Sunday, May 18, 2014

MF’s that you can invest now

With the election results behind us – I am sure you are looking forward and wondering if you need to rebalance your portfolio. The answer is YES.
If you been following my blog and investing accordingly, you should have invested in Pharma and IT sector focussed MF's. These sector funds gave returns of around 25% per annum in the last two years. Now the time has come to move out of these sectors as they are overvalued.  In the next one year these funds may not give great returns  - already for the past two months they are in the negative zone.
Hence it is best to sell these funds. If you have invested in these funds in the past 12 months – you will be charged 1% of the value as exit load plus you will need to pay tax on the capital gains based on your tax slab.

Looking forward, I think the funds to invest in now are large cap and mid cap funds. I personally prefer HDFC Top 200 and HDFC Mid Cap Opportunities fund. There a few more large and mid cap funds that you can look at –  
  • in large cap catogory you can look at ICICI Pru Focussed Bluechip equity fund
  • in mid cap you can look at IDFC premier Equity-A and ICICI Pru Discovery fund .
There are also the banking sector focussed funds that are doing well already - In case you want, you can invest in the Reliance banking fund.  This fund has already gone up by 40% in the past three months and so I am not sure how much more it will go up now.

The basic assumption behind choosing these funds is that ther new government will take measures to improve the GDP growth  rate from the current 4.5%  - if that happens, these funds will surely give about 15-20% per annum.


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