Tuesday, April 8, 2008

Mutual Fund Advise

An Investor asked me :

"Dear Mr. Srikanth

I am a small investor, age 43. I want to reshuffle my portfolio.
I want to switch in the following fund due to laggard of the fund performance, Pl. advice me or give your valuable suggestion for the following fund. All the below fund I want to switch in or switch out in one time in during April & May'08. I am hold the fund 3 to 5years.

From Sundaram Select Midcap to Select Focus (Rs.80,000)
From Magnum Global – switch out to Birla Midcap (Rs.80000)
HSBC Adv. India Fund –switch out to Birla Frontline Equity (Rs.20000)
Magnum Multiplier Plus to Magnum Contra (Rs.113000)
DSP ML Equity to DSP ML Top 100 (Rs.65000)
HDFC Equity to HDFC Top 200 (Rs.55000)
Fidelity Equity Fund – switch out to HDFC Top 200 (Rs.20000)
Franklin Prima Plus – switch out to HDFC Top200(Rs.20000)

All the above fund I invested before eight months now loss by 5% to 10% approx.

Expecting your best advice / suggestions.

Best regards,


My Reply was :
Dear PritwisDear sir,
Your investment is above 4 lakhs and so investment is not small. You has said you want to hold for 3 - 5 years which is good and I dont think if your time horizon is that long, you need to make such major changes.
However, you has asked for my suggestion and here goes.
1. Switching from Sundaram Select Midcap to Select Focus., definitely good and recommended.
2. SBI Magnum Global to Birla Midcap switch is not fully agreed upon. Even though Birla Midcap has performed well, I would rather have Reliance Growth Fund which has a better track record.
3. HSBC Adv India Fund to Birla Frontline Equity switch is a must and should be done at the earliest.
4. I recommend some changes with your switch from Magnum Multiplier Plus to Magnum Contra. First of all, Divide your amount in Multiplier Plus equally and invest in Sbi Comma Fund and Sbi Balanced Fund equally. Sbi Comma Fund should be an outperformer going forward due to booming Commodities Market and Sbi Balanced Fund will give a bit of downward protection to your portfolio in weak markets.
5. DSPML Top 100 Fund has become a favourite of mine in recent times and a switch to it is always welcome.
6. And HDFC Top 200 Fund is my evergreen favourite, and I always recommend in every portfolio and should form a core of your portfolio.
7. Switching from Fidelity Equity Fund to HDFC Top 200 Fund could be avoided because you already have a exposure to HDFC Top 200 Fund and also Fidelity Equity Fund (though a underperformer recently) has beaten the Benchmark consistently since inception.
8. Finally your switch from Franklin Prima Plus to HDFC Top 200 Fund need to be reconsidered and instead you can look at Templeton India Equity Income Fund which invests in High Dividend Yield Securities in India and abroad. It has given a return of above 22% since launch and has beaten the Benchmark comfortably.
I feel you are shaken by the recent market volatility and are considering switching to Large Cap Funds. Well, it is a good thing but if you are here for long term you need not worry, mutual funds are best avenue for high returns. And please invest through Sip in future.
Thank you,
Best of luck.

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