Skip NFOs, Instead Consider Building A Strategic Mutual Fund Portfolio
You make new rules and we will find ways to make a mockery of them.
This seems to be the message some mutual fund houses are hinting at the Securities and Exchange Board of India (SEBI).
The capital market regular wants them to trim their product baskets. But mutual fund houses are bending the rules to expand them.
As you might be aware, SEBI has defined 36 categories for mutual funds. Out of that, 10 categories are for equity-oriented schemes and 16 categories for debt-oriented schemes. The remaining 10 scheme categories cover hybrid and solution-oriented schemes.
The regulator also laid down specific terms and conditions for launching New Fund Offers (NFOs), while even nudged fund houses to merge similar schemes.
Following this, mutual fund houses in India performed a massive exercise of re-categorising and repositioning their scheme offerings. These actions had a common objective to achieve—to do away with scheme duplication which can help investors in scheme selection.
But as they say, old habits die hard.
Mutual fund houses have launched NFOs again. And many of them are launching the closed-ended ones, since the latest SEBI rules aren’t applicable to them.
NFO Rush…
(Source: ACE MF)
Aren’t these fund houses concerned about the consequences of scheme duplication?
Similarly, fund houses are also launching sectoral NFOs that predominantly invest in a respective sector or a theme, closely linking the fortune of the fund to undercurrents of that sector/ theme.
[Read: Should You Invest In Mirae Asset Healthcare Fund?]
And launching NFOs particular when valuations appear stretched,exposes investors to very-high risk.
The time of many of the NFO launches is crucial.
Why is it that most mutual fund houses launch NFO when markets are near the high?
The answer is simple: They want to make when the sun shines, garner more Assets Under Management when sentiments are upbeat.
Also, many of these NFO come at a time when investors are unsure whether they should continue with their investments in merged schemes or exit. Instead, to fill in the gap mutual funds are launching NFOs and confusing investors even more.
[Read: Why You Should Be Careful About Investing In NFOs]
Mutual fund houses while they are harping on “Mutual Funds Sahi Hain”, should also educate investors rightly in a far more holistic and engaging way. Mere advertising campaigns may not help.
[Read: Are All Mutual Funds ‘Sahi Hai’? Find Out Here…]
What should investors do?
PersonalFN is of the view that, investors need to outsmart opportunistic fund houses that want to grow their business without bothering about your interest.
Of course, not all fund houses are alike. Some of them manage their assets meticulously, avoid duplicating products, and reward investors well.
Therefore, when choose a fund for your portfolio do not forget to pay close attention the traits of a fund house ––its ideologies, rationale behind launching the fund, whether the fund is unique, and the investment processes & system at the fund house, besides the quantitative factors.
PersonalFN’s more than 15 years’ experience in mutual fund research can help you select the best mutual fund schemes for your investment portfolio.
If you’re looking for “high investment gains at relatively moderate risk”, PersonalFN offers you a great opportunity:
The 2018 Edition of PersonalFN’s Premium Report, "The Strategic Funds Portfolio For 2025"
Based on the ‘core and satellite’ approach to investing, here’s PersonalFN’s premium report:
The Strategic Funds Portfolio For 2025 (2018 Edition)
.
In this report, PersonalFN will provide you with a readymade portfolio of its top equity mutual funds schemes for 2025 that can generate lucrative returns over the long term.
The Strategic Funds Portfolio For 2025 is built on the “Core and Satellite strategy”for mutual funds investing.
“Core” applies to the more stable, long-term holdings of the portfolio; while the term “satellite” applies to the strategic portion that would help push up the overall returns of the portfolio, across market conditions.
PersonalFN’s research states that 60% of the portfolio should be reserved for Core mutual funds and the balance 40%, for the Satellite mutual funds.
At PersonalFN we believe, if you apply this approach to invest in equity oriented mutual funds, you can get the best of both worlds, that is, short-term high-rewarding opportunities and long-term steady-return investing, and the good thing is, it works!
The ‘Core and satellite’ investing is a time-tested strategic way to structure and/or restructure your investment portfolio.
But what matters the most is the art of cleverly structuring the portfolio by assigning weights to each category of mutual funds and the schemes picked for the portfolio.
[Read: Why You Should Strategically Structure Your Mutual Fund Portfolio]
Also, when there is a change in market outlook, PersonalFN will revisit the strategically structured portfolio by reviewing assigned weights to funds and the portfolio.
How this will help?
✔ Your portfolio will be optimally diversified;
✔ The risk to your portfolio would reduce;
✔ You can benefit from a variety of investment strategies;
✔ Create wealth cushioning the downside;
✔ Potentially outperform the market; and
✔ Would reduce the need for constant churning
PersonalFN’s “The Strategic Funds Portfolio for 2025” is geared to potentially multiply your wealth in the years to come. Subscribe now!
This post on " Skip NFOs, Instead Consider Building A Strategic Mutual Fund Portfolio " appeared first on "PersonalFN"