Sunday, April 26, 2009

I want to Redeem Everything.....

Loss in sip

One Reader wrote :

Hello Experts

I have a question, a very important one.
I have been investing in MF via SIP from last 3 years and as of day, my investment of 6 lacs have come down to 3.8 lacs which shows loss of 2.2 lacs as of date. However I had a long term view but with current meltdown, I am worried as others are.
With US market hitting 12 year low and other asian markets hitting 5 year low and our market have not tested the 1 Year low, chances of testing 2200 on nifty looks pretty high.

I am planning to take out the money, complete 3.8 to save further downside and let new sip getting invested as it is and invest this exited 3.8 lacs once nifty comes around 2200...What is the suggestion of experts on this.

Am very very confused. Request you to show me correct path.

Thanks a lot for your time


Dear db,

Your worry is natural. However Redeeming All Funds will be a Great Mistake. You should Review the Performance of each & Every Fund & Switch the Poor Performing Funds to Beter Performing Funds one by one. You should even Continue SIP in Better Performing Funds.

My simple advise is to first look deep in ur portfolio, check the performance of ur funds against its benchmark & after that weed out only non performers or duds from ur folio. Invest the redeemed amount into ur better funds.

I believe that equity as an asset class is suited only to accumulate wealth over the long-term. It is not meant for generating regular income. If deriving periodic income from investment is your objective then equity may not be a suitable vehicle. You had a long term view when you started your investments. That long term view I suppose has not changed. Then why withdraw now and wait for the market to stabilise? Not many has succeded in timing the market and you might be in a situation where the gate was closed after the horse had bolted.
Like I have said earlier, check the performance of your funds against benchmark as well as similar other funds. You might be surprised that your funds might have done better than others and if not, then and then only you should think of going for better ones.
Best of luck,
Srikanth Shankar Matrubai

Also visit for an indepth Equity Analysis

Thursday, April 23, 2009

Heavy loss In Tax Funds

Fig wrote :

I have made heavy investments in tax saving mutual funds as part of my tax planning
in last 2 years. They are as follows

2007 -
SBI Magnum Tax Gain Dividend - 35,000/-
HDFC TaxSaver Dividend - 30,000/-

2008 -
SBI Magnum Tax Gain Dividend - 42,500/-
SBI Tax Advantage Sr-1 Dividend - 15,000/-

2009 -
SBI Magnum Tax Gain Growth - 8000/-
Sundaram BNP TaxSaver Growth - 5000/-
5 year FD @ 8.5% under 80C - 37,500/-

Actually I have realized LATE that there was not much difference in NAVs of these MFs when sensex
was @ 7k and now when it is @ 9k. Thus I should have invested in MFs instead of 80C FD.

Now that I have Rs 4.5 Lakhs parked in fixed deposits, I am thinking of investing small part of
it in order to cover up losses.
Please advice how do I go about investing in order to COVER UP by 50% losses in MFs over last
2 years.

- debhalwa


Dear Debhalwa,
Better late than Never. There is no point in investing in FDs just to save taxes. Inflation will eat your returns.
You seem to taken a liking to SBI Funds and have invested more than 65% in them. Too much exposure to 1 Fund/ Fund House is always fraught with Risk. Invest your Fresh Investment in Funds other than SBI. Either way, SBI Funds have been underperforming the market and their peers.
For ELSS, you can consider Fidelity Tax Advantage Fund and Sundaram Tax Saver.
These may to some extent help you in covering up your past 2 years losses.
However, you have very little option than to wait.
By the way, always consider investing through SIPs rather than a One time investment.
Best of luck,
Srikanth Shankar Matrubai

Also visit for an indepth Equity Analysis

Help me to Choose ELSS....

Dear Sir,

I am planning to invest around 30,000 in ELSS fund ( or funds ), but not able to decide because of the market situations. My present investments
in ELSS funds are as follows.
1. HDFC Tax saver - 30,000
2. Reliance ELSS - 30,000
3. Principal personal tax saver - 10,000
no need to say I am suffering loss in all...-)
These investments are for long term.. Alteast 10 years..

Pls adivice me which fund should i go for or should i look for any other option in which I can save tax too...

Pls advice


Dear Devgun,
Your long term commitment will serve you well. Out of your existing ELSS, Reliance ELSS has been a poor performer since inception and need not be considered. Even though your other two ELSS Funds, HDFC Tax Saver and Principal Personal Tax Saver are good funds and have had a decent showing, I advise you to look at investing in Fidelity Tax Advantage Fund and Sundaram Tax Saver which have been performing well in both Bull and Bearish Markets.
Best of luck,
Srikanth Shankar Matrubai

Also visit for an indepth Equity Analysis

Wednesday, April 15, 2009

NRI's Investment Dilemma

Mohammad Idris Khilji wrote :

Dear Mr. Srikanth,

I am doing fine, and wish to the Almighty for the best in Health & Career for you.

