Investment Advise

Mr. Khilji, asked "I have 100K at the moment on hand, and hopefully, won\\`t need it untill April-2009.
Please suggest me, where to park this?"

Srikanth Shankar Matrubai replied ::: "Khilji, I feel Arbitrage Funds is the answer. Go for it, you will get a definite 8% and maybe if you are lucky, the returns could go upto 11%. And if you hold them for more than 1 year, you will not have to pay any taxes.""

Outlook Money letter

Lot of my clients and other well wishers could not get the copy of Outlook Money 9 April issue. I am reproducing the letter here for their benefit. The letter which I had written to Outlook Money went like this ::::
Dear Sir,
"Why have NFOs lost their lustre?(9 April) mad interesting reading. But I disagree with the author on some issues. Avoiding all NFOs would not be a very wise thing to do. You have to invest in some NFOs which are exceptions to existing schemes like DSPML World Gold Fund and Lotus Agile Fund, and exotic funds like JM Core 11, especially if they are closed-end because you may not be able to invest in them for another three years. Also, the author says that some fund houses give up to 8.5 percent commission to distributors. I am a distributor myself and have never come across any fund house giving even 5 percent."

Letter in Outlook Money

It seems that sebi was hell bent on making the mutual fund agents extinct. But even after making no entry load on direct investments, it seems people prefer going through mutual fund advisor rather than direct.
You can see my letter published in Outlook Money magazine in the Letters to the Editor column in the April 24 issue.

Investment Advise

I recd a mail from one Vincent
" dear sir,

I HAVE INVESTED IN THE FOLLOWING FUNDS PLEASE HELP ME OUT MY LEARNED FRIEND AND I WILL BE VERY GRATEFULL-
1. HSBC UNIQUE OPPURTUNITIES FUND ( RS 10000)
2. SUNDARAM BNP PARIBAS SELECT MIDCAP APPRECIATION (sip rs 2000)
3. HDFC MIDCAP OPPURTUNITIES FUND - GROWTH
4. TATA SIP FUND SCHEME -I ( total rs 10000)
5. FRANKLIN TEMPLETON FLEXICAP FUND ( sip rs 1000)
6. ICICI PRUDENTIAL DYNAMIC PLAN CUMMULATIVE ( sip rs 1000)
PLEASE HELP ME OUT . I HAVE ALREADY INVESTED THROUGH SIP IN THESE FUNDS SINCE APRIL 2007 WHAT MUST I DO NOW SHOULD I KEEP THEM OR SWITCH OVER TO SOME OTHER MUTUAL FUNDS.
THANKS FOR YOUR HELP IN ADVANCE!!!

VINCENT"

My reply was :::
"""Dear Vincent,
At the outset, I must say that your portfolio is titled towards mid-cap funds and Major Rejig at once.
HSBC Unique Opportunities Fund should be switched to HSBC Equity Fund to give protection in these volatile times.
Sundaram Select Mid Cap Fund has been a good performer in the past, but has been a laggard in recent times. But one gets the feeling you can continue to remain invested in the fund and review at the end of 2nd quarter. Till further fresh call, you please reduce your sip amount from 2000 to 1000.
HDFC Mid-cap Opportunities Fund has been a dud among HDFC Funds, you would be better off if you switch to the better performing fund HDFC Prudence Fund. This is a Balanced Fund and would also give your portfolio some semblence of stability in times of heavy Downtrend in Market.
Tata Sip Fund is a close ended fund, so you can't do anything till it completes 3 years. Stay invested and take a call on the fund at the time of the fund becoming open ended.
Franklin Templeton Flexicap Fund has a mandate of investing across market cap but the fund has struggled to give decent returns. You can redeem the fund and start a fresh SIP in JM Contra Fund which tough a Contra Fund has given good returns since its launch and is managed by Star Fund Manager Sandeep Sabharwal.
ICICI Dynamic Plan is again an Aggresive Fund and with its Dynamic Style of investing tends to be very volatile. Since you would be switching from HSBC Unique Opportunities Fund and reducing your sip in Sundaram Mid cap , you can continue your sip in the fund. Though you are advised to keep booking regular profits and thus change the option from Cummalative to Dividend Payout.

