MF Portfolio Building

[Class]

Hi ZomZipp, May I ask a question,

If you are going to put so much effort into investing in MF's, knowing they will take 2% or so from you each year for maintenance of the fund, why not pick half a dozen or so good quality large caps and invest your money in them?

Many quality co's are way off their lows still, and still are very well managed and great quality companies, which are likely to return 50-100% over the next year as the "economic recovery" sets in. Certainly some of these will be back to their highs in 3-5 years, possibly 300% returns in that period. If you are going to redeem and alter your holdings in MF's, are you not going to use the same logic as rearranging and realocating your funds in 6 or so stocks?

Take a weekend and read some of the threads in this forum by some very experienced traders and investors. Back test and follow their advice on paper for a few weeks and you may be surprised at what you are capable of. You don't need to turn into a day trader, long term investment in a handful of quality, beaten up stocks will reasonably get your expected returns and more.

You are looking very sensibly at MF, I'm just wondering if your good sense would be better placed in the markets themselves. After all MF's do exactly that and I'm sure underperform many on this forum.

Food for thought....

 

[zomzipp]

thanks Class...will take note of it...just to get started where to start from in this forum....
Yogesh bro..looking for ur reply

 

[Class]

Hi ZomZipp,

Good place to start is the Thread by Saint called something like Give a man a fish, or feed a man a fish. It is the basics about Technical Analysis which is built up using good examples. Identifying the trend is half the battle and he explains it very well.

All the best,

 

[yogesh-tiwari]

Mutual funds vs Trading

Question that comes to mind of a newbie, which one to choose?

Well, answer lies with you yourself. Ask yourself,

how much time you can devote either?
how much you are willing to learn and dig in?

Mutual funds are managed by fund managers with decades of market experience under their belt.
Trading, you ll start learning it...and god knows how long, and how many losses would teach you the right trick.

Believe it or not...no matter how many forums, threads you read through...you ll still be unsatisfied and would find some or the other flaw(pertaining to your risk appetite) in every system that you use.

I m not saying that Saint's, AW01 ...etc's methods dont work...but every method has its own patience testing level...Many crack under pressure and then disregard the system. Consistency is the key for success in every system.

Unless you are ready to give good few hours a day to trading/learning..you are not ready for it yet..

Evaluating MFs on the otherhand are easier. There are websites that evaluate MFs...All you need is to study the parameters on which they are evaluated..and choose a few MF for your portfolio..thats it..Let the funds manager do the rest.

Regards
Yogesh Tiwari

 

[yogesh-tiwari]

hey Yogesh thanks for your reply... as i mentioned I got this portfolio from ET NOW's Investor's Guide Show featuring advice by MF Expert Dhirendar Kumar(CEO, Valueresearchonline.com), So I wanted to cross check whether to go with this as I plan to go aggressive for next 2 years...

My earlier portfolio shortlisted was:
HDFC Top 200 Fund - 25%
BSL Frontline Equity Fund - 25%
Sundaram BNP Paribas Select Focus - 25%
Reliance Growth - 20%
GoldBeES ETF - 5%

Can you suggest what final portfolio to shortlist from above funds and earlier ones...


Secondly, if you dont mind, can I know your source of this excellent knowledge... and as you said do your own analysis.. how to go about it?

Please enlighten me...thanks

Here you go...

http://www.traderji.com/mutual-fund...ough-sip-short-listed-funds-2.html#post349102

Regards
Yogesh Tiwari

 

[senanindo]

Hi ,

I want start SIP of Rs.2000 for 15-20 yrs in an ELSS funds.Please provide me some good funds..

AlsoI have already invested in Reliance Vision fund and Magnum taxgain in SIP and should i continue or should i stop these SIPs and start 2 new SIPs ... please help me...

 

[zomzipp]

hey Yogesh and others...so my final portfolio for next 1 - 2 years(Rs 15000) via SIP comes to...
IDFC Premier Equity Plan A - 30% ( Aggressive Large Cap)
DSPBR Equity - 30% ( Large Cap )
HDFC Top 200 - 25% ( Large Cap )
Sundaram BNP Paribas S.M.I.L.E. Reg - 10% ( Aggressive Small/Mid Cap )
GoldBeES ETF - 5% (Gold ETF )

Please share your feedback on this for next 2 years. Is percentage allocation correct? And, from where can I get sectoral break-up of all these funds??
Can you please tell me Sectoral and Company wise how diversified is this. And if I can find it out myself using some site or software.


You had earlier mentioned in one of your posts...

