Hello Shreekanth,
Good-day!
I have SIPs running in the below funds (note: top 3 funds are for section 80c benefit for taxation purpose) –
- Axis Long Term Equity Fund - Direct Growth - since 2016 @ 5,000 pm
- BSL Tax Relief '96 Fund (ELSS U/S 80C of IT ACT) - Dividend Payout - Dec 2008 to Jun 2016 @ 500 pm; re-started since 2016 @ 3,000 pm
- RELIANCE TAX SAVER (ELSS) FUND - GROWTH OPTION - Dec 2008 to Jun 2010 @ 1,000 pm; re-started since 2016 @ 3,000 pm
- MIRAE ASSET EMERGING BLUECHIP FUND - Growth - 4,000 pm will begin from 28th Nov 2017
- BSL Tax Relief'96 Fund- (ELSS U/S 80C of IT ACT) - Growth - 2008 to 2013 @ 1,000 pm
- HDFC Tax Saver - Growth Option - 2009 to 2016 @ 500 pm
- HDFC Top 200 Fund - Growth Option - Jun 2013 to Feb 2016 @ 2,000 pm
- Principal Personal Tax Saver Fund - Growth - Jun 2008 to Jun 2013 @ 1,000 pm
- SBI Magnum Tax Gain Scheme - Growth - June 2008 to Jan 2016 @ 2,500 pm
- SUNDARAM SELECT FOCUS - GROWTH - May 2008 to Jul 2013 @ 500 pm
- Age – 38 years
- Risk – High
- Time Horizon – Long term. I want to stay invested for the next 12 years and wish to appreciate my capital over this period.
- Marital status – Single
- I do not have debt funds. I have few lacs in PPF and savings.
- which funds should I redeem and which ones do I keep SIPs running?
- should I reinvest the redemption money to any of the existing funds or reinvest in new fund ?
- if reinvesting in an existing fund is the best option, then should I reinvest it via SIP or lumpsum?
- if reinvesting in a new fund is the best option, then which funds (large cap or small cap or multi -cap) should invest via SIP ?
3 Answers
Best Answer
Dear Satish,
You may consider Growth option for all funds as your investment horizon is long-term. You have one Dividend payout scheme, the same one you have growth option as well, you may continue with Growth scheme (Birla tax relief).
We can treat ELSS funds as Multi-cap/diversified funds. The first set of 4 funds are good ones.
https://www.relakhs.com/mutual-fund-portfolio-overlap-comparison-tools/
Axis LTE and Birla tax relief are decent performers. Reliance Tax saver is a high risk-high reward option, has higher standard deviation.
HDFC Tax saver, Principal tax saver and SBI tax-gain, units which are older than 3 years, can be redeemed and move to Mirae Emerging (Lump sum option is temporarily suspended in this fund), Axis LTE & Birla Tax relief (through STP route).
I believe that there are better funds in large cap category than Sundaram select focus. Ex : Birla Frontline Equity / SBI Bluechip etc.,
https://www.relakhs.com/best-mutual-fund-scheme-risk-ratios/
https://www.relakhs.com/best-mutual-fund-schemes-2017/
https://www.relakhs.com/200-day-moving-average-dma-mutual-funds/
Hello Shreekanth,
Good-day!
Apologies for the delay in responding. Thankyou so much for the quick response. I do need few clarifications further to your response –
(1) BSL Tax Relief’96 - I have switched my BSL dvd and reg plans into growth-dir plans. Thanks to you.
(2) HDFC Tax saver, Principal tax saver and SBI tax-gain, units which are older than 3 years, can be redeemed and move to Mirae Emerging (Lump sum option is temporarily suspended in this fund), Axis LTE & Birla Tax relief (through STP route) – The corpus I have accumulated in these funds are as follows : HDFC Tax saver Rs.204,540; Principal tax saver Rs.168,289; SBI tax-gain Rs.625,631. The free units value comes to around 7 lakhs.
(a) Now, for STP, I cannot do this across fund houses. So, will need to first invest these funds in the liquid/UST funds of respective fund houses and then do STPs into equity schemes of that funds house, right? Just wanted to understand, wouldn’t the taxation be a bit complicated here, I mean tracking every STP, the return on it and calculating tax element thereof?
(b) Just exploring this strategy, what if I redeem the free units and invest –
(i) 40% each via Lumpsum into Axis LTE, BSL Tax relief’96 so I take advtg of power of compounding. Am I right or should I stick resort to STP?
(ii) 20% via SIPs (say, Rs. 11,000) for 1 year into Mirae Emg. Will my investment lose the power of compounding by not investing lumpsum?
(3) I believe that there are better funds in large cap category than Sundaram select focus. Ex : Birla Frontline Equity / SBI Bluechip etc. – Yes, even I agree. Also, you have not mentioned about my investment in HDFC Top 200 Rs.111,418. Should I redeem this as well and switch funds into large cap Frontline Equity / SBI Bluechip etc.? Again, should I re-invest Lumpsum or SIP here ?
Sorry for the painful questions, but it would be really kind of you to write an intuitive article (with analysis, if possible) explaining whether lumpsum or STP or SIP is the best way (in terms of returns in long-term) to re-invest funds -
(1) that are redeemed from a particular scheme under Fund house “A” into a particular scheme under fund house “B”.
(2) from REG option to DIR option.
Regards, Satish
Regards, Satish
Dear Satish,
3) a) - If you are doing the Capital Gains calculations manually then it is a tough task. But these days you can get CG statement from your broker/service provider/R&T and you may take help of a CA..
Yes, all STP outflows are treated as normal redemptions and taxes (if any) are applicable.
https://www.relakhs.com/mutual-funds-taxation-rules-capital-gains-tax-rates-on-mfs-fy-201516/
STP or lump sum - there is no right or wrong answer to it. As markets are at peak levels as of now, may be STP would be a better choice.
Kindly read :
https://www.relakhs.com/sip-systematic-investment-plan/
If you are planning to move to a new Large cap fund, you may consider to redeem funds of HDFC top 200 too. But, I still believe that one can stick (atleast existing corpus and not new investments) for some more time with this fund.
Kindly read :
https://freefincal.com/should-i-continue-my-sip-in-hdfc-top-200-fund/
Thanks Shreekanth. Appreciate it !
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