Tuesday, February 17, 2009

Too many Infra funds in Portfolio

Mr.Saurabh Bhatia wrote back :

Hello Sir, First of all, thanks for your comments to my previous mail. I began investing in November last year and as the situation is, have already lost a lot of unrealised value owing to the great market fall. I would like to know your thoughts on my current portfolio which I begin to feel is not very good and pretty polarised.

1. Tata Indo Global Fund - 15%
2. UTI Infrastructure Fund - 9%
3. Sundram Capex - 9%
4. Reliance Power Sector- 12%
5. JM Agro and Infra - 9%
6. UTI Infrastructure - 9%
7. JM Basic - 12%
8. Birla Sunlife Tas Saver - 10%

9. Principal Personal Tax Saver- 15%

Please advice about my decisions so far. I am a medium to long term investor with a time frame of more than 2 years. Please also tell as to which ones can be discontinued. I also hear commodity based funds tend to outshine others in difficult scenarios. Please provide your valueable comments. Thanks

Dear Saurabh Bhatia,
Yes, Mr.Saurabh, you are right, your portfolio is not showing a rosy picture, not just because of the Bearish Market but also some bad investments.
It is unbeliveable that 75% of your investments is in Infrastructure and Related Sectors!!!. A sure reciepe for Disaster. Your portfolio needs a makeover and a very urgent one at that.
To begin with, let me clarify, that I am not considering your ELSS investments as they have a lock-in period and both your ELSS funds are pretty good one at that.
The changes/switches you need to do is as follows:
Tata Indo-Global Fund - 15% (Retain 5%, and balance 10% , divide into 5% each and shift 5% to Tata Pure Equity fund and 5% into DSPML Top 100 Fund)
UTI Infrastructure Fund - 9%. (Sell in entirety and invest 5% in Birla sunlife Equity Fund and balance 4% invest in HDFC Prudence Fund)
Sundaram Capex Fund - 9% (Shift entire 9% into Sundaram Select Focus Fund)
Reliance Power Sector Fund - 12% (Shift 6% each into Reliance Growth Fund and 6% into Reliance Natural Resources Fund)
JM Agro and Infra Fund - 9% (This is a Close ended Fund and you will have pay High Exit Charges, if you switch out or exit now. So, with heavy heart, I have to say, you have no other option but to continue and stay invested)
UTI Infrastructure Fund - 9% (Obviously, this is UTI Infra Advantage Fund, which is again a Closed ended Fund and with the same reasons as above, continue)
JM Basic Fund - 12% (Sell and invest 4% each in Fidelity Equity Fund, HSBC Equity fund and DWS Investment Opportunity Fund)
Note, I would have recommended JM contra, but you already have a good exposure to JM Fund House, so it is better you diversify across Fund Houses also.
After the above switches and shifts, your portfolio would look something like this:
Sundaram Select Focus Fund - 9%
JM Agro and Infra Fund - 9%
UTI Infrastructure Fund - 9%
Reliance Growth fund - 6%
Reliance natural Resources Fund - 6%
Birla sunlife Equity Fund - 5%
DSPML Top 100 Fund - 5%
Tata Pure Equity Fund - 5%
Tata Indo Global fund - 5%
HDFC Prudence Fund - 4%
DWS Investment Opportunity Fund - 4%
Fidelity Equity Fund - 4%
HSBC Equity Fund - 4%
and of course your existing ELSS Funds
Birla Sunlife Tas Saver - 10%
Principal Personal Tax Saver- 15%

And, Mr.Saurabh Bhatia, you need to find a Good Mutual Fund Advisor immediately, so that the previous mistakes are not repeated.

Best of luck,
Srikanth Shankar Matrubai

Visit http://goodfundsadvisor.blogspot.com for More Detailed Mutual Fund Advise.

1 comment:

Sandy said...

It is really quality & outstanding post. keep it up!

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