REARRANGEMENT OF PORTFOLIO

My regular reader Sri Divate wrote again “Your advise is absolute top class, Mr.Srikanth”. Thanks for your previous advise. http://goodfundsadvisor.blogspot.com/2009/06/shall-i-continue-my-fixed-deposit.html

It was of immense help.

Kindly help me in rearranging my portfolio. As you know I am 50 yrs old and a Govt employee.
My present MF investment is ....
Units invest amt
Birla SL AAF -Aggrve (G)339.731 10,225
HDFC Prudence Fund (G) 83.937 10,357
HDFC Prudence Fund (G) 32.403 5,000
LIC MF Equity Fund (G)1170.026 25,000
LICMFFloMIP-PlanA(AD)2068.218 25,005
Reli Diver. Powe -RP(G) 165.751 11,000
Reli Growth Fund -RP(G) 36.108 15,000
Reli Growth Fund -RP(G) 35.648 12,000
Reli Natur Resoures (G) 977.995 10,005
Reli Vision Fund -RP(G) 93.150 17,000
SBI Mag Contra Fund (G) 400.834 25,000
SBI Mag Contra Fund (G) 438.745 25,000
SBI Mag Global Fund (D) 975.17 24,000
SBI Mag Global Fund (D)1360.750 45,000
SBI Mag Index Fund (G) 86.291 1,979
SBI Mag Insta Cash (C) 902.362 17,119
SBI Mag Tax Gain (D) 182.630 10,001
UTI VIS-Inde Linke (D)1759.201 25,000
Total 323,691

1. Whether is there any need of rearranging present folio to get better returns.
2. If some of the funds are to be rearranged then which funds.
3. I have kept about 20K in cash fund so that if market goes below NSE 3000 ? to switch to equity funds.
4. What is the Nifty target when to convert the equity funds to cash funds and vice versa.... if this has to be done.

With best wishes
anusridi


SRIKANTH SHANKAR MATRUBAI advises :
Dear Divate,
Shockingly, your portfolio is concentrated in SBI Mutual Fund which accounts for 50% of your portfolio. It is never a wise to have a concentration in one Single AMC. Ensure that all your future investments go to non-SBI amc to avoid over-exposure and ensure Diversification.

Out of your present MF Investment, you can continue holding the following Funds:
HDFC Prudence Fund
LICMF Monthly Income Plan
Reliance Growth fund
Reliance Natural Resources fund
SBI Magnum Contra fund
SBI Insta Cash Fund
SBI Magnum Index Fund

You should EXIT the following funds completely
LICMF Equity Fund
Reliance Diversified Power Sector Fund
SBI Magnum Global Fund
UTI VIS Index Linked fund

You also switch the following funds
Reliance Vision fund to Reliance Regular Savings Fund (Balanced) Fund.

From the Amount received from the Exit of Funds, you invest in a Debt Fund like Birla Income Plus or HDFC Income Fund and go for Systematic Transfer Plan in a Plain Diversified Fund and you can also look at investing HDFC FlexIndex
http://goodfundsadvisor.blogspot.com/2009/07/hdfc-flexindex-plan-for-cautious.html

which Transfers your Debt Fund Amount at Pre-assigned Index Levels.
Avoid Sector funds and also look at alternative assets like Corporate FDs, FMP, etc. to diversify your portfolio.
Keep a regular tab on your portfolio and make appropriate changes, if required.


Visit my blog for more details.
Best of luck,
Srikanth Shankar matrubai




http://goodfundsadvisor.blogspot.com




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4 WAYS TO BECOME WEALTHY

4 WAYS TO BECOME WEALTHY

Before going through the article, do some Financial Planning for yourself, assess your risk profile.

