Thursday, January 22, 2009

Too many Infra funds in Portfolio

Mr.Saurabh Bhatia wrote back :

Hello Sir,

First of all, thanks for your comments to my previous mail. I began investing in November last year and as the situation is, have already lost a lot of unrealised value owing to the great market fall. I would like to know your thoughts on my current portfolio which I begin to feel is not very good and pretty polarised.

1. Tata Indo Global Fund - 15%
2. UTI Infrastructure Fund - 9%
3. Sundram Capex - 9%
4. Reliance Power Sector- 12%
5. JM Agro and Infra - 9%
6. UTI Infrastructure - 9%
7. JM Basic - 12%
8. Birla Sunlife Tas Saver - 10%
9. Principal Personal Tax Saver- 15%

Please advice about my decisions so far. I am a medium to long term investor with a time frame of more than 2 years. Please also tell as to which ones can be discontinued. I also hear commodity based funds tend to outshine others in difficult scenarios. Please provide your valueable comments.



Dear Saurabh Bhatia,
Yes, Mr.Saurabh, you are right, your portfolio is not showing a rosy picture, not just because of the Bearish Market but also some bad investments.
It is unbeliveable that 75% of your investments is in Infrastructure and Related Sectors!!!. A sure reciepe for Disaster. Your portfolio needs a makeover and a very urgent one at that.
To begin with, let me clarify, that I am not considering your ELSS investments as they have a lock-in period and both your ELSS funds are pretty good one at that.
The changes/switches you need to do is as follows:
Tata Indo-Global Fund - 15% (Retain 5%, and balance 10% , divide into 5% each and shift 5% to Tata Pure Equity fund and 5% into DSPML Top 100 Fund)
UTI Infrastructure Fund - 9%. (Sell in entirety and invest 5% in Birla sunlife Equity Fund and balance 4% invest in HDFC Prudence Fund)
Sundaram Capex Fund - 9% (Shift entire 9% into Sundaram Select Focus Fund)
Reliance Power Sector Fund - 12% (Shift 6% each into Reliance Growth Fund and 6% into Reliance Natural Resources Fund)
JM Agro and Infra Fund - 9% (This is a Close ended Fund and you will have pay High Exit Charges, if you switch out or exit now. So, with heavy heart, I have to say, you have no other option but to continue and stay invested)
UTI Infrastructure Fund - 9% (Obviously, this is UTI Infra Advantage Fund, which is again a Closed ended Fund and with the same reasons as above, continue)
JM Basic Fund - 12% (Sell and invest 4% each in Fidelity Equity Fund, HSBC Equity fund and DWS Investment Opportunity Fund)
Note, I would have recommended JM contra, but you already have a good exposure to JM Fund House, so it is better you diversify across Fund Houses also.
After the above switches and shifts, your portfolio would look something like this:
Sundaram Select Focus Fund - 9%
JM Agro and Infra Fund - 9%
UTI Infrastructure Fund - 9%
Reliance Growth fund - 6%
Reliance natural Resources Fund - 6%
Birla sunlife Equity Fund - 5%
DSPML Top 100 Fund - 5%
Tata Pure Equity Fund - 5%
Tata Indo Global fund - 5%
HDFC Prudence Fund - 4%
DWS Investment Opportunity Fund - 4%
Fidelity Equity Fund - 4%
HSBC Equity Fund - 4%
and of course your existing ELSS Funds
Birla Sunlife Tas Saver - 10%
Principal Personal Tax Saver- 15%

And, Mr.Saurabh Bhatia, you need to find a Good Mutual Fund Advisor immediately, so that the previous mistakes are not repeated.

Best of luck,
Srikanth Shankar Matrubai

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