Skip to main content

Best Practices for Mutual Funds

 

  • Understand your risk profile, read the offer documents to see if the fund objectives match your needs

 

  • Build a strong foundation of funds as the basis of your portfolio before you diversify within growth or sectoral fund

Sectoral funds in India will give you a concentrated exposure to a particular sector, e.g., infrastructure, IT etc. If this kind of fund is the only fund you own, then that can be risky. You should add a sectoral fund in your mutual funds portfolio only if the portfolio is well diversified based on the investor's risk profile and time horizon.

  • Buy and hold equity funds, don't churn

Do not sell funds just because your agent asks you to sell one fund and invest in another fund. Ask them for reasons why you should switch. Churning will make you poor and your agent rich! And you might incur tax consequences as well

  • Avoid NFOs

NFOs or new fund offerings become very popular because they get a lot of marketing publicity when a new fund is launched. NFOs should be avoided for a few reasons:

    • Often you will end up paying higher fees in an NFO
    • NFOs have no track record, so you have no way knowing how well the fund will perform across market cycles, how good the risk management systems are or how good the back office and administration of the fund house is. For instance, if you have to go to a doctor for some trouble in your kidney, would you rather go to a new doctor with no track record, or would you go to a 10 year veteran who has experience and track record in dealing with patients like you.

 

  • Revisit your asset allocation periodically

Due to market movements, you might end up having a higher or lower exposure to certain industries or assets than what you had set out for. Therefore, just like you go for a regular health check, review your asset allocation across your mutual funds periodically. Once every 6-12 months is good period.

  • Avoid investing in too many different funds - preferably not more than 5-7 funds

Over diversification can also be bad for you. So do not duplicate by buying two different infrastructure funds or have too many balanced funds. If you have more than 10 funds, after a while you will realize that you do not have time to manage all the paperwork related to all the funds and you will need a full time assistant just to manage your accounts

 

Popular posts from this blog

Mirae Asset Healthcare Fund

Best SIP Funds to Invest Online   Mirae Asset Global Investments (India) has launched Mirae Asset Healthcare Fund. The NFO of the fund will be open from June 11, 2018 to June 25, 2018. Mirae Asset Healthcare Fund is an open-ended equity scheme investing in healthcare and allied sectors. The scheme will invest in Indian equities and equity related securities of companies that are likely to benefit either directly or indirectly from healthcare and allied sectors. The investment strategy of this scheme aims to maintain a concentrated portfolio of 30-40 stocks. Healthcare is a broad secular theme that includes pharma, hospitals, diagnostics, insurance and other allied sectors. The fund will have the flexibility to invest across markets capitalization and style in selecting investment opportunities within this theme. Neelesh Surana and Vrijesh Kasera will manage this fund. In a press release, Swarup Mohanty, CEO, Mirae Asset Global Inves...
Read more

How to Decide your asset allocation with Mutual Funds?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) How to Decide your asset allocation ? The funds that base their equity allocation on market valuation have given stable returns in the past. Pick these if you are a buy-and-forget investor. Small investors are often victims of greed and fear. When markets are rising, greed makes the small investor increase his exposure to stocks. And when stocks crash to low levels, fear makes him redeem his investments. But there are a few funds that avoid this risk by continuously changing the asset mix of their portfolios. Their allocation to equity is not based on the fund manager's outlook for the market, but on its valuations. Our top pick is the Franklin Templeton Dynamic PE Ratio Fund, a fund of funds that divides its corpus between two schemes from the same fund house-the...
Read more

Reliance Regular Savings Fund - Debt Option

Reliance Regular Savings Fund - Invest Online     The scheme aims to generate optimal returns consistent with moderate levels of risk. It will invest atleast 65 per cent of its assets in debt instruments with maturity of more than 1 year and the rest in money market instruments (including cash or call money and reverse repo) and debentures with maturity of less than 1 year. The exposure in government securities will generally not exceed 50 percent of the assets. The fund uses a mix of relatively low portfolio duration with active investments in higher-yielding corporate bonds. It does not take aggressive duration calls but tries to improve returns by cherry-picking corporate bonds. This is reflected in the fund's returns matching the category and benchmark for five years - at 8.4 per cent - but lagging behind the category during a raging bull market in bonds in the last one year. The fund has been a consistent but not chart-topping performer in the income category. Despite its ...
Read more

Tax saving tools to maximise returns

  An Individual can claim a deduction up to Rs 1 lakh U/S 80C of the Income-Tax Act, 1961 ('Act') by incurring a certain expenditure or making specified investments. Few of the popular schemes which are generally availed of by the individuals, inter-alia, include the following: Expenditure-Related Deductions Broadly, the expenditure-related deductions include tuition fees and home loan payments.    Tuition fees for full-time education in any Indian university, college, school, and educational institution, for any two children is eligible for deduction. However, development fees or donations are not considered.    The principal amount re-paid against a home loan to banks or certain category of employers is also eligible for deduction. Stamp duty, registration fees and other expenses incurred for the purpose of acquisition of such a house property are also eligible for deduction.    It should, however, be noted that the cost of renovation/house repairs after the completio...
Read more

HDFC Mid-Cap Opportunities Fund

Performance - Regular Plan - Growth Option NAV as on 30 th June, 2017 51.741   Period Scheme Returns (%) Benchmark Returns (%) # Additional Benchmark Returns (%) ## Value of Investment of ( ) 10,000         Scheme ( ) Benchmark ( )# Additional Benchmark ( )##   Last 1 Year 28.63 28.32 14.88 12,863 12,832 11,488   Last 3 Years 20.95 16.89 7.74 17,703 15,977 12,509   Last 5 Years 26.26 19.23 12.50 32,129 24,116 18,036   Since Inception 17.82 11.74 8.36 51,741 30,426 22,353 ^Past performance may or may not be sustained in the future . Returns greater than 1 year period are compounded annualized (CAGR). Load is not taken into consideraiton for computation of performance. #Nifty Free Float Midcap 100 Index ##NIFTY 50 Index. Inception Date: June 25, 2007. The Scheme is managed by Mr. Chirag Setalvad since inception. Different plans viz. Regular Plan and Di...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now