1. INVESTING WITH A SPECIFIC GOAL :
Most Investors invest without any specific Target/Goal in mind. They do invest in Quality Assets but sadly fail invest without any Clear Targets in Mind.
Clearly decide when and why you need the money., and how much will you need.
Prioritise your wants, needs, comforts, luxuries. Make a list of major goals which you visualise for the future, be it your car, home, child’s marriage, etc. Now, prioritise this list. Also read http://goodfundsadvisor.blogspot.com/2009/03/my-target-1-crore-in-10-years.html

It is easy for an Investment Advisor to show you the Right Assets if you specify your Target/Goal. Investing in Debt Funds for your Child’s Marriage is a foolish thing, but at the same time investing in Debt Funds for Next Year’s School Admission is a Wise Thing. Thus, it is imperative to invest with a Specific Target in Mind.
If you have more time to reach a target, then equities is the BEST avenue for you, as equities tend to give you higher retursn over the longer period
Also read http://goodfundsadvisor.blogspot.com/2009/03/retirement-planning-and-sons-education.html

2. INVESTING IN THE RIGHT ASSET CLASS :
Investing your hard money just to save taxes and making some smart investments in the right assets. It is to do more with the Asset Allocation.

It is always advisable to invest in a Mix of Varied Assets like PPF, Equities, Gold, Fixed Deposits, Property, Insurance, etc. Overexposure/Underexposure to Any and All Kinds of Assets should be Avoided. For Long Term, Equities are the best avenue of Investment.
Studies have shown that getting the Right Asset Allocation contributes more than 90% to the overall Performance of a Portfolio in the Long Run while Security(Equity) Selection contributes less than 10% !!!!.
The right mix of the assets will ensure that your money works hard for you and beats inflation hands down always!!
Asset Allocation is universally acknowledged method of creating Superior Returns over Long Term.
http://goodfundsadvisor.blogspot.com/2009/08/investment-portfolio-advise.html

3. AVOID MIXING INSURANCE WITH INVESTMENTS

Even Educated investors tend to invest in Insurance as their only source of Investments whereas it is well known Fact that Insurance is the Costliest way of Investment. Insurance is purely for sake of Protection if any untoward event happens to the Earning member of the Family.
The best Insurance is the Term Insurance. Agents avoid telling you about this because that Term Insurance gets them very very little Commission. ULIPs are a strict no-no. ULIPs leave you with insufficient cover and also give you below par returns. The best option would be to take a combination of Term Insurance and Mutual Funds.
Mutual Funds are the better option thatn ULIPs. Your Insurance Part should be taken care by Term Insurance and all the other features of ULIPs are taken care by the Mutual Funds which are very very cheap due to NO Entry Load., whereas ULIPs have a complex fee structure which could eat into your profits.
However, there are some ULIPs which can be looked into, but only if your investment horizon is over 15 years.
http://goodfundsadvisor.blogspot.com/search/label/Insurance


4. INVEST FOR LONG TERM
Almost Every Investor starts his Investment with Long Term Goal, but very soon as soon he sees the first profits, he becomes Greedy and forgets all about Long Term.
The problem comes when his Short Term Investment starts showing losses, the investor starts withdrawing his Long Term Investment to cover up for his Short Term Investment Losses and ends up failing to Accumulate a Sizeable Amount for his Long Term Goal.
Long Term Investment allows you the benefit of power of Compounding. Sensex, inspite 50% Drop in its value in 2008, has given a Compounded Return of 18% over a period of 30 years!!!! You would do well to read this post http://goodfundsadvisor.blogspot.com/2009/05/shall-i-switch-from-equity-to-debt.html

. Do not get swayed by the Market Movements and change your Investment.

Thus, in conclusion, when you start Investment, take your time, do consult a Good Financial Advisor and Invest in Diversified Assets and Stay Invested for Long Term, allowing your Assets to Perform.

Finally, do review your investments at least once every year.