Since you will be saving 1000 from Sundaram Select Mid Cap, you should consider investing the same in Large Cap Fund like Birla Sunlife Frontline Equity Fund, DSPML Top 100 Fund or HDFC Top 200 Fund.
Your portfolio lacks Large Cap Funds. In these times of high volatility, you will be better served only by Large Cap Funds. """

Free Insurance by Mutual Funds

Mr. Khilji wrote :: " Check out the latest facility of SIP+Insurance offered by Reliance. I was planning to start SIP of 1500 Rs. as per advice of some senior members, which I am going to make 2000 Rs. out of total 15000 Rs. SIP monthly. Please post your views / suggestions on this as well as my idea of 2000 Rs. SIP."

Srikanth Shankar Matrubai replied ::: ""

Its good that you bought this topic to the message board. In fact, I was planning to do the same. The way the Insurance works is like this ::: Suppose you take a sip for 10 years say for 2000 per month. Then the Reliance Mutual Fund will provide 2000 * 12(months) * 10 (years) i.e. Rs.2,40,000 insurance to you. Now, the catch is, the Insurance will keep reducing every month as you keep completing the sip. Say, after the 1st year, since you have to pay for only 108 months, the insurance coverage will automatically reduce to 108 * 2000 that is, 2,16,000. This way, insrance will keep reducing monthly, ultimately bringing your insurance to nil on the completion of your sip. Kindly, if two consective instalments is made, then the insurance stands cancelled. Though your investment stays on. I think Mr.Ranjan would be a better judge on this, as he is an expert in insurance investments. The same option is available in Kotak Mutual Fund Schemes also. This fund works better for those who already have some sort of Insurance. Otherwise, you are better off going for a Term Insurance and going for a normal Sip. If you are really interested in Mixing Insurance with Mutual Funds, I would advise you to invest in Deutsche Mutual Fund's DWS Tax Saving Fund which works in much better and friendly way. In Reliance and Kotak Mutual Fund, the Insurance keeps reducing and is available only for Sip investors. However, in DWS Tax Saving Fund, the Insurance is available for both one time investment as also for SIP. Here, the insurance is given for 5 times of your investment value. And more importantly, the insurance is covered upto the completion of 60 years age. And most, importantly, if with slight intelligence, you procure different folios in the same fund, you can withdraw or redeem one folio and continue to enjoy returns and insurance in the other folios in the same fund. Last but not the least, DWS Tax Saving Fund has been a very good performer since launch and is second ranked in terms of returns.

Fund Manager v/s Fund House

There is no dispute to the fact that Sandeep Sabharwal is one of the best Fund Managers. He single handedly took SBI Mutual Fund to the top when he was at the helm in SBI.
And since the time he joined JM, he has repeated the magic and in fact took some of the schemes ranking from Rank 165 to Rank 1 !!!!!.
Great.
And that's one of the reasons I recommend JM Contra to all my clients.
Wadia too is bang on target., that it would not be easy to keep track of the Fund manager and change the fund house, as and when he leaves the fund. It would be quite a chore. But for some gains, some pain is inevitable.
One solution to this could be that you can invest in Fund Houses which do not depend on Star Fund Managers and have an inbuilt System to Analyse and Track Stocks. The Fund Houses which have this kind of system is Birla Sunlife Mutual Fund, Tata Mutual Fund and to some extent DSPML Mutual Fund.
Think it over.............
Best of luck.

Thank you note

Tarangam wrote a thank you note which went like this ::::

Dear Kentmss,
How are you? Thank you for your message. I will follow the direction provided by you and our dear Ashalanshu.


Thank you for your recommendations. Several friends including Ranjan, Ashalanshu, Kentmss have tried to help me. I have found several Funds common in these recommendations. That way my job is made easy. I will pick up the best of the best Funds. You guys answer every call with utmost speed. Now the beginners like me know that you guys are there to lead us in the right direction. Carry on with your mission, my dear friends. That is life. I admire it. I recall now what Herold Robbins said in his novel, 'A Stone for Danny Fisher'. He said, 'Death is more universal than life. Everyone dies but not everyone lives'.
Regards.

Investment Advise

One Person wrote :
I am an NRI and have been investing in mutual funds for the last 4 years. I am 58 years old and will be returning back to India in 2 years time. I require about 40 to 50K as monthly expenses from my investments once I am back in India. I request our fellow boarders Ranjan, Wadia, Ashal and Kentmss to review my portfolio and suggest if any changes are required.
My present investments are as follows.
Safe Investments:
1) Bank FDs and other fixed income investments. 30 lac
Mutual Funds:
1) Birla Sunlife Equity. 5.5 Lac (On going SIP)
2) HDFC Equity. 4.7 Lac (On going SIP)
3) HDFC Prudence 4.5 Lac
4) Reliance Growth 4.5 Lac
5) Templeton India Equity Income 7 Lac
6) UTI Infrastructure 1.5 Lac (On going SIP)
7) UTI MIS Advantage 15 Lac
8) ICICI Pru Index 6 Lac
Hoping to hear from you all,
Thanks.


