Dhirendra Kumar, CEO, valueresearchindia.com said that Templeton India Equity MF is a kind of fund which an investor should be regularly investing in, without looking at what is the outlook for the next three years, three months, four months, six months and so on. For naïve and recently initiated investor, this is an investment, which one should just stick on without looking at the performance, he added.
On funds that invest abroad, he believes that the difference between a fund through which Indian investors can invest abroad, is little different. He said, "One is that when a new fund is created in India it has no history. It is a story, it is a theme and it is a new offer document, which states that it intends to do this thing and come and invest money." According to him, they are stable investments, diversified adequately and they will do the job. So, don’t chase past performance when choosing these funds as well, he said.
On Templeton India Equity MF:
It is a relatively new fund but this fund has done extremely well. The real benefit of a mutual fund is that with Rs 500 monthly investment you are able to invest and your portfolio is also well spread. It is a fund, which is nearly on an average, it has been about 80%-85% into domestic stock, 10%-15% has been into foreign stocks and this fund has done extremely well in this falling market. It has fallen the least and these are the point of time when the diversification bid actually shows up that how beneficial it is. In the good times, we just tend to forget the rules that it is time to make easy money quickly and you do not need to follow rules but past six months has reminded us of that.
It is an excellent fund and because it has fallen less and has been able to guard your assets reasonably well. This is a kind of fund which an investor should be regularly investing in without looking at what is the outlook for the next three years, three months, four months, six months and so on. For naïve and recently initiated investor, this is an investment, which one should just stick on without looking at the performance.
If an investor can invest more, most welcome because if one is looking at three-five year horizon, that will be guided by his own situation. For long-term allocation invest in a fund like this and if one can invest more one should.
On funds that invest abroad, he believes that the difference between a fund through which Indian investors can invest abroad, is little different. He said, "One is that when a new fund is created in India it has no history. It is a story, it is a theme and it is a new offer document, which states that it intends to do this thing and come and invest money." According to him, they are stable investments, diversified adequately and they will do the job. So, don’t chase past performance when choosing these funds as well, he said.
On Templeton India Equity MF:
It is a relatively new fund but this fund has done extremely well. The real benefit of a mutual fund is that with Rs 500 monthly investment you are able to invest and your portfolio is also well spread. It is a fund, which is nearly on an average, it has been about 80%-85% into domestic stock, 10%-15% has been into foreign stocks and this fund has done extremely well in this falling market. It has fallen the least and these are the point of time when the diversification bid actually shows up that how beneficial it is. In the good times, we just tend to forget the rules that it is time to make easy money quickly and you do not need to follow rules but past six months has reminded us of that.
It is an excellent fund and because it has fallen less and has been able to guard your assets reasonably well. This is a kind of fund which an investor should be regularly investing in without looking at what is the outlook for the next three years, three months, four months, six months and so on. For naïve and recently initiated investor, this is an investment, which one should just stick on without looking at the performance.
If an investor can invest more, most welcome because if one is looking at three-five year horizon, that will be guided by his own situation. For long-term allocation invest in a fund like this and if one can invest more one should.
On funds that invest in international assets:
There are quite a number of options today. There are about 13-15 funds, which invest abroad, and many more are in the pipeline. The difference between a fund through which Indian investors can invest abroad, is little different. One is that when a new fund is created in India it has no history. It is a story, it is a theme and it is a new offer document, which states that it intends to do this thing and come and invest money.
Compared to that the funds, which are investing abroad in an existing vehicle are structured in a manner that they are an existing fund, which have managed abroad, have a history and in which the Indian investors money will be channelized into. So, you are buying into an existing performance. To that extent, many of these funds qualify on the framework that they have some history. The first and foremost objective of an Indian investor when he is evaluating these funds because it is a new avenue, is to achieve diversification globally, internationally.
So, don’t get into exotic investment ideas, which are very quirky in terms of this theme, that theme, this commodity cycle, this part of the globe, that part of the globe, these kind of businesses. We have seen it in recent past that the funds which are the simplest ones like the Principal Global Opportunity and Birla Sun Life International Fund, which is a newly created fund but it gives you the widest in diversification internationally in terms of foreign markets. They have been able to guard investor’s assets very well and have been able to deliver superior returns. These investments are not to be evaluated just for the sake of return. They are stable investments, diversified adequately and they will do the job. So, don’t chase past performance when choosing these funds as well.
On Tata Indo Global Fund:
I am quite downbeat on this sector in India. This was the big story and a lot of investors made money in the past two to two and a half years but the coming year could be difficult for this kind of thematic fund. There is a slightly advantageous position that here is a fund, which will be invested abroad in foreign markets in this space itself. But that does not actually reduce the pain and for an investment horizon of one to one and a half years, there could still be downside because markets have this viral attitude.
When we get optimistic, we take it to a different level and when we are neutral or negative on a sector then they go completely out of favour and that is why we see this wild swings. For the next one to one and a half year, the investor may not be lucky with the wild swings on the positive side. So one will be in a better position of being in a diversified equity fund, one should just check the pain. There will not be any tax incidents; it is a relatively new fund move to a Tata pure equity or something which he can do on an overall basis.
On Birla Sun Life Tax Relief Fund:
Birla Sun Life Tax Relief is a good fund but there are other choices too. For tax saving fund, one has to be little more careful because once you choose it you can’t undo it for three-years. Once you invest in such a fund you have to stay put for at least three-years. So, one has to be a little careful that you don’t go and choose a fund, which completely lacks any credentials and a completely new tax fund is avoidable.
For a Birla Sun Life Tax Relief or Magnum Tax Gain or a Principal Tax Saver, we will be looking at past three-years and the next three-years could be very different. So generally an investor should choose a fund, which stacks up among the top five-seven over three-five years period and Birla Sun Life Tax Relief will qualify them. These tax relief funds are very smart vehicle because all other tax saving avenues available to Indian investor is a fixed income avenue whether you invest in Public Providend Fund (PPF), NSE or even a bank deposit with a five-year lock in of a certain kind gets you the same advantage.
On one extreme you have this government-bagged sovereign guaranteed fixed income avenues, on the other extreme you have this tax savings funds and in the middle you have the Unit Linked Insurance Plans (ULIPS). For anybody who is looking at five-years and above, this is the smartest tax saving vehicle.
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