Do you want to invest in a good portfolio that will have a mix of large caps, mid caps and small caps? A portfolio that will give you higherv returns than the Sensex and is not very volatile.
What are the benefits of investing for the long-term in mutual funds?
What are the risks that you take when you invest in a mutual fund that only invests in certain sectors? When can you invest a lump sum amount instead of taking the SIP route?
Planning for retirement and looking at 15 per cent returns from a good mutual fund?
In a chat with readers on May 10, Get Ahead mutual fund expert T Srikanth Bhagavat answered these and many more queries related to the art of building good mutual fund portfolios.
For those of you who missed the chat, here is the transcript.
Part I -- How long-term investors can become rich
ajit asked, I have a SIP of Rs 3,000 in HDFC Taxsaver (for 1 year). As this scheme has not performed well in the last 1 year is it good to continue in this scheme? If not, then please suggest two schemes where I can invest Rs 2,000 per month in each of them.
Srikanth Bhagavat answers, The Tax Saver was having more of mid cap stocks, hence it underperformed. It also had too many stocks in the portfolio, which is now likely to reduce. I have faith in the fund manager, and I expect performance will pick up.
Rediff asked, Sir, which fund do you suggest of these: Reliance Growth or Reliance Vision?
Srikanth Bhagavat answers, Reliance Growth is mid cap, while Vision is large cap. Both are good perfromers in their category.
quantum asked, out of new funds which is the best: a) J P Morgan b) DSP Merrill Lynch Micro Cap c) Birla Sun Life Long Term Advantage Plan?
Srikanth Bhagavat answers, All three have different charecteristics -- JP Morgan is diversified across all categories; DSP will focus on small cap (high risk, high return variety); Birla is mid cap. The micro cap looks exciting!
shom asked, Srikanth, what are your views on Fidelity Equity Fund please?
Srikanth Bhagavat answers, A good diversified portfolio, which will outperform the index, but not too volatile. Can be a good core to your portfolio.
sv asked, Sir, I am investing in SIPs of ICICI infrastructure growth, HDFC top 200 Growth & Franklin Prima Plus. Is this ok?
Srikanth Bhagavat answers, All are good performers. Why not include mid cap in the portfolio too? An SIP will reduce the risk but benefit you in the long run.
Dinesh asked, IT sectoral funds were performing good till mid-February. After that I did not see any significant growth in the NAVs of IT Secoral funds compared to midcap funds. Why this is happening?
Srikanth Bhagavat answers, The appreciation in the rupee reduces the profits of exporting companies such as IT. In anticipation of lower profits, their share prices have fallen. This is a danger of sector fund exposure -- you are held ransom to the fortunes of that sector!
Nag asked, Planning to start SBI ELSS. Which one is best SIP or bulk?
Srikanth Bhagavat answers, With a 3 year lock-in, bulk is ok.
Rohan asked, Can you please throw some light on Sundaram BNP Paribas Select Mid Cap fund and Tata Infra Fund with a time horizon of 5 years?
Srikanth Bhagavat answers, Sundaram was doing exceedingly well last couple of years. Since it focuses on mid caps, it will start performing again when mid caps regain flavour. Another good mid cap fund is Reliance Growth.
agastya asked, I am about to leave my job and going to start my own venture. Wish to invest Rs 1,000 per month in a mutual fund for five years (SIP). My goal is to gather money for post retirement period. My age right now is 40 and returns on invetment expectation is 15 per cent per annum. Please advise a good mutual fund.
Srikanth Bhagavat answers, HDFC Equity will do the needful.
ramanand asked, How cost effective it is to invest through SIPs since nowadays most of the fund houses are charging entry load at every installment?
Srikanth Bhagavat answers, The advantage in SIP is not to do with the entry load, but averaging your cost of purchase over time! It is still very important to do this.
ubm asked, Sir, I have invested in Franklin India Index Fund -- BSE Plan and Dividend Plan (Rs 300,000) when the NAV was Rs 39.4513 and today it is Rs 38.2845. As per your understanding of market when do you expect to break even for me?
Srikanth Bhagavat answers, You will break even with a growth of 3 per cent only. Possible this year itself.
mdmenon asked, what are the advantages of blue chips as well as their risks when one opts for a mutual fund scheme?
Srikanth Bhagavat answers, Blue chips are established large companies. They are assumed to be safer as they have finished going through the growth pangs. They have lesser long term returns than a well manged mid cap fund. But mid caps can have higher volatility.
sridharan asked, Hi Srikanth, How do you evaluvate the funds?
Srikanth Bhagavat answers, Quantitatives: 3-year and 5-year consistency in perfromance; high risk adjusted return; standard deviation measures for volatility or riskiness.
Qualitatives: Consistency in policies; ethics and principles followed.
satu asked, My SIP portfolio consists of: HDFC Top 200, DSP Tiger, Fidelity Equity, Kotak Midcap, Sundram Leadership & Midcap, Reliance Growth, ICICI Dynamic & Emergying Star, Tata Infrastucture for ELSS HDFC Tax Saver, SBI Magnum, Reliance Tax Saver, ICICI Tax Plan. Kindly advise about portfolio. Holding since the past one year and plan to hold for another 5-7 years.
Srikanth Bhagavat answers, Too many schemes! Too much diversification will not get you anywhere!
meowmeow asked, Bole to kaun se mutual funds penny-stocks me invest karte hain.....jara batao to bhai-jaan?
Srikanth Bhagavat answers, DSP ML Micro Cap/ Sundaram SMILE.
Srikanth Bhagavat says, Thank you everybody! My time is up.
Part I -- How long-term investors can become rich
T Srikanth Bhagavat is the Managing Director of Hexagon Capital Advisors Pvt Ltd. He has been in the mutual fund industry for more than a decade now.