MY REPLY :Dear Guest, you should thank Ashalanshu for giving such a detailed analysis of your portfolio and your future expected income. He is bang on target when he says that with the kind of investment you have made, 40-50k per month should not be a problem.
As we age, it is always better to shift our investments gradually to Large Cap Funds and Balanced Funds. I would advise you to shift your funds further to Dividend Payout option.
And finally, regarding your holdings, Continue your investment in Birla Sunlife Equity Fund for now, but let your SIP go to Birla Sunlife Frontline Equity Fund.
Switch from HDFC Equity Fund to HDFC Top 200 Fund for lesser volatility and smoother journey.
Continue your investments in HDFC Prudence Fund and invest more as and when possible.
Reliance Growth is slightly baised towards Mid-caps, hence better you stop your fresh sips in the fund and consider investing the same in SBI Magnum Balanced Fund.
Templeton Equity Income Fund has been a favourite of mine and is a must have in all portfolio. The fund invests in High Dividend Yielding Stocks across geographies and thus spreads your risks.
I advise you to redeem your investment in UTI Infrastructure Fund and invest the proceeds in DSPML Top 100 Fund. Even though Infrastructure as a theme is a favoured investment by most fund managers. It is not advisable for your goal to have such a highly volatile fund.

You can consider investing in some Arbitrage Funds and Monthly Income Plans with around 15-30% equity exposure for debt plus returns and safety purposes.
Best of luck.
Srikanth Shankar Matrubai

Investment Advise

One Ashutosh wrote :
planning a portfolio like this : diversified DSP ML TIGER RP (G) - 5000.00
ELSS - Principal personal -500 SIP
SBI magnum Tax Gain - 500 SIP

Balanced - ICICI Pru CCP Gift plan - 5000

HDFC Young Star ULIP

What say ?


MY REPLY ::::::
Dear Ashutosh,
Your choice of ELSS fund are good, though nowadays I am having second thoughts on SBI Magnum Tax Gain 93 about its future capability to generate above Market returns. The doubt has arisen due to its bloated Corpus in recent times and I prefer to invest my ELSS amount in DSPML Tax Saver Fund and Lotus India Tax Plan.
However, you can continue your planned investment in Principal Personal Tax Saver.
If your are planning for a SIP of 5000 in DSPML Tiger Fund, good, go ahead. But, if possible, please dont put all your money in only one fund. Preferably invest in atleast 3 different funds to have diversification and avoid sector concentration.
As Ranjan has said, ULIPs are very bad investment option. They tend to charge heavily and give huge commissions to agents which ultimately affects you.
Instead you can consider Kotak Star Kid Facility offered by Kotak Mutual Fund for its funds namely Kotak K30, Kotak Opportunity and Kotak Tax Saver.
You can also look at DWS Tax Saving Fund which too offers Life Insurance Coverage upto 5 times your investment.
Best of luck.
Srikanth Shankar Matrubai.

Investment Advice

Tracked by (0)

One TARANGAM wrote: Dear all, Last Friday I invested in Sundaram Select Focus via SIP at Rs.10,000 per month for 10 months. I have another 6 lakhs to invest in MFs. I wish to invest next week in the following 6 Funds via SIP at Rs.10,000 per month in each of the 6 Funds. I wish to have your advice before I invest. I am looking forward to hearing from my well-wishers, Ashal, Ranjan, Kentmss etc. 1.SBI Magnum Contra (G) 2. DSPML T.I.G.E.R. (G) 3. DWS Investment Opportunity Fund (G) 4. Reliance Growth Fund (G) 5. Tata Infrastructure Fund (G) 6. Principal Child Benefit Fund-Career Builder Plan Regards.

