Should I sell this fund?

By Morningstar |  17-06-19 | 
 

Looking at the performance of ABSL Hybrid Balanced 95 Fund - Dividend payout, should I sell?

- Syamal

The fund’s recent performance has remained subdued, with the fund falling in the bottom quartile among its peers in 2018 as well as in the first quarter of 2019. This short-term underperformance has in turn impacted the cumulative long-term performance of the fund over a 1, 3 and 5-year period. The fund also witnessed a change of leadership in 2015, with Pranay Sinha and Dhaval Shah taking over the management responsibilities on the fund from erstwhile manager Prasad Donde. This change coupled with the fact that markets have remained extremely volatile over the past year had led to the fund underperforming.

Having said that, we think that the fund house has a strong investment team in place and is backed by a large and efficient research team. While we don’t recommend putting additional money into the fund at this point in time, we think that the fund’s performance should witness a turnaround over the long term.

I am planning to invest 10,000 per month in an ELSS fund with time horizon of 15 years by SIP. I am comfortable with high risk. Mirae Asset Tax Saver Fund completed only 3 years, but has some good stocks. Axis Long Term Equity Fund has a good track record but total asset size is more than Rs 18,000 crores. Which one must I pick?

- Sathyam

Both funds are extremely well managed strategies although with quite different management styles.

Axis Long Term Equity has significant exposure to large-cap growth stocks and takes concentrated bets.  Jinesh Gopani runs the portfolio with a huge focus on quality of growth and management, while building his portfolio. While the fund size has increased quite significantly, we don’t think it is concerning at the current juncture given its large cap bias.

While we don’t have analyst coverage on Mirae Asset Tax Saver, we have covered other funds managed by Neelesh Surana. We think Neelesh is an experienced manager and his focus on margin of safety while buying stocks and building a diversified portfolio holds the fund in good stead over a market cycle.

You could pick either of the two, given its fund management style, Mirae could tend to be slightly less volatile than Axis Long Term Equity.

Also read our analyst views on:

I am 38 years old. A moderate risk investor. My monthly SIPs:

  • SBI Bluechip: Rs 4,500
  • ABSL Frontline Equity: Rs 5,000
  • Mirae India Equity: Rs 5,000
  • Mirae Emerging Bluechip: Rs 4,500
  • L&T Midcap: Rs 4,000
  • Reliance Small Cap: Rs 4,000
  • Tata P/E Equity: Rs 4,000

Goals: Rs 50 lakhs in 13 years for child’s education / Rs 2 crore in 20 years for retirement. My total corpus in mutual fund in the above schemes is Rs 21 lakhs so far.

- Mahesh

We think the funds in your portfolio are well managed, we rate most of them quite highly. There is no need to change any funds or the overall allocation which also seems to be in line with your goals. Continue making these investments.

Given the value of your current portfolio and monthly SIP investments, you should be able to comfortably meet both your stated goals.

That said, we recommend you increase your SIP amounts by 10% every year in order to build an even healthier retirement corpus for yourself.

Also read our analyst views on:

I am 52 and looking to retire 10 years from now. I have investments in debt. These are my equity SIPs:

  • Mirae Asset India Equity: Rs 50,000
  • ABSL Equity: Rs 60,000
  • Mirae Asset Emerging Business: Rs 70,000
  • ICICI Prudential Discovery: Rs 30,000
  • SBI Midcap: Rs 30,000
  • HDFC Small Cap: Rs 80,000
  • NPS: Rs 60,000

- Basudev

Your portfolio has funds from various categories – Large Cap, Multi Cap, Large & Mid Cap, Mid Cap, Small Cap and Value.

We would like you to reduce your overall allocation towards small and mid cap funds, which currently is at 40%. Given your age and the fact that you are retiring in 10 years, we recommend bringing this down to 20%. This amount can be reallocated towards large-cap funds.

We think the funds you are currently invested in are good and don’t see any reason to exit any of them.

You can read our analyst views on various funds, including those you have selected, here.

My investment horizon is 15 -20 Years. My SIPs are across Axis Long Term Equity, Canara Robeco Emerging Equities, DSP Small Cap, HDFC Mid Cap Opportunities, ICICI Prudential Bluechip, L&T Mid Cap, Mirae Asset Emerging Bluechip, Mirae Asset India Equity, SBI Bluechip, SBI Small Cap.

- Vishal Singh

Your portfolio looks well spread out across various categories. We have a positive analyst rating on most of the funds that you hold.

HDFC Mid-Cap fund holds a Gold rating which is the highest conviction that we have on a fund based on the fund’s qualitative aspects.

Axis Long Term Equity Fund, ICICI Prudential Bluechip Fund, Mirae Asset Emerging Bluechip Fund, Mirae Asset India Equity (Mirae Asset Large Cap Fund) and DSP Small Cap are Silver rated funds and we have a lot of conviction on the manager as well as the processes on these funds.

We also have a positive Bronze rating on the SBI Bluechip Fund.

Canara Robeco Emerging Equities recently witnessed a manager change with Krishna Sanghavi taking over the fund. We think that he should be able to steer the fund in a positive direction.

L&T Mid-Cap is managed by S.N Lahiri and we have a positive view on the AMC as well as some of the manager’s other funds.

We think that the SBI Small Cap fund is also a great option for investors who are able to handle the volatility that comes with it.

Given your long-term investment horizon, we think that the funds that you currently hold are a great option. We would urge you to look at the asset allocation in your portfolio and the percentage of allocation across categories based on your risk appetite and return expectations.

You can read our analyst views on various funds, including some that you have selected, here.

These are my SIPs. ICICI Pru Bluechip, ABSL India Gennext, HDFC Hybrid Equity.  In each I put Rs 2,000. I want to invest additional Rs 10,000 per month for long term investment.