Best of luck,
Srikanth Matrubai

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QATAR NEWSPAPER PUBLISHES MY VIEW ON DEBT FUNDS

Qatar's leading English Daily THE PENINSULA published my view on Debt Funds. The Newspaper carried a article on how the Indian Investors dumped most of their equity investments and how most investors were looking at the debt investments.
Further, the article wrote about which debt funds should be looked for investments and published my opinion on them.
This is what it had to say :
'Considering the falling interest rates, one would be better off investing in long term debt funds rather than short term as these would not yield much, says fund advisor Srikanth Shankar Matrubai. In his estimation, some good debt funds for an NRI to invest in would be ICICI Prudential Income Opportunities Fund, Birla Sunlife Income Plus, Canara Robecco Income(Growth) Fund and HDFC Income Plan. Then there is TATA Capital NCD which is giving attractive Rate of 12 per cent. "

One of my NRI client based in Qatar brought this to my notice.
Click on the link below to read the article.


THE ARTICLE

http://www.thepeninsulaqatar.com/Display_news.asp?section=business_news&month=march2009&file=business_news2009031581431.xml

Regards,
Srikanth Matrubai


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EVALUATE MY PORTFOLIO

CHANGE THE DEFENSIVE MINDSET

Mr. Brahmananda wrote :
Thank you for your informative blog. It has been very useful to small investors like me.
sir,
please evaluate and guide my portfolio.
At present I am investing in
bank R/Ds 15,000p/m,
Mutual Fund investments
Reliance Regularsavings Equity 1,500/m;
Sundaram Select focus 1,500/m;
Kotak Opprtunities 2,000/m;
Reliance Diversified Power Sector fund 5,000/m and
BirlaMidcap Fund 5,000/m,
I have 3yrs old daughter and I like to invest 5,000/m into gold, should i go for Gold ETF or Postoffice gold purchase and my investment horizon is 10-15yrs and after that to consolidate all investments.
I have term insurance for 35L;
Critical Illness 10L;
Mediclaim 5L(Family floater);
my annual takehome salary is 8-9L and
I have a own house and no major liabilites as of now.
Please guide me.
Is my investments are suffice and whether I am in right track?


SRIKANTH SHANKAR MATRUBAI advised :
Dear Brahmananda,
Thankfully, you have got your own house and have no major liabilities. This is a major plus point in favour of your finances.
I wonder why you need to invest 15000 per month (nearly 50% of your investment amount) in Bank RD where the interest rate barely covers the Inflation and leaves you with very little actual gains. Since, you have no major liabilities, you can afford to be a bit balanced, if not aggressive. Your investment in Bank RD is too defensive. You can as well consider investing in Balanced Funds or even Diversified Equity Funds, especially since your investment horizon is 10-15 years.
I feel you need to add another Rs.10 Lakhs to your Insurance Cover and increase your overall Cover to about 45Lakhs. You can consider taking a Top-up to your existing Term Insurance.


You need to make only some minor adjustments in your portfolio for a better returns. Otherwise your Fund selection is quite good.
Reliance Regular Saving Equity - 1500pm - continue
sundaram Select Focus - 1500pm - Continue
Kotak Opportunities - 2000pm - Switch to Kotak K30 Fund
Reliance Diversified Power Sector Fund - 5000pm - Stop immediately and invest 2000pm in Reliance Growth Fund
and the balance 3000pm in HDFC Prudence Fund
Birla Midcap Fund - 5000pm - Stop immediately and split the 5000 and invest 2000pm in Birla sunlife Equtiy Fund and 3000pm in DSPBR Top 100 Equity Fund

so, your Mutual Fund Sip investment will be like this

Reliance Regular Saving Fund(Equity) - 1500pm
Sundaram Select Focus Fund - 1500pm
Kotak K30 Fund - 2000pm
Reliance Growth Fund - 2000pm
HDFC Prudence fund - 3000pm
Birla Sunlife Equity Fund - 2000pm
DSPBR Top 100 Equity Fund - 3000pm

This Portfolio has the right mix of Large Cap and Diversified Equity funds with a Balanced Fund to complete the picture.