My reply was :
Dear Tarangam,
How are you?.
Your first choice of Sundaram Select Focus is excellent one and definitely recommended.
Regarding your choice of other funds namely,
1.SBI Magnum Contra (G)
2. DSPML T.I.G.E.R. (G)
3. DWS Investment Opportunity Fund (G)
4. Reliance Growth Fund (G)
5. Tata Infrastructure Fund (G)
6. Principal Child Benefit Fund-Career Builder
Plan

I am not a believer in SBI Magnum Contra nowadays., especially since Sandeep Sabharwal left the fund. I am not saying that just because he left, the fund is not good. But the point, the new fund manager Sanjay Sinha, is threading slow and defensive in Stock selection and hence Sbi Magnum Contra is now more a Contra Fund, and is just one more Diversified Fund. If you want Contra Fund, you could look at JM Contra Fund which is managed by Sandeep Sabharwal. Also, never go by ratings, for in Mutual funds Past performance may not always be repeated. Just look at Franklin Blue Chip Fund. It was given 5 star rating in 2005 when it gave around 126% annualised return. Now where is it standing?. It is not even in the top 25 Funds.
I am fully with you regarding DSPML Tiger Fund. Go ahead.
DWS Investment Opportunity Fund has been a good performer and has a tendency to pick multi-baggers like Gujarat NRE Coke out of nowhere. I recently met one fund manager, he seemed to bullish on all DWS Funds., and was recommending DWS Alpha Equity Fund among Large Cap Fund (I have to admit I have yet to study about this fund).
Reliance Growth fund has been a star performer both in Bull and Bear Market and is a must have in every portfolio.
I am not in favour of Tata Infrastructure Fund, because you have already invested in DSP ML Tiger Fund, instead you could look at DSPML Natural Resources Fund which will be complimentary to the DSP ML Tiger Fund.
Regarding Principal Child Benefit Fund, I am in full agreement with ashalanshu that you are better off investing in HDFC Prudence Fund.

You can also consider Franklin Templeton Equity Income Fund, which invests predominently in High Dividend Yielding Stocks worldwide and will be a good diversifier.
Best of luck.
Srikanth Shankar Matrubai.

AIG WORLD GOLD FUND

Excellent Article.
Only critisicm about the article is that it came too late., I mean only on 13th of May while the Fund itself is closing on 14th May.
I am always advocating investing in DSPML World Gold Fund for the same reason. In fact, when the DSPML World Gold Fund came out with its NFO, lot of my senior advisors were laughing at my suggestion when I was recommending the same to my clients. But I was convinced about the same, and I was the highest in my group in terms of Total Sales.
Even about the AIG World Gold Fund too, I feel the same. It is an excellent diversification both in terms of Geography and Asset Class.
For lesser knowledge person, let me clarify that in terms of comparision DSPML World Gold Fund falls in the category of Large CAp Funds and AIG World Gold Fund comes under Mid-Small Cap Fund. So, ideally you should be invested in both.
Dont miss the NFO, and if you have missed, As soon as it is available for purchase, BUY.
Best of luck.

Investment Advise

Posted by: neerajavalaskar on ( 12-May-08 21:26 )
I want to start SIP of Rs. 5000/- 1.please suggest me shall I invest into 1 or 2 ELSSs? 2. In which ELSS fund/s Thank you in advance. My reply was : Dear Neeraj SBI MAgnum Tax Gain 93 has been a star performer and given 5 Star ratings by most rating agencies. But its fund size has grown substantially and I have my doubts regarding whether it will be to give the same returns as in the past. In fact, I doubt whether it will be even able to give Sensex average returns!!! So, in hindsight, I disagree with Mr.Extermite that you should invest your entire funds in SBI Magnum Tax Gain. In the ELSS category, my picks are Birla Sunlife Tax Relief 96, DSPML Tax Saver, DWS Tax Saving Fund, Fidelity Tax Advantage, HDFC Tax Saver, Lotus India Tax Plan, Principal Personal Tax Saver and Sundaram Tax Saver. You can consider among these. If you dont worry short term volatility and investing for a really long term, then you can safely consider DSPML Tax SAver Fund. Best of luck. Srikanth Shankar Matrubai.

Investment Advise

Posted by: japa on ( 13-May-08 08:32 )
Hello all, I'm a employee with an MNC and am interested in investing a total of 24000 Rs for the whole year in a Tax saving MF. From the money control board and from some of my personal relations i understood that Principal MF is slightly better than SBI Magnum in this category. But i wanted to take your help in deciding which is better of these two. Though it's a small amount to be invested, this is the first time i'm trying it in MFs, so please suggest me which one should i go for. Thanks, Anil My reply was : Dear Anil Japa, Principal Personal Tax Saver Fund is slightly more baised towards mid-caps, so it tends to be more volatile whereas SBI Magnum Tax Gain 93 Fund is veered towards Large Caps., so in effect both are good for long term but SBI Magnum corpus is bloated and may struggle to give high returns so you can invest in Principal Personal Tax Saver Fund. You can also consider investing in DSPML Tax Saver Fund and Lotus India Tax Plan. Both the funds are relatively new and just about one year old but both the funds have given above market returns and especially DSPML Portfolio contains excellent future multi-baggers and could well be the next STAR performer in the ELSS Category. Best of luck.