"Third, my way of looking at it...I 'd never buy small/mid cap MFs in bull or rangebound market(I hope you now, when to invest in them to get max return, in a bear market near bottom...I ll tell you how to find a bottom.)"


and

"4. Invest in mid/small cap fund only when you see that benchmark indexes like nifty/sensex go below 13-14 P/E and hold only until P/E crosses 20-21..thats it..you ll make tons of money in mid/small cap MFs"

Please explain this....

thanks for your replies

 

[zomzipp]

pls reply....

 

[yogesh-tiwari]

hey Yogesh and others...so my final portfolio for next 1 - 2 years(Rs 15000) via SIP comes to...
IDFC Premier Equity Plan A - 30% ( Aggressive Large Cap)
DSPBR Equity - 30% ( Large Cap )
HDFC Top 200 - 25% ( Large Cap )
Sundaram BNP Paribas S.M.I.L.E. Reg - 10% ( Aggressive Small/Mid Cap )
GoldBeES ETF - 5% (Gold ETF )

Please share your feedback on this for next 2 years. Is percentage allocation correct? And, from where can I get sectoral break-up of all these funds??
Can you please tell me Sectoral and Company wise how diversified is this. And if I can find it out myself using some site or software.


You had earlier mentioned in one of your posts...

"Third, my way of looking at it...I 'd never buy small/mid cap MFs in bull or rangebound market(I hope you now, when to invest in them to get max return, in a bear market near bottom...I ll tell you how to find a bottom.)"


and

"4. Invest in mid/small cap fund only when you see that benchmark indexes like nifty/sensex go below 13-14 P/E and hold only until P/E crosses 20-21..thats it..you ll make tons of money in mid/small cap MFs"

Please explain this....

thanks for your replies

Percentage allocation seems good.

2 years seems to be too small a timeframe for a mutual fund to give extra-ordinary return that you may expect(you may get lucky though). However, a higher timeframe like 4-5+ years can give you much better return.

You can always refer to valueresearchonline.com for details of each MF, its composition etc.

Coming to your second question.

This is what I do, for investing in small/mid cap fund only, I track P/E value of CNX MIDCAP. P/E(26) of MIDCAP peaked out in jan 2008. thereafter it has just been falling..suggesting weakness in mid cap sector... recently(in last 6-12 months), it has started going up again after falling till P/E of 8. And has peaked out again at 18.

My strategy here is, I buy midcap/smallcap MFs when they fall and sell when they rise.

CNXMIDCAP is a must buy below P/E of 12(normally market bottoms-out here) and thereafter an SIP until P/E of 20 is reached. After it reaches P/E of 20 and above. I start withdrawing my money partially. (Well, buy this time you 'd have already made almost double, maybe more than that, of your total investment).

Again, this is risky and why I say that is cause midcap/smallcap dont give you a lot of return until you are near to end of a bull market and you were lucky to invest in the beginning of bull run(what we say recently was all due to election results that propelled midcap to such heights....otherwise, it 'd have taken at least 2-3 years to reach to level it has seen recently). They need a lot of time to mature (I'd say at least 5 years)

Starting investment in mid of bull market or a rangebound market(if you were not able to invest during market bottom)...can kill your investment. Also, if you are doing SIP at that time and you fail to sell out on time...your investment ll take a hit and then you ll have wait for god knows how much long to make money again.

SIP is a golden way of investment. Averaging is the beauty of SIP..However, using it at wrong time in wrong instrument can lead to diaster and a very long recovery period(at least for your investment).

CNX MIDCAP data is available at nseindia.com
MF details are available at valueresearchonline.com (dont just fall for the stars that you see against a MF, study how various parameters like sharpe ratio, alpha ratio, beta ratio affect a MF, coz these can really help you understand that if a MF is better than its benchmark index.)

Hope this answers your questions.

Regards
Yogesh Tiwari

PS: Delayed reply, coz I was too busy too surf internet..

 

[zomzipp]

thanks everyone for ur feedback..
my final portfolio for 1 year via SIP started on 31st Aug (Rs 20000):

IDFC Premier Equity Plan A - Rs 4000 pm ( Aggressive Large Cap)
DSPBR Equity - Rs 4000 pm ( Large Cap )
Sundaram BNP Paribas S.M.I.L.E. Reg - Rs 3000 pm ( Aggressive Small/Mid Cap )
Franklin Bluechip India Rs 4000 pm ( Large Cap )
Canara Rebecco Tax Saver Rs 2500 pm
Sundaram tax Saver Rs 2500 pm

GoldBeES ETF - 5% (Gold ETF ) (will do lumpsum when gold prices are down)
HDFC Top 200 - 25% ( Large Cap ) -- not selected because of its large corpus

thanks a lot..