Investing in Gold is never a good idea. Buy Gold only when you want to use and not for investment purposes. And with your investment horizon of 10-15years, Gold may not serve the purposes. You may as well consider investing in a Good Diversified Fund. Except for the last two years, most of the time Gold has managed to deliver returns on par with Inflation. However, you may take a small exposure to Gold through Gold ETFs or better still through UTI Wealth Builder Fund - series II. This Fund invests in a mix of asset of Equity and Gold in the ratio of 65:35 in favour of Equities. If your mindset is aggressive you can take a small exposure to Gold Mining Funds like the DSPBR World Gold and AIG World Gold Fund, which, beware, more volative than Gold ETFs.


Best of luck,
Srikanth Matrubai


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SUNDARAM PSU OPPORTUNITIES FUND

RELIGARE PSU EQUITY IS A BETTER OPTION

Following the footsteps of the successful fund launch of Religare PSU Equity Fund, Sundaram too has joined the PSU bandwagon and has launched the Sundaram PSU Opportunities Fund, which seeks to invest in PSU companies across the market cap and sectors.
The fund has identified wealth creation triggers in the form of disinvestment process, growth, valuation re-rating and high-dividend payouts. Sundaram PSU fund will overlap its other Funds like the Energy Fund and Financial Opportunities Fund.

The Sundaram PSU Opportunities Fund was launched on November 25 and is schuduled to close on December 24, 2009.

As usual, the minimum lumpsum investment is Rs.5000, but, as with every Sundaram Scheme, this Fund's Minimum SIP instalment amount is Rs.250/-.

INVESTMENT ANALYSIS :
1)With a Stable Govt in place, one can expect quite a huge disinvestment programme which should keep the PSU stocks in limelight and this fund along with Religare PSU Equity Fund will be in good position to capture any upside.

2)Most PSUs are BIG companies and are Leaders in their industries, in fact, many are virtual Monopolies. Thus this Fund will be like a Large Cap Fund. This Fund will is recommended for Long Term Investors.
3)In the Last Year's Big Bear Crash, PSUs were the Least Affected thus giving a sort of comfort to investors.
4) PSUs are trading at a average discount of 40% discount to the Private Sector, even a 50% re-rating would immensely boost the stock prices of the PSUs and thus, the Sundaram PSU Opportunities Fund too.

Negatives :
1) The Fund is a thematic fund catering to the limited universe of public sector companies.


WHY RELIGARE SCORES OVER SUNDARAM :
While most analysts would blindly recommend Sundaram PSU Fund over Religare PSU Fund., I would take a contra view and say AVOID SUNDARAM PSU FUND AND INVEST IN RELIGARE PSU EQUITY FUND.
Here are the key reasons for the same :
1. Equities Outside PSUs :
While Sundaram has the mandate to invest upto 35% outside the PSU basket, Religare does not. While this may ensure diversification, this also means that the PSU THEME IS DILUTED IN SUNDARAM PSU FUND.
2. Overseas Investments :
Sundaram again can invest upto 35% in Overseas which is laughable considering that this is a Public Sector Fund. Religare will be 100% investing in India which ensures NO CURRENCY RISK, NO COUNTRY RISK, NO GEO-POLITICAL RISK.
3. Exposure to Banks in Benchmark :
Sundaram has CNX PSE as its Benchmark which has NIL Exposure to Banks, where as Religare has BSE PSU as its Benchmark which has around 20% exposure to Banks. It is shocking how Sundaram tripped on this. BANKING AS A SECTOR IS IGNORED IN SUNDARAM PSU FUND.

SPECIAL TIP
Religare has already invested its Assets. More buying in the PSU Stocks by the new Funds like Sundaram PSU Fund and SBI PSU Fund (which is in the process of being launched) will benefit Religare PSU Equity Fund which is already fully invested. The Scope for Value Unlocking of Public Sector Undertakings is huge and Religare and Sundaram both are poised to take advantage of these.