- Rohit

As per your current allocation we observe you have 25% of your monthly SIP towards the Aditya Birla Sun Life Gennext fund, which is a Consumption oriented thematic fund. We think it will be prudent to reduce overall exposure to this fund to not more than 5-10% of your portfolio. You can continue with your investments in the other funds.

With regards to the additional Rs 10,000/month investments, it would be good to have some more details about your intend time horizon and risk return expectation.

If you are looking for an aggressive portfolio over a 10-year horizon, here is what we recommend:

  • Equity Large Cap: Rs 3,000
  • Equity Mid Cap: Rs 2,000
  • Equity Multi Cap: Rs 2,000
  • Debt - Short Duration: Rs 3,000

You can find a list of our rated funds and analyst views here.

My time horizon is 20 years. I have Rs 2,000 in my PPF. My SIPs are (Rs/month):

  • SBI Bluechip: 2,000
  • SBI Small Cap: 1,000
  • HDFC Hybrid Equity: 1,500
  • ICICI Bluechip: 1,500
  • L&T Emerging Businesses Fund: 1,500
  • L&T Hybrid Equity Fund: 2,000
  • PP Long Term Equity: 200

- Dev

The funds in your portfolio are well diversified across categories. Your allocation to hybrid funds and large cap categories each stands at around 30% of your portfolio. If you’re a slightly conservative investor, with a 20-year horizon, this allocation should work well for you. Out of the remaining 40%, you have around 21% invested in Mid and Small Cap funds and 17% invested in a multi-cap fund.

We have a positive rating on most of the funds that you have picked as part of your portfolio. While we don’t have an analyst coverage on the Hybrid funds and the PP Long term fund, we think that these are good funds to remain invested in for the long term.

You can read our analyst views on various funds, including some that you have selected, here.

Goal: Rs 60 lakhs. Period: 12 years. Below are the funds I invest in. The value of the investment today, and SIPs (Rs/month):

  • ICICI Prudential Value Discovery Fund: Rs 1,20,000 (SIP: 2,000)
  • UTI Equity Fund: Rs 1,60,000 (SIP: 4,000)
  • ICICI Prudential Bluechip: Rs 2,000 (SIP: 2,000)
  • L&T India Value Fund: Rs 34,000 (SIP: NIL)
  • HDFC Midcap: Rs 24,000 (SIP: 2500)

- Ashish

Fund Category Investment SIP Portfolio SIP
ICICI Prudential Value Discovery Fund Value 120000 2000 35.3% 19.0%
UTI Equity Fund Multi Cap 160000 4000 47.1% 38.1%
ICICI Prudential Bluechip Large Cap 2000 2000 0.6% 19.0%
L&T India Value Value 34000 NA 10.0% NA
HDFC Mid Cap Mid Cap 24000 2500 7.1% 23.8%

While the overall funds in your portfolio are good. We have the following suggestions:

  • Portfolio is over allocated towards Value Funds. While Value funds are great addition in a portfolio from a style diversification perspective. India is still largely a growth market, thus we think value shouldn’t form more than 20% of your portfolio.
  • While UTI Equity is a well managed strategy, you are currently holding almost half your portfolio in the fund, plus 37% of your monthly SIP is going towards this fund. We think the concentration of this fund in your portfolio needs to come down to 25%.
  • Accordingly increase your allocation to Large cap funds. You can find a list of highly rated Large Cap funds here.

I am a beginner. What do you think of my funds? HDFC Small Cap, L&T Emerging Business, SBI Small Cap, Mirae Asset India Equity, Mirae Asset Focused Fund, HDFC Equity Fund, Axis Focused 2.

- Nakul

We have an analyst rating of Gold on the HDFC Small Cap Fund as well as the HDFC Equity Fund. A gold rating indicates that we have the highest level of conviction on the fund.

Mirae Asset Large Cap Fund (Mirae Asset India Equity) currently carries a Silver rating while we don’t have a rating on the newly launched Mirae Asser Focused fund.

The Axis Focused 25 is also a positively rated fund with a Bronze rating.

We don’t have a rating on SBI Small Cap, but have covered other funds managed by fund manager R Srinivasan. We think that it’s a good choice for investors in the small-cap category.

You should diversify across categories. Your current portfolio is devoid of funds from the large-cap category and you might want to consider adding a couple of them based on your investment goals and return expectations.

To help you choose funds, read our analyst views on various funds, including some that you have selected, here.

I am 43 years old. I want a corpus of Rs 1.5 core in 12 years. I recently started SIPs in Mirae Asset Emerging Bluechip (Rs 7,000), Axis Bluechip (Rs 7,000), HDFC Small Cap (Rs 7,000).

- Ashok

The three funds that you have invested in are a great choice and we have positive opinion on all.

We also urge you to use an SIP calculator to tailor your investments in a manner that will enable to meet your financial goals over the 12-year time horizon. Please find a link to the calculator here.

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Tarun Kumar
Jul 20 2019 08:05 PM
I'm 32 years old and I've just started investing in mutual funds. My long term horizon is of 25 years. These are the funds I'm currently investing in (all direct plans) :-

ICICI Prudential Bluechip - Rs. 2500
Mirae Large Cap - Rs. 1000
Kotak Multicap - Rs. 1750
Mirae Emerging Bluechip - Rs. 2000
ICICI Prudential US Bluechip - Rs. 750
SBI Small Cap - Rs. 750
HDFC Small Cap - Rs. 750

Total - Rs. 9500

I can increase the monthly SIP to Rs. 11000. I want to include debt or liquid funds (Franklin Ultra Short and Reliance Liquid) in this portfolio. Is it advisable to do so considering I'm investing for a long period or should I increase the fund amount so that it reaches Rs. 11000? Thanks.
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