In an online chat with readers on August 10, Vidya Bala, head of mutual fund research at FundsIndia, answered their queries. For hose who missed the chat, here is the transcript.
paresh parikh: Hi kindly suggest if I should hold or redeem my investments done in UTI Midcap and UTI Opportunities fund?
Vidya Bala: Paresh Parikh, hold to UTI Midcap it is high risk but doing well. UTI Opportunities - see for 2 more quarters. If it still underperforms, exit
Amit Sinha: Hi madam It is told that to review investments in MF at regular interval but if a mf is doing good and it is withdrawn and invested in another mf then how will the benefit of compounding work in SIP? I mean the 2nd fund will have lumpsum investment from the 1st fund SIP amount.
Vidya Bala: Amit, when you move within the same asset class (in this case equity), there is no risk of timing the market. Hence, moving lumpsum from one fund to another won't hurt.
Varsha Singhe: Now the stock market is again closer to 9,000 mark. Is this the right time to invest in mutual funds?
Vidya Bala: Please invest SIPs and do not look at market. Look at you own goals and time frames.
Jenny Dsouza: What would be your advice for youth who are between 18 and 25 about investing in mutual funds?
Vidya Bala: Jenny - Invest through SIP, DO NOT stop investment, have exposure to equity and invest with a long term view.
Adil: Hi Vidya, could you tell me the advantages of SIPs over investing lump sum in mutual funds?
Vidya Bala: Adil, SIPs allow you to invest smaller sums regularly; it is easier this way to save large sums required for retirement or children's education. SIPs also remove the need to time the market. It will ensure that you stay invested across market cylces. When you invest during market downturns, it will lower investment cost thus boosting returns.
Ravi Prakash: DSP Blackrock Top 100 Equity Fund - Growth. Kindly suggest about this MF, Should I continue in this fund?
Vidya Bala: Ravi Prakash. Stop SIPs if you have one in this fund and use BNP Paribas Equity or Birla Sunlife Equity.
Monica Vaswani: Tell me two funds (equity) which can give me decent return. I have a horizon of 10 years?
Vidya Bala: Monica, consider Birla Sun Life Frontline Equity and Franklin India Prima. Please make sure you have adequate exposure to debt either through funds or fds and bonds.
Ravi Prakash: I have done SIP @ Rs 2000 in HDFC Top 200 Fund - Growth. Is it a good fund to invest?
Vidya Bala: Ravi HDFC Top 200 is a volatile fund. It is ok if you have a 5-year view. Increase your investment now. 3 years down the line benefits of GST will be visibly seen in the stock market.
hardik: I have real estate and stocks in my asset portfolio but have never bought mutual funds? How will MFs help me diversify my portfolio?
Vidya Bala: Hardik, you should be able to buy stocks at the right time and exit on time. Equity MFs will actively do this. Investing thru SIPs will ensure that you don't need to time the market, especially if you don't have the time/ knowledge to do the homework needed. Debt mutual funds are the most tax-efficient. FD interest is taxed at slab. Long-term capital gains on debt funds have indexation benefit.
Disha Nair: which are the best mutual funds right now? how should one pick the best?
Vidya Bala: Disha - best mutual funds will depend on your time frame. If you are a long term investor and starting MF investments go with a balanced fund like HDFC Balanced.
srinu varikuti: HI Vidya, what are the things need to consider for making portfolio diversification. and increase risk adjusted returns? what are the top 3 must have funds for aggressive investor in each category?
Vidya Bala: diversification can be achieved through asset allocation (equity, debt gold etc) and through category allocation (within equity large cap midcap, balanced and within debt dynamic bond, income accrual etc). There are no must-have funds. It will be based on investor's requirements. Midcap funds are aggressive and suits a high risk investor but only up to 30 per cent of allocation and not more.
adil: Can I invest in mutual funds online? Do I need a demat account to do that?
Vidya Bala: yes you can invest online using portals such as fundsindia, without a demat account.
Prakash Patolia: Please provide me name of 2 best ELSS MF for SIP long term...
Vidya Bala: Prakash - you can go with Franklin India Taxshield and Axis Long Term Equity; Please stay invested for 5 years at least.
Bhupinder Singh: I have done SIP in HDFC Equity and Reliance Equity Opportunity Fund @ 2500 each. Should I continue?
Vidya Bala: Bhupinder, you can continue SIP in Reliance Equity Opportunities, but do monitor its performance. Stop SIPs in HDFC Equity and start it in a large-cap fund like Birla Sun Life Frontline Equity.
surendra kinlekar: Is it advisable to invest in reliance equity opportunity fund on long term frame?
Vidya Bala: Surender, yes you can but monitor performance.
anil: Would you suggest investing in open ended or close ended mutual funds? Tax saving is not my concern...