As you know, I am an NRI and using my NRE account to invest in mutual funds.
As of now, I have lost almost 2.4 Lac out of 5.1 Lacs of my investment.

Even though, I am invested regularly in:

Reliance Growth - 2K SIP+Insure
HDFC Top 200 - Total 3K
Birla Frontline - Total 3K
ICICI Infra - Variable Amount
Kotak Opportunities - 1K
I started VIP of 2K in HDFC Growth & Reliance Banking also.

But since last couple of months, I have lowered down the amount I
invest on monthly basis, because the more amount I am investing, the
more I am loosing.
Also situation here in Kuwait is very tight. Cost cutting is going on and a lot of my colleagues lost jobs, and no one knows, when his turn might come.

Please check the attachment for my current status of investments in mutual funds as well as ULIPs of my family.

Please suggest best for me.

Thanks and regards,
Mohammad Idris Khilji

Dear Khilji,
Thanks for your wishes and I reciprocate the same.
Lowering your investment amount when the markets are falling is not the right thing to do. In fact, you are doing exactly the opposite of a Wise Investor. Of course, if the Recession is hurting you, and you are unable to spare money for investment, then it is acceptable.
Not paying your ULIPs will leave you at a disadvantage, especially since your ULIPs have not completed 3 years. Somehow, try to pay the Premium and after 3 years, STOP the Premium payments and instead invest in your Existing Mutual Funds. As you may already be knowing now, ULIPs are a strict no-no due to their prohibitive Annual Maintainence Charges.
Regarding your Funds, I advise you to Stop your SIP in Reliance Banking and ICICI Infra AT ONCE. I am never ever in favour of Sector/Theme Funds. Always go for Diversified Funds, as they tend to give you MORE returns than these Sector/Theme Funds over a Longer Period of Time.
All your other investments are into Good Funds. Continue to invest in the same and Best of luck.

Srikanth Shankar Matrubai

Visit my blog

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Saturday, April 11, 2009

Comment on My Portfolio

My name is rakesh, came acorss your blog.
Its amazing, very hepful and has very good articles, keep up the good work.
I just wanted ur opionion on my MF investments. At present i have started sip in foll. funds from sept'08 -
Reliance Growth - 500 * 4 = 2000

HDFC Top 200 - 1000 * 1 = 1000

DSPML Top 100 - 2000 * 1 = 2000

Sundaram Select focus 500 *4 = 2000

Please advise if these funds are safe and good for longterm.
Prior to these i have lost a fortune in stock market and MF. My portfolio is down over 50% at this time. Its only about 3-4 mts back i started to invest in quality funds.
From Aug 06 - Aug 07 i had started SIP in below funds and then after market crash and they were not performing well and i switched them to below funds but did not contine SIP, just transferred them to these funds.
Birla sunlife Eq - now switched to Birla sunlife frontline Eq.
DSPBR Tiger - now switched to DBPBR Eq.
Fidelity Eq - stopped, no fresh investment
Hdfc Grwoth - Switched to HDFC Eq.
Reliance Vision - Swtiched to Reliance Growth
Also since past 2-3 years i have invested in below funds -

Birla sunlife midcap - 104 @ 95
DSPBR Tiger - 437 @ 46
DPPBR Taxsaver - 818 @ 12
Hdfc Eq - 88 @ 170
icici pru infra. - 1044 @ 24
JM Basic - 302 @ 33
magnum taxgain - 311 @ 48
HDFC long term adv. - 97 @ 102
reliance eq. - 1378 @ 10.8
reliance vision - 113 @ 219
sundaram rural - india 1000 @ 10
templeton eq - 977 @ 10.2

All are in bad shape but i have no choice but to keep them for more longer duration. My stock portfolio is even worse with some stocks down 70%. I had entered at the wrong time.
Please advise. Thanks in advance and have a nice day.
Thanks in advance for ur time and advance.


