Mutual Fund Investment Advice

#1
What should be the ideal strategy to choose my finds to be invested in for a shorter period of time like 3 to 5 years?
I want to start my SIP with monthly 2000/- and how should I start...
I have the option of investing through my DBS Digibank App as I have been using this app as my secondary bank account. Is it fine if I invest from this app?
 
#2
If DBS Digibank App allows you to invest in direct plans or mutual funds for no extra cost, then you may go that way. I generally prefer to invest directly with the AMC though. I had tried using HDFC investment account earlier, but I felt that there was lesser transparency in that.

For 3-5 years horizon, you can look at Balanced, Largecap and Multicap funds.
 
#3
If DBS Digibank App allows you to invest in direct plans or mutual funds for no extra cost, then you may go that way. I generally prefer to invest directly with the AMC though. I had tried using HDFC investment account earlier, but I felt that there was lesser transparency in that.

For 3-5 years horizon, you can look at Balanced, Largecap and Multicap funds.
Thank sir for replying and sharing your insight.

Can you please share your opinion on which funds should I select in Large-cap and Multi cap as suggested...?
 
#4
That is something that you should research yourself. There is enough information on sites like valueresearchonline.com, moneycontrol.com etc to help you with selection. Once you shortlist a few, you can post them here so others can comment.
 
#5
For SIPs, it is best to invest directly through the fund website. It is a quick affair. Money can be auto deducted from bank account. Even setting that up is quick.

That said, you can invest via your app if there are no extra charges.

For SIP of ₹2000, I suggest you put everything in one fund instead of splitting it. I suggest a multi cap fund that has 4 or 5 star rating on popular websites
 
#6
This rating thing is very confusing. Today 4-5 star can be tomorrow's 2 star (read tomorrow's as may be in couple of years).

And today's 2-3 star funds can become tomorrow's 4-5 star fund. So, its not reliable factor with time. And even your decision to withdraw from a fund should not be the star rating.

E.g. two to three years back, I remember HDFC AMC's fund were mostly in 5 star rating (in many fund category) and at the same time Axis funds were rated 2-3 stars. But currently its all reverse.
 
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#7
That is correct. But funds also keep changing their portfolio holdings, and have different strategies to select companies. For example, HDFC funds manager Prashant Jain bet huge on financial stocks, but they did not do well, and due to that returns of HDFC AMC's funds were down. The ratings agencies must be taking into account all of these things while rating funds. So if one does not have much idea about evaluating portfolios and future earnings of companies, one can either rely on these ratings, or consult a financial expert.

I usually look at the following things while evaluating a fund:
1. Fund ratings on both valueresearchonline and moneycontrol (ICRA)
2. Returns over the last 2, 3 and 5 years (for equity funds) - lower ranges for debt funds
3. Fund manager reputation - and also how long a fund manager has managed a fund, and how has it done (gives an idea on whether decisions taken by the fund manager are resulting in better performance or not)
4. Top 20 holdings of the respective fund (and whether I agree with the selections, etc).
5. Fund investment strategy (this can be obtained from the fund docs).

At the end of the day, no one knows which fund will do better, and past performance is no indication of the future. But we can do some due diligence and take a call.
 
#8
If selecting a fund becomes too complicated, pick a passive index fund. Then the only selection criteria is expense ratio. Go with a fund with expense ratio of 0.1% or less.

A fund that maps to Nifty or Nifty 100 should be good.
 
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