If you are convinced about the PSU story, then you know which fund is a better proxy to play on the theme.

Best of luck,
Srikanth

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ADVISE FOR A HOUSEWIFE

START WITH EVEN A RS.500/- SIP


A HouseWife Mrs.SA wrote :
Dear Sir,
You are doing a great job with your blog. I have learnt a lot from your blog. Even though I am afraid of Equities, your writing has given me confidence to invest in Mutual Funds, to be begin with.


I'm a home maker & can save Rs.500/- every month. I want to invest this amount
systematically every month for next one year & want good return after 5 years.
Now my question is which option is the best for my investment. I don't
want to take high risk.

Thanking You,

SA
KOLKATA

SRIKANTH SHANKAR MATRUBAI :
Dear Soma Madam,
I have stopped giving FREE advise both online and offline. I am charging a minimum of Rs.1000 for each advise. But I am making an exception in your case because of your status as a Housewife and also because of your small investment amount.
But note this is a one off exercise. Next time, you will have to pay me for any advise.

My Advise :
Being a Housewife with very little invesible amount and also with your low Risk taking ability, you are better off investing in Large Cap Funds and/or Balanced funds.
I feel 500 is too little. But something is better than nothing. Even with this 500, I will try to get you not only Good Low Risk Funds, but also good diversification.
My advise would be to split your 500 into 3 parts and invest as under :
250 * 1 in Sundaram Select Focus Fund
150 * 1 in Reliance Regular Savings Fund ( Balanced )
100 * 1 in SBI Magnum Balanced Fund

This way, 50% of your investment is going into Balanced Fund and the rest 50% into Large Cap Fund and you are getting into 3 different AMCs.
I encourage you to continue to use the SIP way as this is the BEST way to invest and also make maximum returns on your investment.

With you all the best.
Regards,
Srikanth Shankar Matrubai,
Bangalore






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DSPBR WORLD MINING FUND - UNIQUE THEME

FOR THE HIGH RISK APPETITE INVESTOR

DSP BlackRock World Mining Fund
After two sucessful Fund of Funds, in DSPBR World Gold Fund and DSPBR World Energy Fund, DSP BlackRock has come out with its 3rd Fund of Funds DSP BlackRock World Mining Fund.
The fund will invest in the BlackRock Global Funds’ World Mining Fund, which has a corpus of about Rs 51,000 crore and invests in mi

ning companies across the world, with operations in precio

us metals, coal, iron ore and copper among others.
The BGF World Mining Fund has been in existence for a period of more than 12 years and has a great performance track record.

The fund has outperformed its benchmark HSBC Global Mining Index over one and five-year periods. The Fund has given a return of 17.8%

CAGR compared to its Benchmark return of 12.7%.

The Fund has been awarded the maximum AAA ratings from both Standard & Poor’s and OBSR.

COMMENT AND SUGGESTION :

After the 2007 highs and the subsequent crash, commmodity prices are stablising and moving up steadily. Supply constraints and the Weak Dollar will make Commodities costlier and the Fund should benefit from this strong prices in commodities.

The Fund will give you both Sector diversification as well as Geographical diversification.
An investor interested in a concentrated portfolio of commodities and the mining sector in the medium to long term should consider investing in this fund.

Risks :

There is an exchange risk. If the rupee depreciates, it adds to the return of the fund since the investment is in a non-rupee asset. Likewise, if the rupee appreciates it would potentially reduce the return of this fund.
There is a Sector Risk with this Fund as the Fund will be fully exposed to the fortunes of the Mining Sector.

Suggestion :
The Fund has given excellent returns and has had a great trackrecord. Invest with a medium to long term view and do not have more than 5% exposure, depending on your risk appetite.

Note, the NFO does not have a SIP. If you want to invest through SIP, you have to wait for the Fund to reopen for regular purchase.

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