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Recommended Portfolios for 2015
March 26, 2015

A brief update on Recommended Portfolios 2015.


Author : Dr. Renu Pothen



Changes in Recommended Portfolios

In line with our tradition, we have revamped our Recommended Portfolios on March 23, 2015, incorporating the changes made in our Recommended Funds for the current year. We became neutral on Indian markets in November 2010 and since then have continued to maintain this stance. This was on account of valuations not being attractive during the end of 2010. As I write this note, the S&P BSE Sensex PE is trading at a level higher than the iFAST Fair PE estimate which is 15X. This compels us to maintain a status quo on our neutral stance and as such our asset allocation in the portfolios continue to reflect this view.

 

Table 1: Portfolio Fund Allocation Changes

Category Fund Name Conservative Moderately
Conservative
Balanced Moderately Aggressive Aggressive Moderately Aggressive (Global) Aggressive (Global)
Debt
Ultra Short Term  Templeton India Ultra Short Bond Fund 10 10 5 5 2 5 2
Short Term  Sundaram Select Debt Short Term Asset Plan 20 15 10 - - - -
UTI Short Term Income Fund - - - 10 4 10 4
Reliance Regular Savings Fund - Debt Option 15 10 10 - - - -
Dynamic Bond  Birla Sun Life Dynamic Bond Fund 25 20 15 - - - -
Tata Dynamic Bond Fund - - - 15 4 15 4
Corporate Bond  SBI Corporate Bond Fund 20 15 10 - - - -
Equity
Large Cap  Birla Sun Life Frontline Equity Fund - - - 10 15 5 5
ICICI Prudential Focused Bluechip Equity Fund 5 10 10 - - - -
Axis Equity Fund 5 10 15 - - - -
Multi Cap  Kotak Select Focus Fund - - - 10 15 5 5
Mirae Asset India Opportunities Fund - 10 15 - - - -
Midcap & Small Cap  Canara Robeco Emerging Equities - - 10 15 15 10 10
Reliance Small Cap Fund - - - 10 10 5 5
Contra & Value ICICI Prudential Value Discovery Fund - - - 15 20 10 20
Banking  ICICI Prudential  Banking &
Financial  Services Fund
- - - 10 10 10 10
Infrastructure  Canara Robeco Infrastructure Fund - - - - 5 - 5
Global  JPMorgan Greater China Equity Off-Shore Fund - - - - - 10 15
L&T Global Real Assets Fund  - - - - - 15 15
    100 100 100 100 100 100 100


Equity Funds
This year, we have removed Tata Dividend Yield Fund from the conservative, moderately conservative and balanced portfolios. Although a dividend yield fund is known to be less volatile vis-à-vis other categories of diversified funds, we have decided to include a large cap fund in its place. This is because we wanted equity funds with more than 70% of their portfolio concentrated only in large cap stocks, to be a part of our conservative and moderately conservative portfolios. As for our balanced portfolio, instead of the dividend yield fund, we have included an aggressive mid cap fund that is Canara Robeco Emerging Equities fund to create the desired alpha in rising markets. The other two funds which have exited our portfolios this year are UTI Opportunities Fund and SBI Emerging Businesses Fund. The fact that our model had severely punished these funds led to their exit from our portfolios. They have been replaced with Kotak Select Focus Fund and Canara Robeco Emerging Equities fund. The irony here is that Harsha Upadhyaya who was instrumental in UTI Opportunities Fund becoming the best performing multi cap fund a few years back, has once again proved his mettle as a fund manager who can turn around funds in the diversified category. The inclusion of Kotak Select Focus Fund in our Recommended Portfolios is a case in point. Finally, for the first time in our portfolios, we have included a small cap fund (Reliance Small Cap Fund) for our aggressive and moderately aggressive investors. This is to take advantage of the favourable phase that the Indian economy is going through.


Debt Funds
As far as fixed income is concerned, Sundaram Select Debt Short Term Asset Plan becomes the preferred short term fund for our conservative, moderately conservative and balanced investors. This year, we have taken an exposure into corporate bond fund for our conservative, moderately conservative and balanced investors. For investors with a time horizon of 3 years, we believe that an exposure into this instrument would be an ideal alternative to Fixed Deposits. SBI Corporate Bond Fund is the recommended fund in this space. In addition to this, we have decided to replace the income fund with a dynamic bond fund in our aggressive and moderately aggressive portfolios. Although we believe that there is scope for more rate cuts, any surprises on the domestic or global arena can lead to uncertainty in interest rates. Hence, dynamic bond funds would be more suitable for our investors who would like to play the interest rate cycle. Our recommended fund in this category is Tata Dynamic Bond Fund.

To conclude, my advice to investors would be to use these model portfolios in such a way that they match the goals and time horizons that they have in mind.


Happy Investing!!!


Table 2: New Fund Additions and Old Fund Deletions

Changes in Scheme

Categories

Old

New

Short Term

Pinebridge India Short Term Fund

Sundaram Select Debt Short Term Asset Plan

Income / Dynamic Bond

Canara Robeco Income

Tata Dynamic Bond Fund

Corporate Bond

-

SBI Corporate Bond Fund

Multi Cap

UTI Opportunities Fund

Kotak Select Focus Fund

Midcap & Small Cap

SBI Emerging Businesses Fund

Canara Robeco Emerging Equities

-

Reliance Small Cap Fund

Dividend Yield

Tata Dividend Yield Fund

-

Please feel free to get back to us on research.ind@ifastfinancial.com if you have any queries on any of our funds.

 


iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. No investment decision should be taken without first viewing a mutual fund's offer document/scheme additional information/scheme information document. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website.

 



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