla Sunlife Equity Fund.
Since your goal is 10 years, you do have sufficient time on your hand to allow your fund to grow. Your 25k sip should at a conservative estimated return of 15% easily give you 65lakhs.
You intend to invest another 10k per month, so your investment of 35k per month should give 92 lakhs in 10 years time at a conservative return assumption of 15%. So, you are on the right track.
You also need to rejig your existing 25000 sip. So, ultimately your 35000 sip should go to the following funds, in the manner explained:
Birla Sunlife Equity fund -- 5000
DSPML Top 100 Fund -- 5000
HDFC Prudence Fund -- 7500
HDFC Top 200 Fund -- 5000
Reliance Growth Fund -- 5000
Reliance Natural Resources Fund -- 2500
Sundaram Select Focus -- 5000

These funds should over a period of 10 years give you Good Returns and help you in accumulate your retirement kitty of 2 crores very easily.
Best of luck,
Srikanth Shankar Matrubai