Skip to main content

How to Balance Mutual Fund Portfolio?

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 



Everyone needs balance in their lives. So, too, do investors. They need a balanced portfolio – one that meets their goals. A balanced portfolio is one which encompasses a spectrum of investments, a range exposed to different asset classes, suitable to an individual, so as to avoid putting all one’s eggs in only one basket. One can go about doing this in various ways. For a layman, though, using mutual funds is a viable choice because of the wide range of options and the possibility of creating a portfolio suitable to specific requirements.

Overall options

Several choices are available.

One needs to look at the options in the market to achieve one’s objective. There are equity- oriented funds (which invest in large caps, mid caps and international funds), debt- oriented funds and gold funds.

There is ahuge range of debt- oriented funds, but exposure has to be considered as much depends on prevailing market conditions as well as the time frame available to an investor. The choice here would be stable funds, short duration ones and those open to interest- rate risk.

Equity funds

One area of focus has to be equity- oriented funds because these instruments provide growth momentum to aportfolio. Some large- cap funds in your portfolio act as a stabilising factor.

For those who are slightly conservative, the extent of exposure to largecap funds would be greater. For those looking for a balanced portfolio, overall equity exposure can be capped at around 45- 50 per cent. This would comprise large- cap, mid- cap and, maybe, international funds.

For an aggressive investor, who wants stability in a portfolio, the proportion of mid cap- funds would be slightly larger as these are more volatile, simultaneously bringing in a higher risk element. In mid- caps, too, alonger period could elapse before an investor sees returns. This would need to be considered. These funds have a minimum time horizon of at least four to five years, which enables them to perform and show results. Those wanting to diversify their portfolios even further can set a small exposure of around 5 per cent to international equity funds. These offer a different flavour to a portfolio.

Stable Debt Funds

In the portfolio of an investor there is usually some exposure to fixed deposits. This can be easily replaced by mutual funds, within which are products similar to fixed deposits – Fixed Maturity Plans (FMPs). An investor should ensure that wherever s/ he does not want the principal amount at risk and there is an element of surety in returns, the investment should be in these FMPs. The other option that can provide some element of regular returns are monthly- income plans, though since these have a small amount of equity they should not be considered as a sure source of income and hence should be used only for indicative purposes. The exposure to these two categories of funds in the overall construction of a balanced portfolio should be in the range of 20- 25 per cent.

Other Debt Funds

There are other debt funds that would be used mainly to ensure that debt exposure is adequate. This has two components: a small part can continue in short- term or liquid funds to ensure that the money can be used to invest in some opportunity that suddenly arises. The extent of the exposure to this section in the portfolio should not be more than 5- 10 per cent at any time.

Another 15- 20 per cent should be in funds that actually enable an investor to gain from the movement of debt instruments in the secondary market. If prevailing interest rates are high and expected to slide in coming months, this should be directed towards income funds that are available for investment. However, when the situation concerning the future is uncertain, an individual would do well to choose dynamic funds, in which the fund manager ends up making the right choice about the kind of instruments suitable for investor gains. Once again, the overall aim of an investment is to ensure a steady rise in returns on this part of a portfolio.

Gold Funds

The rest of the portfolio should go towards another asset class, namely gold, as this provides a different kind of exposure for an investor; it protects aportfolio from similar kinds of movements. This should not exceed 10 per cent of the total value and should be slowly built up over time. The real gain to an investor is when s/ he considers gold funds as longterm investment assets and s/ he has invested in this when prices have corrected.

This would enable her/ him to accumulate various units when the going is tough so that when prices actually go up s/ he is ready to earn returns. This calls for an element of patience because the asset cycle is longer than one sees with other asset classes, often running for over 10 years in a specific direction.

Overall Many options in mutual funds are available. It is the responsibility of each individual to check what is appropriate as they go about creating their own balanced portfolios. Utilising the right mix would be beneficial; even more important is the need to ensure regular re- balancing.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

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

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

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

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

SBI Magnum Tax Gain Scheme 1993 Applcation Form

    https://sites.google.com/site/mutualfundapplications/tax-saving-mutual-funds-elss     Investment Details Basics Min Investment (Rs) 500 Subsequent Investment (Rs) 500 Min Withdrawal (Rs) -- Min Balance -- Pricing Method Forward Purchase Cut-off Time (hrs) 15 Redemption Cut-off Time (hrs) 15 Redemption Time (days) -- Lock-in 1095 days Cheque Writing -- Systematic Investment Plan SIP Yes Initial Investment (Rs) -- Additional Investment (Rs) 500 No of Cheques 12 Note Monthly investment of Rs 1000 for 6 months and quarterly investment of Rs 1500 for 4 quarters.
Read more

Birla Sun Life Tax Plan Online

Invest Birla Sun Life Tax Plan Online   An Open-ended Equity Linked Savings Scheme (ELSS) with the objective to achieve long-term growth of capital along with income tax relief for investment.   After a bad patch from 2008 to 2010, Birla Sun Life Tax Plan has made a big comeback in the last five years, with a particularly good run since 2014. The fund's rankings, which had slipped to two stars in 2011-12, recovered sharply to three-four stars in the last three years. The fund has delivered a particularly large outperformance over its benchmark and peers in the last couple of years. The fund's investment strategy focuses on a diversified and high-quality portfolio, with parameters such as capital ratios and balance-sheet strength used to judge quality. It uses a combination of top-down and bottom-up approaches to take sector/stock positions. The fund avoids highly leveraged plays. Staying more or less fully invested at all times, the fund parks roughly half of its portfoli
Read more

Should you Roll Over 1 year Fixed Maturity Plans?

The period between January and March typically sees an uptick in the launch of fixed maturity plans, or FMPs. Not this year. Instead, fund houses are busy rolling over or extending the tenure of their one- year FMPs launched last year to three years. Investors in one- year FMPs have a choice. Either redeem units or roll over to three years. If you exit now, your gains will be added to your income and taxed in line with your individual slab rate of 10, 20 or 30 per cent. If you stay invested for two more years, you pay 20 per cent tax with indexation benefit. Yields have softened in the past few months on expectations of a rate cut. If the central bank continues its soft monetary stance, yields are likely to fall further. In such a scenario, it makes sense for investors, particularly those in the 30 per cent tax bracket, to roll over their investments and lock in at a higher yield now. In a surprise move, the Reserve Bank of India cut repo rate by 25 basis
Read more

Mutual Fund Review: IDFC Premier Equity Fund

  IDFC Premier Equity Fund, which falls under the presumed high risk group of mid- and small-cap schemes, can rely on astute and timely equity picks. These make it less vulnerable to fluctuations compared with others in the category   IDFC Premier Equity Fund is designed to invest in upcoming, but promising businesses available at cheap valuations, and hold on to these businesses until they reap desired returns. The experiment has been successful so far, and IDFC Premier Equity has emerged as one of the top performing mutual fund schemes in the mid- and smallcap category of equity schemes.    While the scheme is an open-ended equity fund, i.e. open for subscriptions throughout the year, it has a unique philosophy to limit fresh inflows. Thus, while an investor can always take the systematic investment plan ( SIP ) route to invest in the scheme throughout the year, inflows through a lumpsum investment have been restricted. Since inception, IDFC Premier Equity has been opened for l
Read more

IDFC Premier Equity Fund dividend

  IDFC Mutual Fund   has announced dividend under the dividend option of   IDFC Premier Equity Fund Direct-D . The quantum of dividend shall be   R 4.3464 per unit.   The record date has been fixed as May 06, 2015. Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds Invest in Tax Saver Mutual Funds Online - Invest Online Download Application Forms For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot]
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