While we briefly answer your queries, we encourage you to read our analyst views on specific funds.
You can post your query by accessing the Ask Morningstar tab. Our team will endeavour to answer queries ONLY related to mutual funds and portfolio planning from our registered readers.
I am investing in Birla Pure Value Fund though SIP since the last 3 years. The recent fall has reduced the investment substantially. Should I switch to a better fund or continue in this? My time horizon of investment 8-10 years.
The market fall over the past couple of months has led to a loss in value of a lot of funds. Given the current situation, the fund has underperformed significantly especially over the past couple of months, falling in the bottom quartile.
The value fund category on the whole has underperformed since 2018.
Given that markets are cyclical in nature, it’s important to stay invested over the long term in order to average out returns and achieve a positive outcome.
Do take into consideration the reasons for holding this fund as a part of your portfolio and ensure that you are investing in a diversified set of mutual funds with a view to maximize returns and reduce risk.
I invested in Sundaram Equity Hybrid 3 years ago. The return is -30%. What is the chance of my portfolio recovery?
Sundaram Equity Hybrid Fund is from Aggressive Allocation category. This fund invests across asset classes such as equity, fixed income and cash and always has to maintain equity allocation between 65-80%. The fund is managed by Rahul Baijal and Sandeep Agarwal since 2018. An ideal time horizon for an investor to invest in equity mutual funds is 5 to 7 years and that is valid for equity hybrid category as well.
We understand that the last one month’s fall has eroded the portfolio value, but equity in the long run will create reasonably food returns. And, to that extent, irrespective of what stage of the market cycle you are in, this is a product which balances risk between debt and equity and within equities between large and midcaps fairly well.
I'm 43 years old moderate aggressive investor with horizon of 15 years to create a wealth of Rs 75 lakhs.
SIPs: Kotak Standard Multicap (Rs 3,000), Mirae Asset Emerging Bluechip (Rs 2,000), Axis Focus (Rs 1,000), Kotak Emerging Equity (Rs 1,000).
Should I replace Kotak Standard Multicap as it is a big fund?
The Kotak Standard Multicap is amongst the best funds in its category. The fund predominantly invests in large cap stocks and this leads to portfolio that consists of highly liquid stocks. The fund is quite large in terms of its size but given that the markets have grown substantially over the past 4-5 years, we’ve also witnessed a substantial growth in a lot of funds. The fund is managed by Harsha Upadhyaya and we have a positive opinion on the manager as well as the processes that are followed at the fund house. Given these factors, we don’t see the size of the fund as a concern.
We also have a positive opinion on the other funds in your portfolio. For example, we have a Morningstar analyst rating of Silver on the Mirae Asset Emerging Bluechip fund and Bronze rating on the Axis Focused 25 fund. The Kotak Emerging Equity fund also carries a positive rating of Bronze.
Having said that, we would urge you to use the SIP calculator in order to check the value of your investments to ensure that your SIP’s are in line with your goal of wealth generation.
The NAVs of certain debt funds are going down. What is the reason, as these funds have quite good papers?
Since late 2018, the debt market has witnessed several downgrades and defaults amid the slowdown in the economy and stress in the NBFC sector. In case of downgrades/defaults, securities are marked-down or completely written-off by mutual funds as per valuation norms by SEBI, which results in a drop in fund NAVs. Hence, even though overall portfolio quality is high, if relatively small exposures see a mark-down or write-off, the same is reflected in a fall in the fund NAV.
In March 2020, few debt funds have witnessed sharp drawdowns owing to a mark-down in their exposure to the stressed Yes Bank, after the RBI placed it under moratorium and imposed operational curbs. During the latter part of the month, NAVs of short term and money market funds have seen a fall in NAVs. This was due to a sharp rise in yields of corporate bonds and commercial papers in the debt market as liquidity dried up amid the coronavirus induced business shutdowns. As securities with residual maturity of more than 30 days need to be marked-to-market as per SEBI valuation norms, this led to a fall in prices of the securities resulting in a fall in NAVs.
