MF Query Board

I have been investing in Axis Blue Chip Fund through SIP at ₹5,000 per month from March 2021. It was a high-rated fund then. However, this fund has not performed as expected. Should I stop my sip investment or continue with any other fund in the same category? - Anonymous
 

There are two aspects to this issue. The first is about taking Large-Cap equity exposure and the second is fund selection. There are two ways you can take exposure to large-cap equity: actively managed large-cap funds and index funds. Axis Blue Chip Fund is an actively managed large-cap fund. Lately, this fund has not performed well. In fact, it has never been on our list. This was because it takes heavy cash calls. Cash calls do benefit when the markets are heading down while valuations are also taking a hit. [EasyDNNnews:PaidContentStart]

But at the same time finding an opportunity to invest at lower valuations is the key. Not investing the cash can drag the fund’s performance as cash earns merely anything. Therefore, we suggest exiting from this fund. If you can actively manage your portfolio, switch from Axis Blue Chip Fund to Kotak Blue Chip Fund. However, if you do not actively manage your investments then investing in a Nifty 50 index fund would make more sense in the long term. You can invest in UTI’s Nifty 50 Index Fund as this has one of the lowest tracking errors and expense ratios.
 

After my retirement in 2019, I invested a good amount in debt and equity mutual funds. They are performing well. I am 64 years old. Is it the right time to quit? Or should I continue for the next few years? - RSB Singh
 

Your financial information is private. Thus, we won’t be able to provide specific guidance. But, we would like to provide you with some advice that you might find valuable. With your retirement fund you should use considerable caution. You can take certain risks if you receive a monthly pension from the government or your company. If not, using the corpus to assure consistent income that can be used to cover your monthly expenses should be your first priority. To obtain guaranteed income backed by the government, you should invest in a Senior Citizens Savings Plan or Post Office Monthly Income Scheme. You can also make investments in safer debt mutual funds to enhance your income.

You should use considerable caution while investing in equity-based offers. Equity plans, as you may be aware, invest in equities. Stocks are incredibly volatile and hazardous. For this reason, only long-term investors are advised to invest in shares. Re-examine your equity plans to see whether you are comfortable with the risk. Also, you may want to learn about the categories and the added risks related to investing in them. If they can continue to remain invested for seven to ten years, we usually advise retired clients to stick with large-cap and flexi-cap schemes. Avoid investing in equity mutual funds if you are unwilling to take on additional risk or devote the necessary time.
 

I need to shift from SBI Debt Hybrid Fund. Could you suggest a good alternative? I would also appreciate any suggestions about mutual fund and stock investments. - Tin Ash
 

If you are looking to invest the redeemed amount again in a conservative hybrid fund, then investing in ICICI Prudential Regular Savings Fund makes more sense.


 

As can be seen in the table above, this fund has provided 9-10 per cent annualised returns. Moreover, since its inception, in no single three-year period has it given negative returns. Moreover, for a maximum number of times (70.3 per cent) this fund has delivered annualised returns between 8-15 per cent. In terms of risk, its standard deviation and beta is lower than its category average. Therefore, this fund fairs well against the category. If you are looking to have higher equity exposure then I would recommend Edelweiss Balanced Advantage Fund.
 

As can be seen, not even in a single three-year rolling returns instance has this fund given a negative return. In fact, almost 65 per cent of the times this fund has provided returns above 8 per cent. In terms of risk, this fund has lower standard deviation and beta and with its reasonable returns this fund has one of the highest Sortino ratios in the category.
 

Please share your advice on the NOF dividend yield funds such as the SBI Dividend Yield Fund. - Nitesh Sahay
 

The SBI Dividend Yield Fund, an open-ended equity scheme that invests for capital growth and dividend distribution by investing primarily in a welldiversified portfolio of stock and equity-related instruments of dividend-paying companies, was unveiled by SBI Mutual Fund on February 20, 2023. An open-ended fund, this new fund offer (NFO), which is open until March 6, 2023, is for investors who want to park their earnings in prospects for capital gain or dividend distribution by investing primarily in a well-diversified portfolio of stock and equity-related instruments of dividend-paying corporations in order to create long-term capital income.
 

A minimum of 65 per cent of the assets must remain in stock and equity-related securities, mostly in dividend-paying corporations, according to the fund’s investment objective. The fund will also aggressively search for investment possibilities in firms that have continuously increased their dividend payouts while offering relatively lower dividend rates. Investors who want to put their money into dividend-paying businesses with significant growth potential must participate in this fund. The purpose of investing in this scheme is to profit from dividends declared on equity-related securities and equity-related instruments over the long term, gaining from both dividend earnings and capital appreciation.
 

Since the programme is open-ended, interested investors can invest once the mutual fund house begins allocating units under it. The programme provides units for ₹10 apiece. Investors can participate in the plan with a minimum investment of ₹5,000 and additional investments in multiples of ₹1. The additional purchase will cost ₹1,000 and then in multiples of ₹1. Investors have the option of choosing between regular and direct plans. Investors can choose to sign up for the SWP (A) facility, which attracts capital gains as appropriate for equity-oriented mutual funds as a tax-efficient option to receive monthly cash flows, subject to terms and conditions indicated in the scheme information document.
 

The SWP (A) facility is a tailored option provided to SBI Mutual Fund participants looking for consistent cash flows from their investments in a straightforward and tax-efficient manner. One only needs to choose from the different options accessible to withdraw a fixed percentage of their cost of investment or any specified amount to fulfil their regular cash flow needs (monthly, quarterly, half-yearly and yearly). When the remaining corpus continues to provide returns, either the growth or IDCW plans may choose for the SWP (A) facility. The market has seen the introduction of dividend yield funds previously.
 

The equities assets in this scheme will be managed by Rohit Shimpi, while the specialist fund manager for foreign securities will be Mohit Jain. According to the information provided in the scheme information document, the plan entails ‘very high risk’ and is most suitable for investors who are prepared to hold their investments for an extended period of time. Investors must, however, speak with their financial advisors if they have any questions about whether the product is right for them. Many asset management firms have previously introduced such funds before this one. Some of them are tabled below:
 

I have been investing in the direct plan of the Nippon India Small-Cap Fund. Throughout the past five years I have invested via SIPs. Should I keep going or stop now?
- Bhanusingh A

You have not explained why you are considering selling your Nippon India Small-Cap Fund holdings. Is it as a result of the recent market volatility or the meagre profits the programme has provided over the past year? You may be aware of the volatility in investing since you have been doing it for five years, particularly in small-cap areas. You should be aware that the stock market does not consistently give modest returns each year. It may yield very high returns in some years and low returns in other years. We talk about average returns over a lengthy period of time because of this. The performance of Nippon India Small-Cap Fund has been consistent both in the short term and long term and the scheme has been among the best in the small-cap category.

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