MF Query Board

MF Query Board

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I have been investing with the following equal monthly SIPs. I have also invested in gold ETF on a fortnight basis for two units. Can you recommend your views on them and suggest changes, if required? They are: Edelweiss US Technology Equity Fund, Edelweiss Greater China Equity Offshore Fund, Motilal Oswal Nasdaq 100 Fund of Funds, Nippon India Japan Equity Fund, Franklin Feeder Franklin US Opportunities Fund, Axis Mid-Cap Fund, Axis Long-Term Equity Fund, ICICI Prudential Blue Chip Fund, Mirae Asset Large-Cap Fund and SBI Health Opportunities Fund.

- Anand Joshi



If we are not wrong, you currently have running SIPs in 10 funds. If we keep the Axis Long-Term Equity Fund (which is an ELSS) aside, and equally divide the investments, each fund would have 10 per cent allocation. With this, your portfolio is highly tilted towards international funds with almost 50 per cent of your investments dedicated towards them while the remaining 20 per cent is in large-cap, 10 per cent in mid-cap and 10 per cent in sector fund (healthcare). Let us look at the performance of these schemes to understand how they have done in the long run and recently.

If we look at the five-year rolling returns, then most of the funds failed to beat Nifty 50. This shows that in the long-term, investment in Nifty 50 is much more beneficial than some of the above funds. Having gained this clarity, let us first try and understand the purpose of your investments. This is because if you have invested in international funds with the intention of funding your child’s education abroad or to perhaps go on an international vacation, then it is fine. But if you have invested in them just because of the rally, then this shows that you are carrying a behavioural bias wherein decisions are taken based on recent performance.

This is also evident with your investment in the healthcare fund and gold ETF. Chasing returns is one of the worst investment ideas with the largest probability of failure. Hence, what we believe is that you should have the objectives defined before investing. The reason is simple: you won’t understand the suitability of the product unless you know why you are investing. However, if these investments are tactical calls and you are investing for short-term profits, then they will work for you provided you know when to exit.

However, as you are running SIPs in them, it doesn’t reflect those intentions. Further, there seems to be a clear case of mistaken or misleading selling or a concept of ‘do it yourself’ (DIY) going haywire. So, in such a case we would urge you to stop SIPs in international and sector funds. You could also stop the SIP in Axis Mid-Cap Fund. The fund, has not performing well over the past 10 rolling quarters, largely due to holding large amount of cash that has helped it to perform better during the falling market but worked against it during rising market. Even in the case of ELSS, if possible, invest in lump sum. Further, if you are investing in ELSS to save on tax, our advice is not to invest all your money in ELSS and rather divide it between ELSS and PPF. It’s best to have a proper investment plan before parking your funds.

 

 

 

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