Your Stocks is a daily show where market experts answer your specific stock related queries.
In July 17 edition of Your Stocks, Feroze Azeez, deputy chief executive officer, Anand Rathi Financial Services, answer your queries on investments in the stock market.
Nitin Parihar calls us from Jammu. He has been investing Rs 22,000 in various schemes via Systematic Investment Plan (SIP). He want to assess his portfolio?
Nitin has done a good job in terms of trying to the goals right by getting the debt allocation in Sukanya Samriddhi Yojana, which gives you a fillip on what kind of interest you would get on a debt fund, so utilising that is a wonderful idea. For the rest of the viewers, who haven’t done a Sukanya Samriddhi Yojana for their daughters, it's a good point to highlight that, point one.
Point two, all your funds largely are correct. You have two equity link saving scheme, which is giving you tax benefit that is a wonderful thing. Then, the other four funds, which you have mentioned out of them, two of them require some attention and some modification. One is the Motilal Oswal Focus 35. I think its exposure on financial services sectors is a little too much 45-47 percent. So, I would not recommend that fund, because it has 26 stocks, largely financial services. So, it is skewed towards one financial service sector, so I would ask you to change that.
Point two, you also have an L&T Infrastructure Fund. To my mind infrastructure as a sector could be good, but most of the diversified funds which you have just listed down already have a substantial exposure in them. So, I would recommend you to not have those either, that fund either and you can replace that with a couple of other good funds or add to your other funds which are there. On that category, you can move that money into Mirae Asset India Equity Fund, which is a good fund from a next three year perspective.
Abdul G has posted a query on Facebook. He wants to invest Rs 5,000 per month for SIP. He wants to know an investment plan for tax saving purpose?
From a tax saving perspective, you have to be little more vigilant, because you are stuck in that scheme for three big years, not just your first instalments, all your instalments need to have finish three years. So you have to choose ELSS scheme as they call it Equity Linked Saving Scheme little more carefully.
In that category, if you look at it from a future perspective prospectively, Birla Sun Life Tax Relief Fund would be the best fund in my opinion in that category because it has a mix of very good sectors and I think the fund managers has done a great job in terms of bottom stock picking. So Aditya Birla Tax Relief would be my pick from the ELSS perspective. If you want the second one, which is also a good thing to do, because you have Rs 5,000 to invest, then you can definitely look at Reliance Tax Saver Fund. These two funds will do the job, money divided in half in each of these.
RG Diwan calls us from Pune. He wants to know whether dividend option is better or growth option?
On the debt fund category, the dividend option is very detrimental. The dividend distribution tax, which is optically not visible to an investor is deducted and then paid. So, equity schemes, only if you are investing for really short term in equity schemes, which is counter intuitive, I think dividend as a category is redundant. On the debt side, certainly not. So, now the problem is that if a retired person who is at the age of 80 like Diwan wants a regular income, which the dividends were furnishing. So what does he replenish this dividend option and the dividend pay out from with. You can take a systematic withdrawal plan on a monthly basis for a constant amount that will be far more tax efficient on the dividend distribution tax category and also on the short term and the long term capital gains category. So, replace dividend pay out with systematic withdrawal plan (SWPs) and the debt fund and in equity fund. I think there is no case to actually have dividends reinvestments or pay-out.
Chanda Manral Bisht has posted a query on Facebook. He wants to know the view on Aditya Birla Top 100. Should he stay or switch?
Aditya Birla Top 100 has gone through a transformation in the category. It has now become a focused fund. So, the number of stocks have been reduced to 26-27. In a focused fund category, I would definitely not look at this fund, because the stocks are intersecting with the rest of the portfolio. So, I would strongly recommend to move the investment to the other fund of Aditya Birla, the same fund house, which is doing very well. Mahesh Patil is the fund manager. Aditya Birla Sun Life Equity to my mind not from the historical perspective, from a future perspective, would be a better scheme in that basket to choose from.
Rajesh Shahi has posted a query on Facebook. He has two funds, Kotak Select Fund and Axis Multicap Fund. He wants to know if he should continue with both or opt for a single large cap fund.
If somebody incidentally holds a fund in the largecap category, but transforms itself into multicap, that is the fate of Kotak Standard Multicap, which used to be Kotak Select Focus. So, I think he can stick on to Kotak Select Focused, which is now called Standard Multicap, because 86 percent of the money is anyways in the largecap category, but 14 percent is in midcap. It now has the flexibility given to Harsha Upadhyaya, who is the fund manager, to move more into midcap. As the correction of midcap pans out, I think his exposure in midcap would increase. So, net-net stick on to that fund. I think in spite of it not being a largecap category, it has a skew towards largecap.
Coming to the other fund, which you hold, which is the Axis Multicap, I would not say that it's one of my favourites. I would want you to move that to Mirae Asset India Equity Fund, which is a better largecap category. So, it will create a balance in your portfolio with these two schemes.
Abhishek Pandey has posted a query on Facebook. He wants to know which fund would be beneficial for a term of 1-2 years for a SIP investing for the first time.
It is important for you to not invest for one-two years, because if you analyse the last 25 years of data, it is very clear that any short term investor is posing his hard-earned money into risk. So, if you look at five-ten years time frame, the loss on capital is miniscule probability. So, you cannot ignore this fact and start this journey and your strategy, which is not commensurate to this data. So, you will have to have equity investments upwards of 4-5 years if not more.
So, if you can expand your time frame, then I will recommend you some equity funds. Kotak Standard Multicap could be a very good fund for you to start with. Reliance Largecap Fund, which was called Reliance Top 200 before, is a very good fund from a future perspective for a starter because both largecap and multicap schemes could be a good start point. Avoid midcap schemes till you have acclimatized yourself to the volatility.
If you want the debt schemes and cannot expand your time frame, stick to debt schemes. Do your SIPs there. ICICI Credit Risk Fund and Axis Credit Risk Fund could be a good fund basket, where you will get about 1-1.5 percent more than what a regular AAA rated debt fund would give. However, increase your time frame, you have time on your favour, make sure that you use compounding to your benefit.
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