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, Kaustubh Belapurkar, Director – Fund Research, Morningstar Investment Adviser India.
Q) Rajeev Nagpal wants to know about Kotak Select Focus and Kotak Classic Equity Fund both are same or not.
A) Both the funds have different mandates. Kotak Multi-cap Invest with into growth stocks across market capitalisations but with a bias towards large cap stocks. Kotak Contra aims to invest into contra ideas i.e. stocks and sectors that are fundamentally good but are good through a temporary downturn. All though both funds have some similar names in their top holdings, the overall portfolio overlap is around 40-45 percent. On a sector basis, the differences are stark. Kotak Multicap is underweight technology, while Kotak Contra has a huge overweight to technology. Kotak Multicap has a large exposure to finanicials, while Kotak Contra is significantly underweight Financials.
Q) Amit Agrawal is regularly investing Rs 4,000 per month in HDFC Mid Cap Opportunities Fund Growth Option since 2016 and Rs 3,000 in IDFC Tax Advantage Fund since January 2018. Please suggest whether these funds are better or not as IDFC Tax Advantage Fund does not perform better.
A) Both funds are fairly well managed. Since you have recently invested in the IDFC Tax Advantage Fund (January 2018), we would urge you to be patient. Markets have been volatile so far in 2018 and most funds have underperformed during this period. Hold on to your investment for 5-7 years at least.
Q) Tejaswi Gokul wants to know about Axis Long Term Equity Fund Growth for three year lock-in period.
A) We rate the Axis Long Term Equity fund very highly. The fund is well managed ELSS Fund which also gives you a tax deduction under Section 80C.
Q) Padmanabha Linganna writes to us on Facebook. Investing Rs 3,000 in Mirae Asset Emerging Business Fund and Rs 3,000 in L&T Emerging Business Fund and Rs 4,000 in Aditya Birla Sun Life Small and Midcap Fund. If I continue with these funds in 5 years, can I get Rs 10 lakh?
A) To get Rs 10 lakh over the next five years, these funds would need to deliver returns of 21 percent per annum, which is unrealistic. For starters, we would advise you to think about increasing your time horizon. Since 70 percent of your portfolio is in Small cap funds, we recommend at least a seven year holding period. If you can’t hold for more than five years, we would recommend reducing the allocation towards Small caps and investing in Large Cap and Multi-cap Funds. Some large cap fund options are Franklin India Bluechip, HDFC Top 100, ICICI Prudential Bluechip, Aditya Birla Sun Life Frontline Equity and Reliance Large Cap and some multi-cap fund options are Franklin India Equity Fund, HDFC Equity and Mirae Asset India Equity Fund.
Q) Darshan Mehta from Mumbai has invested in the following SIP: Franklin India Prima Fund Direct Growth Plan, Aditya Birla Sun Life Pure Value Fund Direct Plan and HDFC Small Cap Fund. All SIP are of Rs 2,000 every month. I want to know whether I have invested in right fund or not. My time horizon is for five years.
A) On a standalone basis, these funds are good. But I would want you to think about your investment time frame. An ideal time frame for small and Mid-cap funds should be at least seven years, if you can increase your time horizon to 7+ years, then stay invested in these funds, else consider slightly less risky options like large cap or multi-cap funds.
Some large cap fund options are Franklin India Bluechip, HDFC Top 100, ICICI Prudential Bluechip, Aditya Birla Sun Life Frontline Equity and Reliance Large Cap. Some Multi-cap Fund options are Franklin India Equity Fund, HDFC Equity and Mirae Asset India Equity Fund.
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