Vidya Bala: Anil, please go for open ended funds. You should have the flexibility to invest based on your time frame and not the fund time frame. Also, it will help you switch in case performance slackens.
ramakrishna: I am investing through SIPs. All are equity funds as opted for long term investment. All SIPs are selected by my agent. How can I recheck that these are suitable for my type of investment plan? Please guide me.
Vidya Bala: Ramakrishna, you can check how much you have invested in large-cap funds and mid-cap funds. You should not have too many mid-caps. Also check performance of your funds against benchmark and other funds in the category and standard deviation (available on aggregator websites). Do this for different time periods.
Prakash Patolia: Ok as per your suggestion, I have searched for "Axis Long Term Equity" and found 2 plans with same name. What is the difference between "Axis Long Term Equity Fund - Direct Plan (G)" and "Axis Long Term Equity Fund - Regular Plan (G)"? I can invest in which one?
Vidya Bala: If you are investing through a distributor it is the regular plan. If you are investing directly in fund website it is the direct plan. If you need help, go with a distributor/advisor
dinesh: I am 22 now and into my first job. What are the factors I should consider before investing in MFs?
Vidya Bala: Look for funds that have been steadily beating their peers. Do not pick the top of the chart funds. Start investing with a balanced fund. Invest for the long term.
ashutosh dahihandekar: What type of funds are better after the age of 50, if someone has to retire at 58?
Vidya Bala: Ashutosh, after 50, it is best to put the majority of your investment in debt funds. If you have enough investments to see to your intial years of retirement, or if you can take more risk, you can allocate some portion to balanced funds, since they will give some equity exposure and thus better returns.
Arun Kumar: Hi, can you please guide me on 1. L&T income opportunities 2. ICICI banking and financial services fund?
Vidya Bala: L&T Income Opportunities is an income accrual fund and carry some risk as it invests in AA-bonds. Needs 3-year time frame. ICICI PRu Banking - theme fund, invest if you have highr isk appetite but limited exposure to 10 per cent of your allocation.
Karan Aggarwal: hello, i have invested in some funds in the year 2007-2008, how do i determine if i should exit or hold, thank you for your help.
Vidya Bala: Karan, you can compare it with peers and see where they stand now. If that is difficult, the best is to get good advice through a good advisor. Avoid investing in MFs through banks. You can also consider online platforms such as FundsIndia where advisors will guide you.
Vishal Kumar: Which is the best Gold MF? I have currently a sip in Reliance.
Vidya Bala: Vishal, you can go for either SBI Gold MF or Kotak Gold Fund.
sheetal: I have Rs 5,00,000 to invest in mutual funds. Should I go for lump sum investment? Suggest some good mutual funds to invest please?
Vidya Bala: Sheetal, if you have a long term timeframe of 10 years at least and you can take short-term volatility, then you can invest in lump sum. Else, invest the money in a liquid fund and put an STP to transfer each month to equity funds.
Amit Kumar: suggest some funds for 15 to 20 year long term for retirement.
Vidya Bala: Consider a large-cap midcap and debt fund. We need to know more details before we can build the portfolio.
prakash tandel: My SIP @Rs.4000/- in Franklin Smaller Companies fund, Rs.4000/- in DSP BR micro cap, Rs.3000/- BSL Frontline, 3000/- HDFC Mid Cap, 3000/- Reliance Pharma, Rs.3000/- in Reliance ELSS (for Tax) and Rs.4000/- TATA Balance fund. Horizon more than 3 years. R my funds good on long term?
Vidya Bala: Prakash, you have a high risk portfolio in mid-cap and sector funds. You can stop SIP in Rel Pharma and DSPBR Microcap. Add 2000 of this amount to BSL Frontline Equity and the remaining to HDFC Medium Term Opportunities (debt fund, for diversification).
kapil yadav: How is SIP in ICICI pru long term equity fund for long term investments?
Vidya Bala: It is a tax-saving fund. Good choice.
Sandhya Sumesh: There are some funds which are insurance plans, (eg Prudential fund weather plus) are they good as a mutual fund?
Vidya Bala: Sandhya - insuance plans are seprate. They are not mFs. Please keep insurance and investing separate. Do not go for combined options. Invest in a term plan for insurance and invest in MFs for investing.
sutapa ghosh: kindly suggest on my choice of fund
Vidya Bala: Sutapa - we do not see your thread on the choice of funds.
Vaidhy Iyer: Hi Vidya... i am investing in 6 mutual funds for total amount of 32000 per month... ICICI Focussed blue chip... Quantum Longterm Equity, IDFC Premier, UTI MNC fund, Reliance Equity Opprtunities and HDFC Opportunities.. i have been relegiously investing for past 4 years or so.. can you please give oyur suggestions/advise i am a long term investor?
Vidya Bala: Vaidhy, you are doing fine with these funds. Please get them reviewed every year if you have an advisor.
suman ghosh: One midcap and one balanced fund: please suggest.
