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personal finance | IST

Mutual Fund Corner: 'I want to invest lumpsum in Tata Digital Fund Growth, what should I do?'

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Want to invest in mutual funds but don't know how to go about it? Get all your mutual fund related queries answered by our expert, Harshvardhan Roongta, CFP, Roongta Securties on our show Mutual Fund Corner. 

Want to invest in mutual funds but don't know how to go about it?
Get all your mutual fund related queries answered by our expert, Harshvardhan Roongta, CFP, Roongta Securties on our show Mutual Fund Corner.

Q) Charmi Doshi writes to us from Mumbai. Just started Systematic Investment Plan (SIP) in the following mutual funds: ABSL Tax relief 96, IDFC Tax Advantage, Axis Bluechip Fund, DSP BlackRock Mid Cap Fund and L&T Emerging Businesses Fund. While building the portfolio, I tried to include largecap, midcap as well as smallcap components. I was a little confused while deciding the schemes. Want to know if it's a good portfolio or is there scope for more diversification within each category. For the same amount of investment per month, should I include more schemes in the portfolio under each category or is this good enough given that I have no particular time frame in mind to exit and can continue for a long term.
A) Not often we come across an investor who gets into the scheme wise allocation in largecap, midcap etc. You have gone into the details of the schemes to ascertain the exact allocation into largecaps etc. which is a good thing. It shows you are keen and serious about your money. Since you seem to be an investor, who can take of her investments herself, you may also want to consider investing in ‘direct’ option. Direct option will save you certain costs in the form of lower fund management costs. This option is suitable for investors, who can manage their own portfolio and you seem to fit that profile. With respect to your current portfolio, I don’t see any changes that need to be made and the number of schemes for Rs 40,000 per month of investment is also fine. Continue with your current portfolio.

Q) Should I move my investment in Axis long term equity fund to a small cap fund for better gains, asks Hari Shankar?
A) Axis Long Term Equity Fund is an ELSS (Equity Linked Savings Scheme) fund, which has around 70 percent in largecaps. Investments in ELSS schemes are eligible for deduction u/s. 80C and I assume you would have invested in an ELSS fund to take the advantage of equity investments and also to save tax. Axis Long Term Equity fund is one of the top performers in the ELSS category.
Considering these factors, I am not clear as to why would you change the objective to higher returns via investing in a smallcap fund. Mid-smallcaps have given good returns over last 1-2 years, but that should not drive you to move your investments in this category. Please note that past performance need not repeat in the future and in fact, mid-smallcaps have already taken a huge beating since the past few months. Continue with Axis Long Term Fund and do not get swayed by simply looking at past performance.

Q) Anish Dewani writes to us from Gurugram. I have never invested in mutual funds till now. I want to start with a balanced mutual fund of 50 percent equity and 50 percent debt. A one-time investment given the current market scenario is better or should I go for SIP. Is it possible to put lumpsum amount without a fixed schedule? Please suggest me top five balanced mutual funds with their past returns. Also request you to advice on any term and condition that is important before buying any mutual fund.
A) Choosing a scheme will depend upon your time horizon. Since you are a new investor, it's understandable that you wish to invest in a balanced fund with 50 percent in equity and debt. However, if your time horizon is more than 10 years, then you may want to consider increasing the allocation to equities a bit more and to mitigate the market volatility invest via SIP's rather than lumpsum. Further, considering the tax rules, if you invest in a balanced fund, which has 50 percent equity allocation, then that scheme is categorised at a ‘debt’ scheme for taxation purpose.
Therefore, most of the equity hybrid schemes invest more than 65 percent in equities and rest in debt. In case, you still wish to strictly maintain a 50:50 ratio, then you could also consider investing half your money in pure equity funds and the other half in pure debt funds as in that case at least the pure equity portion will get the preferred tax treatment over long term. Since you are a fresh investor, I suggest that you take the assistance of an advisor who will guide you through all the aspects and help you create a suitable portfolio.

Q) Sarfaraz Sheikh has just started investing in mutual funds from December 2017. He has invested Rs 1,500 in DSP Blackrock, Rs 1,500 in Tata Tax Saving, Rs 26,000 in Kotak Opportunities, Rs 24,000 in Kotak Focus Fund and Rs 7,000 weekly in ICICI Prudential Balanced Fund. My savings till date is Rs 9.6 lakh and my target is to create a corpus of Rs 1 crore in 15 to 20 years. I am earning Rs 73,000 per month. Can you please suggest me how can I achieve my target?
A) You are currently investing Rs 3,000 via SIP in equity funds, Rs 7,000 per week i.e. Rs 28,000 per month via STP, which will continue for about next two years and have a lumpsum investment of Rs 50,000 in the two Kotak schemes. With just your current investments, it seems unlikely that you will be able to accumulate Rs 1 crore after 15 years. You will need to increase your SIP amount once your STP stops after two years. You don’t need two ELSS schemes for Rs 3,000 monthly investment. Stop DSP Tax Saver and increase the amount in Tata Tax Saving Fund to Rs 3,000 and rest is fine.

Q) Remya Menon wants to invest Rs 10 lakh in SIP in a good dividend giving fund. Which fund to invest in?
A) UTI Dividend Yield Fund, Birla Dividend Yield Fund and ICICI Dividend Yield Equity Fund are good options in this category.

Q) Vijay J Bhatt asks, how is Axis Midcap Fund?
A) Axis Midcap Fund has been doing well since the recent two years. However, in the midcap space, I would suggest that you look at a scheme which has been a more consistent performer such as HDFC Mid Cap opportunities Fund or Franklin India Prima Fund.

Q) Rajeev Nagpal asks, can you tell me about Kotak Select Focus and Kotak Classic Equity Fund.
A) Kotak Select Focus fund has now been renamed as Kotak standard MultiCap Fund and it has now become a MultiCap fund. Kotak Classic Equity Fund has now been renamed to Kotak India Equity Contra Fund. You may invest in Kotak Standard Multicap Fund. However, in the value oriented scheme category, ‘Tata Equity PE Fund’ is a better option than Kotak Equity Contra Fund.

Q) Annie writes to us on Twitter. Want to start investing in mutual funds with good returns in next three years. Can you suggest me a good fund and I can make investment of 10,000 per month.
A) For a new investor with a time horizon of three years, I would suggest that you invest in short term debt funds and do not experiment with hybrid options. At this juncture, the objective for you should be to accumulate this money for a pre-determined expense after three years and not look at ‘maximising’ returns. You may invest in HDFC Short Term Debt Fund.

Q) Kaliswamy P writes to us on Twitter. Want to invest lumpsum in Tata Digital Fund Growth.
A) This is a sector fund (Technology) and has been in existence since December 2015. If you understand and can follow the developments in the IT sector, then you may consider investing in this sector. However, I would suggest that you invest in a scheme, which has been in existence for a longer period and also has a stable track record such as Birla Sunlife Digital India Fund or ICICI Prudential Technology Fund.
Disclaimer: The views and investment tips expressed by investment experts on CNBCT-V18 are their own and not that of the website or its management. CNBC-TV18 advises users to check with certified experts before taking any investment decisions.