Long term mutual fund other than Parag Parikh for consolidation

[gberen523]

Long term mutual fund other than Parag Parikh for consolidation.

Hello folks, so I couldn’t find anything related to this post on the sub so asking your suggestions. I recently read my eCAS statement and I have 27active mutual fund portfolios. So I’ve withdrawn like 20-21 of them and now looking for suggestions on which fund/fund houses to choose.

The ones that I didn’t stop are

1. Parag Parikh flexi cap
2. US equity FoF
3. Nippon india small cap
4. SBI focused equity fund

Any suggestions which two more funds to chose and/or any of the above to exit as well. Will quit Nippon india small cap as well.

 

[resjudicata]

@gberen523 Add an index fund instead of a focused equity fund and you're done

 

[vbkevin57]

@resjudicata If you see the historical data, all of the good actively managed funds follow the same curves as of index funds, and they usually give higher return. That's why I decided to skip index funds.

 

[splinter215]

@vbkevin57 But why? Index funds have very minimal/zero expense and other fees compared to MF.

 

[maurie]

@splinter215 Indian funds report performance after deducting expenses, if a fund with higher expenses performed better than one with a lower expense, it is a win.

 

[fishyjoe]

@vbkevin57 Are you tracking the same good funds as good funds keep changing every other year(maybe except quant funds for now). One of the biggest reasons, I think people go for index funds

 

[gberen523]

@resjudicata 4 mutual fund houses are enough? Also, what would you suggest, one time big sip or multiple sip throughout the month??

 

[resjudicata]

@gberen523 Lump Sum should only be invested if the market is heavily corrected when the valuation of good companies are cheaper than usual, that's not the case right now so i would advise against investing a lump sum amount in this market, better build a position by investing weekly.

And yes 4 mutual funds are plenty. Unnecessary diversification in mfs doesn't help returns nor does it provide any downside protection, one good amc with good fund manager can do wonders.

 

[gberen523]

@resjudicata Not lumpsum, say 2-3 sips on different dates, or 1 big sip on the same date. That’s the question.

 

[resjudicata]

@gberen523 I don't think it will matter that much, just do it at once.

 

[follow_the_word]

@resjudicata Indeed, if the intention is long term consolidation (so investment horizon of 10-15 yrs+) then all short term volatile gets adjusted for and uou will not see drastic difference between lumpsum v SIP after 15 years.

As for mfs, I would also argue that 3-4 mfs are more than enough for long term holding. Get an index fund, a flexicap, and maybe another one strategy index fund or contra or whatever gets your goat (like a smallcap fund).

However, Parag Parikh flexicap AUM has increased significantly and by their own admission they can no longer invest in microcaps or any smallcap that is too small. Hence, I would consider adding another flexicap to supplement this.

I would personally not hold small cap funds for long term investment. Instead, I would rather trade smallcap fund based on valuations. This is because smallcaps are very volatile and smallcap funds are required to hold smallcaps by their investment mandate. Flexicap funds on the other hand, can move money away from smallcaps when the valuation become exorbitant or start dropping. In any case, this is a personal preference.

 

[alvacam]

@follow_the_word

Parag Parikh flexicap AUM has increased significantly and by their own admission they can no longer invest in microcaps or any smallcap that is too small. Hence, I would consider adding another flexicap to supplement this.

what alternatives are you going to invest in ? Also, on what criteria would you choose another flexi cap ?

 

[follow_the_word]

@alvacam To me, the significant thing is consistency vs spectacular returns that are outliers. So I would look at 5/7/10 years rolling returns, and check for standard deviation. Lower standard deviation is better. Also, i would at how many times the fund was able to generate returns in a particular range.

One could also look at drawdown data from morningstar or something. But for Investment horizon of longer than 5-7 years, I don't think drawdowns matter so much - of course, the occurence of negative returns over a 5-7 year period, is a red flag.

 

[jennifermartin]

@follow_the_word Can you mention another Flexi cap similar to that of Parag Parikh?

 

[follow_the_word]

@jennifermartin Not sure. The alternative I am currently experimenting with is Quant Flexi cap. Their performance looks quite consistent over long period. But it's a more active fund with a higher churn rate.

 

[jennifermartin]

@follow_the_word That's what I don't like about Quant - their higher churn rate.

I am already invested in their ELSS fund.

With the AUM of PPFAS increasing, the only other fund with similar performance and fund house reputation is hdfc Flexi cap but even their AUM is 38000 cr compared to PPFAS's being 40,000 cr.

So, for the time being, I am invested in PPFAS only

 

[gberen523]

@resjudicata Alright, thanku you so much!!

 

[svs1957]

@gberen523 Thumb rule is to align your paycheck with the sip date. If you get paycheck several times a month (like in the US), doing sip several times a month makes sense. For Indian cases, just once a month as soon as your paycheck hits your bank account.

 

[gberen523]

@svs1957 I used to do that, but since I’m trying to consolidate the sip, I’ve withdrawn some amount and I’ll increase the sip amount too, so just wanted to confirm that once.

The account for investment is only credited for sip and debited for that only!

 

[learning_christianity]

@svs1957 I get my paycheck end of the month so I usually do set my SIPs for the 5th of the next month, is that okay?