I see a lot of newcomers here and given the market volatility, this can be a little nerve wrecking for someone. I have been in market for last 12 years as a part time investor and sometimes really find it difficult to track companies for direct investing. After a lot of thought, I am proposing an all weather portfolio of active mutual funds. I believe that this portfolio can be of ‘fill it, shut it, forget it’ type with an SIP approach. I recommend 20% of monthly SIP number in each of these funds below with the logic.
- All funds recommended will be multi cap ones - with different underlying theme.
- Highest weightage is given to fund manager / AMC pedigree.
- Keeping the fund, market cap agnostic, trying to find different approaches to market to ensure adequate diversification.
- 20% allocation to debt to help contain volatility a bit more.
- Conservative approach.
- No star rating, but solid long term performance of the fund manager is considered.
- Relatively smaller fund size - As I believe that large size does hamper stock selection.
- All Direct plans - minimum investment horizon of 7 years.
- 5 funds - starting allocation of 20% each.
Fund 1) PPFAS Long term equity - Unique play of US equity and strong AMC / Fund Manager pedigree. Good results in the first 5 years of the fund. Ethical and focussed AMC.
Fund2) Quantum Long term equity value fund - Excellent long term performance and very good down side protection. Ethical AMC and good pedigree.
Fund 3) ICICI Pru Multi Cap: Bet on S Naren. He recently took over as fund manager of this fund. Relatively small fund from ICICI stable but with Naren at helm, this should do well, I hope.
Fund 4) Franklin India Focussed Equity: As other funds are with value investing theme, this one is more focussed on high growth companies. Franklin India pedigree and very strong 10 / 5 / 3 year plus performance. Even though the fund was launched at market peak in 2007, this fund has managed to give very good returns in last 12 years.
Fund 5) ICICI Banking and PSU debt fund: To get flavour of debt in the mix. Banking and PSU are relatively safer categories and the fund is unharmed from the recent issues. Approx. 8% long term historical returns. Future returns could be a bit lower due to general lowering of interest rates.
Any periodic excess funds can be parked with Liquid funds at any of the fund house above and to be used in case of market dips / crashes to move to equity in above allocation of 25% each.
Critique / suggestions / feedback - Welcome!