Dear Rakesh,
Thank you for your kind words.
Your ongoing SIPs are going into absolutely Top Class Funds.
Do continue the same. It is a rare sight indeed and pleasantly
surprising to see such Excellent Funds in any investors's portfolio. Do continue your sips
and enjoy the fruits and benefits of SIP Investment.
Birla sunlife Frontline Equity - continue
DSPBR Equity - Continue
HDFC Equity - Switch to HDFC Top 200 Fund
Reliance Growth - Continue
Birla sunlife Midcap - SELL
DSPBR Tiger - DSPBR Top 100 fund
DSPBR Tax Saver - After lock in is over, switch to DSPBR Top 100 Fund
HDFC Equity - Switch to HDFC Top 200 Fund
ICICI Pru Infra - Switch to ICICI Pru Dynamic Fund
JM Basic Fund - SELL
Magnum Tax Gain - After lock in is over, switch to SBI Balanced Fund
HDFC Long Term Adv - After Lock-in is over, switch to HDFC Prudence
Reliance Equity - SELL
Reliance Vision - Continue
Sundaram Rural - Continue
Templeton Equity - Continue

From the above sale proceeds, invest in Fidelity Equity Fund.
Best of luck,
srikanth Shankar Matrubai,

Also visit for an indepth Equity Analysis


Jeevan Aastha doubles your money in 10 years

Jeevan Aastha although provide gtd. returns but plz. note the NET Yield is variable for different age person due to difference in prem. paid for the same amount of cover.

Some info for this policy is given below.
Minimum Sum assured = 150000 & can be purchsed in multiples of 30000
Max. Sum assured = No limit
Prem. type = single prem. only
Type of policy = Traditional endowment policy with gtd. return
Minimum entry age = 13 years (nearest birth day)
Max. entry age = 60 years (nearest birth day)
Policy term = 5 years or 10 years
in First policy year the SA = 6 times of Single prem. paid (appx.)
From 2nd year onwards SA = 2 times of single prem. paid (appx.)
Maturity SA = 1/6th of original SA
GTD. addition per year = 100 Rs. for per 000 maturity SA for 10Y plan & 90 Rs. for 5 year plan
Loan & surrender value = after completion of 1st policy year

Sample benefit illustration for a 35year normal healthy male stamdard life.
Age of life assured = 35 years
SA = 300000
Maturity SA = 1/6 of Initial SA = 50000
Single prem. = 48975
Term of policy = 10 years
In case of death during 1st policy year claim amount = Initial SA + GTD addition = 300000 + 5000 (@ 100 Rs. per 000 maturity SA for 50,000 maturity SA)
In case of death during 2nd to 10th year claim amount = 100000 (reduced SA) + GTD. addition of 5000 Rs. per year
Maturity amount after 10 years = 50000 (maturity SA) + 50000 (gtd. addition) + 10000 (lyality addition if any, not gtd.) = 110000 Rs.

From investment point of view (it `ll be the main sales pitch to be adopted by LIC agents al over india), the CAGR for above person = 8.43% with Loyality addition & 7.5% with out Loyality addition of 10000 Rs. which is non guaranteed.

My Take on jeevan Aastha plan -

It`s a carefully designed Fixed Maturity Plan (FMP). Yes u read it right, it`s indded a FMP as the term as well as returns r known to u before taking the policy & are almost gtd. in nature (just leaving loyality addition as a non gtd. one).
Being an ins. plan offeed by the largest Ins. co. of india, it`s also Tax efficient too. In the first year the SA is almost 6 times of single prem. hence 20% prem. to SA rule is taken care off at the time of investment. being investment oriented policy, from 2nd year the SA is reduced immediately to have lesser expenses for mortality charges.

The biggest catch lies in the GTD. bonus calculation.

As the maturity amount is fixed for the policy term, the Net yield (CAGR) `ll be higher for persons in the age bracket of 13-35 years & `ll be very low for the persons in 45-60 age bracket. Anywhere from 6% to 7%. This is due to higher mortality charges for this age bracket.

My Judgement - This Policy is not suitable for any age class. for Y`ger people (20-35 age), the 10 year term can provide better returns from market linked instruments like Eq. & Debt. MFs. For older age people the return is not that much attractive. In fact for the persons who r in their 50s, the 10.5% bank FDs & PPF & Bhavishya Nirmaan Bonds (BNB) of Nabard r better option. as By that time the Ins. needs r over & even if one purchase it for ther partial ins. benefit, the real ins. is very poor.

Another reason why you should not invest in Jeevan Aastha
Let us say you have invested Rs 10,000.
In ten years if your amount has doubled to Rs 20,000 - then the return is 72 / 10 = 7.2%. If your returns are 8% - then the time taken to double your money is 72/8 = 9 years.
The formula is -

72 / rate of return = no of years to double your money or
72/ no of years to double your money = rate of return.

The new JEEVAN AASTHA policy - your money approximately doubles in 10 years.
So the rate of return is 72 /10 = 7.2% (approx) and not 10% as projected by your insurance agent.

Regulars to this Blog know that I hate Combining Insurance with Investment. My advise has always been, and will continue be, For Insurance Take Term Plan, which is the cheapest form of Insurance and then invest the remaining in Diversified Equity Funds. Finally, my advise on Jeevan Aastha is,

Best of luck,
Srikanth Shankar Matrubai

Also visit for an indepth Equity Analysis