Fund monitoring queries

Dear Swikar, I believe that there is no right or the best answer(s) to most of your queries :) One needs to monitor his/her portfolio performance on a consistent basis. I know few of my friends who track the portfolio (stocks/MFs) on a daily basis and get too worried or too excited, and there are few of my friends who do not even remember where they have invested in..So, both methods may not be beneficial. In most of the scenarios, it is prudent to look at the entire portfolio performance rather than at individual fund's performances. I mean one should give high priority to portfolio returns than individual stock/fund's performance. However this does not mean that one has to remain invested with a low performing fund for years together. My point is one has to give sufficient time before deciding to SWITCH to another fund.  It is very tough to remain and be with the best funds at all times. Consistency is what matters. Also, the expectations (expected returns) should be realistic and reasonable.

Thanks Sreekanth for the revert. Is there any thumb rule which amateur investors like me can follow to decide on right time to switch the Fund / pull out the investment from a particular fund? till how long and upto how many percentage of loss one should remain invested in a fund if individual fund and/or fund category is not doing well?  I am bold enough to take the risk as I am investing my entire savings in equity / equity oriented mutual funds. Your inputs on my above mentioned queries would help me take wise decisions.

Dear Swikar, To be frank, no such thumb rule. As you are aware the equity markets can sometimes be very volatile and the returns / performances can not be predicted. So, one should be always vigilant and should monitor the performance, but at the same time should not react /panic looking at short-term fluctuations in returns. A Fund like say HDFC Top 200 which was so popular has not been performing well for the last few years, but if someone has very long-term goal, and provided that the fund manager has not changed, can remain invested in the fund. It may be worth waiting.

Hi Sreekanth;    I have invested in SBI Pharma Fund. NAV is either stagnant or dropping month on month.  Pharma sector itself is not growing since last 1 year.  In fact this is the only fund category which is giving negative returns since last 1 year. What do you recommend me in this case? Requesting you to pls share your inputs.

Hi, I do not track Pharma sector as i do not not understand that sector/business well. Personally, I do not invest in Sector or thematic funds.  Pharma funds generally outperform other fund categories when markets are too volatile or in downturn. They are generally considered as Defensive bets.

Hi Sreekanth;      Consider a period of 2 years, say Jan 2015 till Dec 2017. If NAV on Jan 2015 is 50 and that on Dec 2017 is 100. However there is a huge fluctuation in NAVs in the middle period. In such case how is CAGR mentioned on Moneycontrol.com is calculated? Does it consider only opening and closing value OR it considers the values for the entire period?  Reason for asking this question is, there is a significant difference between the final value drawn with Lump sum type of investment and that with SIP type of investment. One more query- I am deciding to pull out the money from SBI Pharma fund and invest in DSP Black Rock micro cap fund. I am already holding Franklin Small companies fund from same category. Should I go ahead with my decision??  

Hi dear, It considers the values of entire period. It is annualized. Time value of money concept is used. Read:

• What is Time Value of money?
• Five formulas to calculate the ROI.

Kindly check the overlap between the two Small cap funds. Read: MF Portfolio overlap analysis tools.