Vidya Bala: Suman, you can invest in HDFC Midterm Opportunities and Tata Balanced.
Pradipta Kumar Das: Dear Madam, kindly suggest whether it is advisable now to enter in the Pharma Fund?
Vidya Bala: It is a theme fund. Pharma funds will not perform too well in a rallying market. Be careful about the risk. You can enter provided you have a 5-year perspective and keep it to 10 per cent of your portfolio.
vishwas sharma: how do you look at future prospects of mutual funds say coming 10 years?
Vidya Bala: Vishwas, mutual fund performance will depend on the direction the equity and debt markets will take.
deepak: Hi i m Deepak, new to the market.. i interest in MF Tax Saving Scheme.. since i m salaried man paying more tax every year.. what i have to invest in e Bank offered MF or Private (Like Franklin, Birla) offers? pl advise me..
Vidya Bala: Deepak, go for a tax-saving fund. Open an online account and get advisory help to start with. Please stay invested for the long term.
prakash tandel: I can Rs.2000/- in BSL Frontline. Also I, wish add more in running SIP's. Which fund I should go?
Vidya Bala: Prakash, the amount from the stopped SIP has been divided between BSL Frontline Equity and HDFC Medium Term Opportunities, If you can add more to the SIP, start in Franklin India Bluechip or ICICI Pru Focused Bluechip. Please note that you need at least 5 years for equity investments.
pankaj singh: Hi vandana, I am investing lumpsum in reliance tax saver. how's it or shld I do sip? What r the other good options available?
Vidya Bala: Pankaj, Reliance tax saver is a tax-savign fund and has a lock in. It is very volatile. Invest through SIPs.
KamalaKannan J: Is it good ELSS investment better than other fund?
Vidya Bala: Go for ELSS only if you want 80C benefit. Else go for a regular diversified equity fund.
Smit Patel: My Sip in Kotak Select Focus Fund,L&T India Special Situations Fund, Mirae Asset India Opportunities Fund, SBI Magnum Multicap Fund, Motilal Oswal MOSt Focused Multicap 35 Fund...Should i continue with this or switch over?
Vidya Bala: Your funds are doing well. Continue your investments.
Suresh Sindhi: While selecting STP, how the capital gain tax is computed from the liquid/debt fund as bit by bit portion is transferred to SIP fund from liquid/debt fund to SIP fund?
Vidya Bala: Suresh, it will be first in first out basis. That is units that came in first will be considered first for tax purposes. If you have accounts with FundsIndia, you will easily get a capital gain statement anytime.
bharat datkhile: i have rs. 1,000/- in frankline india smaller co. fund & rs 1000 in frankline indis prima plus time period 5 years should i continue nor change the fund?
Vidya Bala: Bharat, it depends on your time frame and risk level. Both are good funds, however.
Suresh Sindhi: What criteria should be applied while selecting the mutual fund? How long one person should be investing in mutual fund? At what frequency interval, mutual fund portfolio should be reviewed?
Vidya Bala: Suresh, look at long-term performance against the fund's benchmark and peers. Do not get influenced by one-year returns, Returns should not be volatile also. In equity, you need to hold at least five years, and invest through the years to build your corpus. Debt funds have shorter timeframes depending on your requirement. But they should always be a part of long-term portfolio for diversification.
ramakrishna: Madam I want to invest money for 5 years on monthly basis what type of investment will be better? I do not need tax savings.
Vidya Bala: Ramakrishna, you should invest in a mix of equity and debt funds. For your horizon of 5 years, please make sure that you do not invest too much in mid-cap funds.
Soumen Bag: I have invested in SBI Blue Chip Fund - Direct Plan - Dividend fund Rs 1,98,000 on Mar 2015 and received dividend 25,000. Now current value is 2,22,000 incl dividend. So, earn 10 per cent in 14 months. Shall I change it to growth fund?
Vidya Bala: In general, you should go for growth option in equity, if you want money to grow through compounding.
vishwas sharma: should we investing continuously in mutual fund or not because I know that its depend on market direction but how you look forward market ahead?
Vidya Bala: Vishwas, if you are looking to build wealth, then yes, you should be investing throughout. Over the long term, equity will deliver inflation-plus returns and is the best asset class for building wealth. It is very hard to invest only for a few years and have enough corpus for retirement/children's education, etc.
sutapa ghosh: HI, should i continue these -- I am investing since 2010 through SIP, kindly suggest / advise on my portfolio for long term -- BNP midcap, franklin smaller companies, sbi small cap, motilal oswal 35 multicap, birla mnc nd sundaram rural india.
Vidya Bala: Sutapa, it depends on how much you have in each fund, your risk appetite and time frame. At an overall glance, it looks like you have high risk through small and mid-cap funds, and themed funds. Consider increasing in large-caps.
Illustration: Uttam Ghosh/Rediff.com
