Fund portfolio - Q & A Forum

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swikargadpayle asked 10 years ago

Hi Sreekanth; This is Swikar. I am holding 3 MF as of now. Axis long term equity fund, ICICI Value discovery fund, SBI Pharma fund. All are direct plan with growth option. I had asked you the query in Q & A Forum regarding whether I can add one Balanced fund to my portfolio. Your response was "YES" and you also suggested me to think over investing in Mid cap and Small cap funds. I have done fund overlap analysis on FUNDO.COM and found Franklin India Smaller companies fund and TATA balanced fund with least percentage of overlap with my current MFs. I want to understand that can some one invest in as many funds as possible if Overlap percentage between the funds is not more than 20%. If your answer is "NO", requesting you to pls elaborate reasons to me for my understanding.

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Sreekanth Staff answered 10 years ago

Dear Swikar, Very good question. Kindly note that the percentage of overlap can change over a period of time and one can not keep on churning the portfolio based on this. 2 to 4 funds across different fund categories, AMCs & managed by different fund-managers can be a prudent choice. One can also have same set of fund for different long-term goals with different SIP amounts. Also, keeping track of too many funds many not very convenient. To summarize - What you do need to ensure is that the small number of funds you have are of different types and are managed by different fund managers.

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swikargadpayle answered 8 years ago

Hi Sreekanth Wish you a very happy new year ! Hope you are doing well. Currently I am invested in below mentioned three Funds

ICICI Pru Value Discovery Fund
Franklin India Small Companies Fund
AXIS Long term Equity Fund
DSP Blackrock Micro Cap Fund

Out of these Funds, ICICI Pru. value discovery fund is not giving the desired returns. Last two years returns are less than it's category as well as it's bench mark. I am of the opinion of exiting this fund and invest into some other good performing fund within the Diversified Equity Category. Pls suggest the fund name wherein I should Invest the money. Also, Further investments in DSP Blackrock Microcap fund is stopped by the fund house. Pls recommend any alternate fund from small cap category. Pls also suggest the website wherein I can compare the funds based on their Alpha , Beta , SD and Sharpe Ratio. I have searched a lot but could not find the website which compares the funds on these parameters OR shares the visibility on scores of these parameters for a particular fund. Thanks & Regards Swikar

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Sreekanth Staff answered 8 years ago

Dear Swikar, Thanks for the wishes and wish you too a very happy New year! You can find the requiired info on Risk ratios in Valueresearch and Morning star portals. Kindly read : https://www.relakhs.com/best-mutual-fund-scheme-risk-ratios/ You may allocate higher amount in Franklin Smaller cos fund itself. No single fund can remain in Top rank for long. So, kindly look at the fund’s consistency rather than whether it is in top 5 or top 10. ICICI Valuediscovery mostly works like a contra fund, it generally performs well in a very volatile and downward markets.
If your investment time-frame is very long-term, you may stick to it, track its performance for 1-2 more years.