Investment Advise

One client wrote:

Respected Mr. Srikanth Matrubai
After reading your profile from moneycontrol.com, I like to talk to you on my MF portfolio. From the commitment to my family, I can’t invest minimum amount say Rs. 5000 to any fund in one go. Hence I always start investment though SIP route to get that magic figure – Rs. 6000 (mandatory for SIP investor) and then I just invest to that fund minimum amount say Rs. 1000/ 500 when the market falls in order to lower my average price (NAV).

My Current portfolio

Under my name:

1. Magnum Contra (G) - Rs. 8500
2. HDFC Equity (G) - Rs. 11000
3. Birla Frontline Equity (G) - Rs. 5000
   

Under my wife (House wife)

1. Reliance Vision (G) - Rs. 12000
2. ICICI Pru Infrastructure (G) - Rs. 10500

Right now I am investing Reliance Vision Rs. 1000 through SIP every month. I am thinking to get started anther SIP Rs. 500 to Magnum Contra since the market will be range bound for next 1 year as predicted by analysts.

My monthly budget for MF investment is around Rs. 3000. The remaining amount I invest in my MF when the market takes a nosedive.

I have one son of 6 years old. I like to invest in another fund for my son. Do you really think of addition one more fund or it would be better if one existing fund should be dedicated to his account. I can add one more fund but it seems hard to maintain that fund with the aim of reducing the average cost / NAV when the market plunges

My target is 50 lakhs after 15 years. Now your suggestion is highly solicited on my goal.

Regards,
Arindam Mukherjee

My advise to him was :

Dear Arindam,
At the outset, congratulations. You have chosen the best route to increase your wealth. And your choice of portfolio is really top class. You deserve appreciation. Well done.
Under your name, all the three funds that you have invested are very good indeed and continue the same. There is no need to change or add to the same.
Under your wife, both the funds, Reliance Vision and ICICI Infrastructure Fund are very good indeed. But dont invest more in ICICI Infrastructure Fund, as I am never a advocate of Theme Funds especially for conservative investors. As and when possible, you can consider investing in HDFC Prudence Fund or SBI Magnum Balanced Fund in your wife name to give protection to overall portfolio during volatile times.
You have already invested 12000 in Reliance Vision which is a good 27% of your portfolio, so continuing to invest in the same fund may not be such a good idea. Instead you can consider investing in Funds like DSPML Top 100 Fund or Templeton India Equity Fund which invests in High Dividend Yield Funds worldwide.
For Your son you can consider investing in Kotak K30 Fund via SIP and go for their offer of Kotak Star Kid., through which they will offer insurance of the Balance Amt Remaining to be invested if something were to happen to you.
Or if you dont want insurance you can investing in HDFC Top 200 Fund in his name.
Get back to me if you want more clarifications, and alternatively post the same question in Moneycontrol Message Board where you will get many more expert advise and also you can email to Ranjan, Wadia, Ashalanshu for their esteemed advise.
Best of luck.
Srikanth matrubai

Prav22 "i have started a sip of lic mf (opportunities fund) a year before and i am seeing its not doing well and is under performance, i wanna know that can i stop it in between , ihave taken it for three years, or should i continue or can i switch to other."

Dear Prav22, there is nothing to stop you from discontinuing your sip. You have made the right decision of stopping the sip. LIC MF schemes are the worst performing schemes for quite a long time. In the first place, you should not even considered investing in LIC MF. Past is past, admit your mistake and move on. Consider investing in High Quality Diversified Fund like Birla Sunlife Equity Fund, DSPML Equity Fund, Fidelity Equity Fun, HDFC Top 200 Fund, Kotak Opportunities Fund, Lotus India Agile Fund, Mirae Asset India Opportunities Fund, Reliance Growth Fund, SBI Magnum Contra Fund, SBI Magnum Comma Fund, Sundaram Select Focus Fund, Tata Equity PE Fund among others.
And always, invest via SIP and invest for long term.
BEst of luck.