Review My Mutual Funds Portfolio - India?

Question

Hi,

I'm 29 years old male & i want to start SIPs in the following funds, with my wife as a joint holder; so that she can also claim rebate under section 80 C:



HDFC TAX SAVER (D-Reinvest) 5,000
FRANKLIN INDIA TAXSHIELD (G) 5,000
TEMPLETON INDIA PENSION PLAN (G) 2,000
HDFC PRUDENCE (D-Reinvest) 2,000
RELIANCE VISION (D-Reinvest) 2,000
MAGNUM TAXGAIN (D-Reinvest) 2,000
FIDELITY TAX ADVANTAGE (G) 1,000
SUNDARAM SELECT MIDCAP (G) 1,000
MAGNUM CONTRA 1,000

21,000


Please advise me about the asset allocation, growth/Dividend options. I'm investing in a few non-ELSS schemes in order to maintain liquidity.
Both me & my wife contribute equally towards all the schemes.

Great Answer , Thanks.

The reason i'm planning to choose dividend-reinvestment is so that income tax benefits can be reaped in the long run;even though tax laws might change adversely towards growth option.

Also, as advised by you; i have a debt exposure in HDFC Prudence as well as Templeton India Pension Plan.Also, TIPP gives tax rebates.

I really want to try either Magnum Contra or Reliance Vision; want to take some risk.

Please advise.

Answer 1

The funds chosen by you are some of the best funds available in the market. Still the portfolio can be fine tuned. Just consider the following points from my point of view.

1.Fidelity Tax Advantage is new fund and hence doesn’t have track record. No point in having a four tax saving schemes in a portfolio. Just two or three would suffice. Any diversification beyond three is just an overhead from the point of view of operational tracking and maintenance. Add this amount to HDFC TaxSaver.
2.Just three AMC (at max four) is sufficient from the point of view of diversification. Hence, you can ignore Reliance Vision which is an aggressive fund and replace it Bluechip fund or Prima Plus which have all along delivered excellent returns with low volatility.
3.While Templeton Pension Plan is good product, from the long term holding perspective, I don’t see it as right product. Hence you may ignore this.
4.You have two products from SBI stable and the amount works out to 3000. Instead of another fund house, I would suggest you to chose FTMIP from Franklin and invest the 2000+2000+1000 (TPP, Magnum Taxgain and Magnum Contra). This will achieve two things. Reduction in no of AMCs to three and increase in debt investment as your portfolio is highly skewed to equity.
5.Through the above changes, a. the debt portion which was minimal will be above 20%. Even an aggressive portfolio should have a 20% debt component and should be rebalanced regularly (once a year is fine), b. The no. of AMCs has been brought down to 3 (and these are best AMCs based on their investment approach and risk management), c. Number of funds brought down.
6.I don’t know why you have chosen Dividend Reinvestment plan for most of your funds. You could chose Growth as it eliminates some of the issues related to short term capital gains.

Your revised portfolio can be:
1.HDFC TAX SAVER (D-Reinvest) 6,000
2.FRANKLIN INDIA TAXSHIELD (G) 5,000
3.HDFC PRUDENCE (D-Reinvest) 2,000
4.FTIBCF or FPP 2000
5.SUNDARAM SELECT MIDCAP (G) 1,000
6.FTIMIP 5000

Good luck.

Answer 2

Hi...
I would suggest you to visit http://www.valueresearchonline.com
Its a wonderful site for mutual funds, you can also post your query there and it would be replied back to you by experts in their field......this site does a complete research on all mutual funds and also it gives year wise break up of the returns received.

Answer 3

The short answer:

If these are your only funds, you are over exposed to India and should diversify. Nothing wrong with the India theme, it just seems to be overdone in your portfolio.

Answer 4

very easy, visit www.stocksidea.com , they are consultants in india in stocks, mutual funds and all finance related info.