Wednesday, May 23, 2018

Visit company websites for changes in mutual fund schemes

Where can I see changed names of mutual fund schemes? How can one analyse the changes? 
—Rakshit Shah
Mutual fund companies have been making significant changes to their schemes following a Securities Exchange Board of India (Sebi) directive about rationalizing schemes and categories. Many schemes have been renamed, quite a few have seen category changes, and some schemes have been merged with others. So, it is important for an investor to take a look at their portfolio and get reacquainted with their investments. The best place to find the news about name, category and other changes is the website of the companies themselves. All of them have published addendums and notices in their website that detail the changes. If you are using an online portal to make your investment, it is also possible that your service provider has provided a consolidated list (such as this).
The impact on the investor could be little or a lot depending on the schemes invested in—there are some schemes that have just had their names changed to conform with Sebi’s directive. In other cases, fundamental attributes have changed.
These will have to be analysed on a case-by-case basis, ideally using the services of an adviser. If you are investing by yourself, ensure that the asset allocation and category allocation ratios of your portfolio remain intact, subsequent to the changes.
I want to start an SIP for an international holiday with my family in 5 years. I can postpone it by 1 or 2 years. Which type of fund should I opt for?
An investment time frame of 5 to 7 years is a decent period to qualify in the low-end of the range that could be termed as long term. So, you could have a pretty good allocation to equity. I would recommend a 70% allocation to equity in your SIP allocation with the remaining 30% going to debt funds. The 70% allocation could go to a mix of 2-3 funds such as Adity Birla Sunlife Frontline Equity Fund, Mirae Asset India Equity fund, and HDFC Midcap Opportunities Fund. The remaining 30% could go to a short-term debt fund such as UTI Short Term Income Fund. It is important, however, that you stay true to the flexibility of your time frame and not make hasty moves if this portfolio should have notional low returns. It is likely that the markets will turn around in such a situation, and you should hold on to gain from the upward movement by holding on to your investments.

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