Skip to main content

Tips for building a good fund portfolio

Tax Saving Mutual Funds Online

 

 

 So you have a financial goal and your adviser has told you how much you should save regularly. You have also agreed that you will invest in mutual funds in a systematic manner. Now comes the tough decision of selecting the funds. Should you trust the list given by the adviser? What should you look for? Let me provide six pointers. I will restrict myself to equity funds here and deal with debt funds at a later date.


   First, your requirement is to invest in the equity market. The mutual fund is only a tool to get there. It is fashionable to assume that you can pick a few winning stocks and do better than a fund manager. However, consider the time, effort, cost and, most importantly, your portfolio's performance record before you do it. If you are honest with your analysis, you are likely to find the mutual fund choice compelling.


   Second, the simplest and cheapest mutual fund product is an index fund or an ETF. It gives you the exposure to equity without any risk of selection. Funds routinely publish performance data, stating that they have beaten the benchmark by a good margin. This may be factually correct, but you will get returns only if you select the winning fund at the right time. Advisers earn the least commission on index funds, so don't wait for them to propose this product.


   Third, a new fund offer at 10 is not cheaper than an existing fund at, say, 100. An NFO is not cheaper than an existing fund; it just has a lower nominal value. It cannot generate a higher return than an existing fund just because it is priced at 10. But an existing fund has performance history, a track record. Unless it is an absolutely new idea, an NFO is an inferior choice to an existing fund.


   Fourth, you should refuse to make a choice without any clarity on how a fund will deliver returns. If a fund manager tells you that the fund 'uses a process-driven, bottom-up approach to select stocks across sectors, with a disciplined selling plan' he is describing his job. If the fund says it will hold largecap stocks, you know it will modify sector weightage and stock weightage compared to the Nifty index, to deliver a better return. If this fund delivers better returns by picking up a few mid-cap stocks, it will amount to dishonesty.


   Fifth, be clear about what you expect the fund to do and what you will do yourself. If you like to assemble your set of index, large-cap, mid-cap and sectoral funds, choose those that stick to such a definition. If you see the portfolio and performance at the fund website over 3-6 months, you will know. If you like the fund manager to do the juggling and like a loosely defined product, go for it, fully aware that you will not know what to expect. Investors like to give fund managers a long rope to do what they like as long as they deliver a return. This preference leads to more poorly defined products with fancy names.


   Sixth, do not rely on past winners. What is important is to hold a well-diversified portfolio. A portfolio suffers damage when you persistently hold laggards; it is all right to miss buying a few winners at the right time as long as you throw out the rotten apples.


   So, build a portfolio using a core and satellite approach. At the core of your equity portfolio should be index and large-cap funds, comprising at least 50% of your portfolio. The next layer should have funds whose specific focus can be rewarding—mid-cap funds, infra funds, small-cap funds, value funds, contra funds. About 35% of your portfolio could be invested here. The next layer should have funds that need an aggressive review. Sectoral funds, concentrated portfolios, specific strategies figure here. These will do well seasonally and need a close monitoring. This should comprise 15% of your portfolio and not over three to four funds.


   If your portfolio holds too many names, acquired at different times for different reasons, you are doing yourself more harm than good.

 
---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

 

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

 

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

 

These Application Forms can be used for buying regular mutual funds also

 

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. HDFC TaxSaver
  2. ICICI Prudential Tax Plan
  3. DSP BlackRock Tax Saver Fund
  4. Birla Sun Life Tax Relief '96
  5. Reliance Tax Saver (ELSS) Fund
  6. IDFC Tax Advantage (ELSS) Fund
  7. SBI Magnum Tax Gain Scheme 1993
  8. Sundaram Tax Saver

Popular posts from this blog

Post Office Deposits Interest Rates

Best SIP Funds to Invest Online   SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich For further information on Top SIP Mutual Funds contact  Save Tax Get Rich on 94 8300 8300 OR You can write to us at Invest [at] SaveTaxGetRich [dot] Com

HDFC Capital Protection Oriented Fund – Series II 36M May 2014 NFO

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300     HDFC Capital Protection Oriented Fund – Series II 36M May 2014 NFO will be open for subscription from 16th May 2014 to 30th May 2014. The key features of the scheme are as mentioned below:   Type of Scheme A Close Ended Capital Protection Oriented Income Scheme Benchmark Crisil MIP Blended Index Fund Manager Mr. Anil Bamboli , Mr. Vinay R Kulkarni & Mr. Rakesh Vyas New Fund Offer (NFO) Period 16 th May 2014 to 30 th May 2014. Minimum Application Amount Rs. 5000 and in multiples of Rs.10 thereafter Plans/ Options Offered Growth and Dividend Payout Facility Liquidity To be listed For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

How to PPF Account extension after maturity

A PPF account can be retained after maturity without making any further deposits. The balance will continue to earn interest till it is closed. Public provident fund or PPF remains one of the most popular savings options for the long term despite a gradual decline in interest rates over the years. PPF accounts have a maturity period of 15 years and they can be extended. If there is no fund requirement, financial planners say, PPF account holders should extend the account beyond 15 years. In terms of income tax implications, PPF accounts enjoy the benefit of EEE (exempt-exempt-exempt) status . Under Section 80C, contribution up to Rs 1.5 lakh in a financial year qualifies for income tax deduction. The interest earned and maturity proceeds are also tax free. What are your options when a PPF account matures? 1) A PPF account can be closed after the expiry of 15 financial years from the end of the year in which the account was opened. 2) The subscriber can retain his

SUNDARAM SELECT MIDCAP

Best SIP Funds Online   SUNDARAM SELECT MIDCAP is a mid-cap focused fund has shown remarkable consistency in outperforming both its benchmark index and the category over many years. It takes a sharper tilt towards mid-caps compared to its peers. While the fund manager used to take large positions in his conviction picks, he has moderated exposure to his top bets over the past year. He has also chosen to stay away from capital guzzling businesses instead favouring those with efficient capital allocation practices. SUNDARAM SELECT MIDCAP fund boasts of a superior risk-reward profile compared to many of its peers, and while it has underper formed slightly over the past one year, its proven track record in the hands of a capable fund manager provides comfort. It remains a worthy pick in the midcap basket. SIPs are when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich For further inform

HDFC Prudence Fund - Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   HDFC Prudence Fund Balanced funds are excellent investment options for investors with moderate risk tolerance, since they give very good risk adjusted returns. It is very surprising why balanced funds are not nearly as popular as diversified equity funds, despite being around in India for nearly two decades. Balanced funds are essentially hybrid funds with both debt and equity in its portfolio mix, to balance the portfolio risk. These portfolios typically hold up to 70% of its portfolio assets in equities and the balance in fixed income. On a risk adjusted basis, balanced funds have delivered excellent returns compared to other equity fund categories, e.g. large cap or diversified equity mutual funds. The chart below shows a comparison of category returns between large
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