An asset allocation-based approach (mix of equity, debt, commodities, real estate, etc.) is advisable for investing towards one’s goal. Fixed income lends stability to the portfolio, whereas equities play a crucial role in wealth generation over the long run.
Assuming a long horizon of 10-plus years given your age, you should look to invest with a portfolio mix of about 90% into equities (large/mid/small-cap/international – 40/30/25/5) and 10% into fixed-income funds. The international equity allocation offers diversification across geographies and acts as a hedge against rupee depreciation. For investment in fixed-income, you can consider fixed-income funds with a high (safer) credit quality portfolio such as banking & PSU debt funds, corporate bond funds and medium to long-term funds.
To meet long-term goals, it is always suggested that one stay invested for the long term. But market realities are such that one does see periods of expensive and cheap valuations, accompanied by periods of volatility. In such a setting, emotions, no matter how seasoned an investor is, do impact decision-making.
If you are an investor looking to deploy lump sum investment and is not sure whether to wait on the sidelines for the market to correct further or to go ahead with investment, Booster STP emerges as a viable solution.
Even if an investor has lumpsum money to invest, making the right investment decision when the market is volatile is never easy and entails high risk. While a traditional systematic transfer plan (STP) could be a good option, it may fail to capture fully an underlying opportunity. In such a period what may work the best is relying on features like the Booster STP.
In a traditional STP, an investor parks the lump sum money in a debt fund (source scheme) and instructs the fund house to transfer a fixed sum of money every month to an equity fund (target scheme) of his/her choice. But in the case of a Booster STP, the amount transferred every month to the target scheme will be variable in nature. The amount can vary in the range of 0.1x to 5x the base STP amount.
do understand, both Multicap funds and flexicap funds are expected to be meant for wealthcreations over the long term and they invest across the companies of different sectors and sizes. However multicap funds have a higher allocation towards midcap and small cap . Therefore they are more aggressive in their approach and are also more volatile then flexi cap funds.
If you are looking for an aggressive approach then you should go for Multicap fund. Alternatively go for a combination of some flexi cap fund and also midcap and small cap fund.
Focused funds have a concentrated portfolio of not more than 30 stocks.On the other hand diversified funds have large number of stocks in its portfolio.
The fund manager of focused funds take concentrated and high conviction bets on few stocks. It may turnout to highly rewarding as well highly risky. If the fund manager of focused fund proves right in his bets, the investors get bumper returns.
On the contrary, the diversified funds are less rewarding but much safer and stable.
I hope you got full understanding .
The Mutual fund investment cannot be gifted or transferred. The only situation in which a transfer is allowed from one person to another is upon the death of the investor.
In such situation , the nominee is required to produce the death certificate of the investor along with KYC documents.
However if you wish to gift a fund, then Gift this amount of Rs. 20000 into the bank account of your brother’s son and then complete the procedure of MF investment in his name .Accordingly the objective that amount gifted in parked in mutual fund will be achieved.
However if you already have investments in mutual funds and you wish to gift out of it, then it is not possible. You have to redeem the existing mf investment and then gift the proceeds.
Motilal Oswal Nifty 50 ETF has provided returns as under : last one year 8.27% return, Last 3 years : 17.47% returns, last 5 years : 12.46% and last 10 years : 13.06 % return.
The above returns are marginally below the returns of Nifty. Since you have invested in Nifty ETF, the portfolio of your fund will be replica of Nifty and is expected to provide returns equivalent to Nifty minus fund manager’s expences.
To this extent, the scheme has provided sufficient returns.
However its returns are much lower than some of the other large cap funds, where the fund manager is at liberty to choose the scrips.
For example , Nifty India large cap fund has provided 13.83% returns during last one year ( as compared to MO Nifty 50 ETF return of 8.27)
So, you may shift your investment to Nippon India Large cap or HDFC Top 100, where the fund manager is at liberty to choose better performing scrips and bring in higher returns.
Dear Mr. Selwyn,
Since you wish to invest for about 20 years, I suggest Equity ( Large & Midcap) which can give benifits of large cap shares ( Stability plus growth ) and midcaps ( Growth).
I would suggest 3 funds to choose from:
1) ICICIPrul Large & Midcap 2) Quant Large & Midcap & 3) HDFC Large & Midcap funds. These 3 funds have good track records.
Alternatively you may go for Quant large & Mdicap fund only.
Dear Ms. Sushma,
The strategy you wish to adopt is not advisable. For example if you have been investing Rs. 10000 per month through an SIP for last 10 years, you would have capital contribution of about Rs. 12 lakhs and this may be worth Rs. 30/40 lakhs at the current valuations. Now if the market drops by 10% and you stop SIP,you will withdraw the investment at lower market value and may take hit of Rs. 4 lacs.
The whole advantage of SIP lies in maintaining discipline investment. Changing methods according to the market trends will not bring good results and you will lose the advantage of sudden rise in the market valuations.
Sir, you have sufficient long period of investing.
So I suggest you to go for equity focused funds with good track record of high performance even during a falling market and the fund manager is well experienced. You are requested to study our Categorywise fund-track record to decide about the funds.
Since you wish to invest Rs. 35000 permonth, I suggest, you go for 3 funds with allocation of Rs. 10000,10000 & rs. 15000. Do understand the returns of the Equity funds may fluctuate over the period, yet in the longer period such investment will bring in much higher returns as compared to PPF or fixed income investments.I believe in the next 3 years, your funds will start showing decent returns.
Dear Mr. Oza, You have not mentioned your question in detail.
HDFC Balance Advantage fund is open ended Nifty50 hybrid fund with very large AUM of Rs. 43079 crore. Compared to its benchmark index and other funds of its category, it is well managed and garnered higher return. Only issue is its expense-ratio is somewhat high at 0.99%. ICICI Asset allocator fund charges only 0.13% as expenses and during the period of 3 years and five years, it has earned return equivivalent to HDFC Balance Advantage fund.
However do understand that compared to Equity focused fund, Hybrid fund bring in lower returns. So you have study your overall portfolio and decide the allocation among various categories.