Our quarterly review and changes end with the review of the 18 unique portfolios we have for 35 different needs. We had already changed some of the portfolios that had fixed deposits in late March/early April when deposit rates underwent changes and when we completed the Prime Deposits review. We’ve changed a few other portfolios now, after completing Prime Funds and Prime ETF reviews.
How do you know what has changed?
Only some portfolios have undergone a change.
For portfolios that you ‘follow’ with us, your PrimeInvestor Dashboard will show you a green bell against the portfolio name. This will alert you to changes in the portfolios you follow. Click this to know the changes and the rationale for the same. You would also have received a mail to take you to this section.
In this article, we would like to explain the broad philosophy with which we review and change portfolios and some key points that we would like you to know when interpreting our changes.
Our philosophy and process
We make changes for various reasons. The most straightforward one is because a fund shows signs of underperforming. But there are various other reasons too, as explained below.
- An investment option may be removed because it is no longer available or viable. For example, an income option like LIC’s Vaya Vandana Yojana is no longer made available by the government. We therefore had to provide you with an alternative. The post office time deposit rate was cut significantly, making it unviable from a return perspective. So we looked for the next best option without upping risks too much.
- Interest rate cycles may also determine our changes. Sometimes in a low interest rate scenario, locking into low interest deposits for longer periods may prove detrimental. You may also lose an opportunity to invest in higher rates a year or so later! In such cases, we have specified the deposit time frame you should go for so that you do not end up sitting with poor returning products for long.
- The debt market climate may change. For example, in a 3-5 year time frame, we removed Franklin India Corporate Debt, as it had a small exposure to credit and had some group concentration. We replaced it with HDFC Corporate Bond that had an all-high-quality-credit portfolio. And yet we preferred Franklin India Corporate Debt in our over 5-year portfolio as the time frame gives it time to recover from any unexpected shocks.
- A fund that is still in our Prime Funds list may have been removed from one of our portfolios, considering the portfolio make up and objective. For example, in our high-growth portfolio, we decided to recommend stopping SIPs in HDFC Small Cap, replacing it with SBI Small Cap. But HDFC Small Cap continues in our Prime funds.
One of the reasons for this change is that the fund’s value-tilted make up now may not be suitable for a high-growth portfolio. Besides, we have provided some value through a Contra fund. We would prefer a more aggressive approach to this portfolio, and would expect a small-cap fund to meet that requirement. Hence, while we may not fault the fund for its strategy, we see that it may not suit the objective and composition of this portfolio.
- A fund may fail to perform its purpose for which we chose it. For example, we picked the Midcap Select ETF. This index houses the 30 largest and most liquid midcap stocks and was supposed to contain downsides better than a regular midcap index. It failed to do this and had to be therefore replaced.
The reason for our explaining the above with illustrations are two-fold:
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- For you to understand what goes into our review process.
- More importantly, to provide you with cues on how you can apply such a philosophy to your own portfolios while you review them. When you choose a fund for a portfolio with a particular purpose, and it fails to fulfil it, that calls for a re-look. Performance is one such but not the only one.
Points to note when you look at the portfolio changes
- When we replace a fund, it does not mean you need to exit it. We have suggested the course of action for every change. That is – where there are SIPs, whether to stop them; for lumpsum or for SIP investments already made, whether to hold them and so on.
- The portfolio allocation, fund changes and allocation changes are meant for those specific portfolios. Do not try to apply the same recommendation across other Prime Portfolios or other portfolios you have on your own. Please use Prime Funds review or Prime ETFs review to know our call on funds in our recommendation list.
An example would be our replacing HDFC Small Cap with SBI Small Cap in our high-growth portfolio. This may not even apply to you if you do not follow that specific portfolio. In other words, the changes, wherever recommended, will apply if your portfolios have been built using our set of researched portfolios.
The review does not alter the way you invest – whether through SIPs or through periodic lump sums.
You can also see all the other reviews for the quarter listed here:
- https://www.primeinvestor.in/quarterly-review-whats-in-and-whats-out-in-prime-etfs/
- https://www.primeinvestor.in/quarterly-review-prime-funds-april-2020/
- https://www.primeinvestor.in/changes-to-review-recommendations-apr-2020/
- https://www.primeinvestor.in/gainers-and-losers-in-prime-ratings/
- https://www.primeinvestor.in/quarterly-review-whats-changing-in-prime-deposits/
6 thoughts on “Quarterly review: Changes to Prime Portfolios”
I want to invest lumsum amount in Mutual Fund Categary Balance advantage. kindly suggest me this is right time to invest or wait for correction & also suggest name of Balance advantage with horizon 3- 5 years.
There is no ‘right time’ to invest in such categories as they are meant to combat volatility. We don’t think it is a good idea to have 3-5 funds in this category. Please check our Prime funds to choose the ones we have or use our MF review tool to check if the ones you choose are fine. thanks, Vidya
Hi,
Started the trial pack today, after reading i understood that it is a DIY website, fine i will subscribe, because it will be better than Value Research.
I have not seen your portfolios, as it is for paid version.
Q1: Do you have a readymade Portfolio for a new investor who wants to enter Equity MF now in these turbulent times with a staggered Lumpsum investment over 6 months ? The general idea is to take advantage of low NAV and then wait for 5-7 years.
Regards,
Ranjeet Jha
Hello sir,
Yes, we have readymade portfolios for 5-7 years, besides other timeframes. You can invest in these portfolios by either putting lump-sum amounts at different times or through SIPs – it doesn’t matter which mode you invest as the funds remain the same. New MF investors who are not yet sure about portfolio building can use these portfolios.
Thanks,
Bhavana
Madam Bhavna,
I am not very sure if u have understood me correctly.
1. We are amidst a global lockdown of people and economy, it has never happened in the past. it will have significant impact on businesses. Some sectors have come down but will grow back, others may suffer permanent damage. It will reflect in NAV of equity MFs.
2. Do u have a specific Portfolio for this situation, meaning by a fresh portfolio staring from April 2020 and ending in April 2030.
3. Staggered Lumpsum – means investment in 12-15 lots over a peiod of next 6 months, when the NAVs are expected to be low, then we park the investment for a reasonable amount of time say 5-7 or 10 years.
Regards,
Ranjeet Jha
Hello sir,
Points 1 & 2: Overall, given that stock markets are broadly correcting across stocks and sectors (barring a couple), there are opportunities across the board. Equity funds have already corrected in line with markets, so if you buy now, you’re already buying on the declines. We still do not know the full economic impact of the pandemic. And since you’re looking at a 10-year timeframe, even if you do pick sectors that will benefit now, the same sector could completely fall out of market favour in such a long period.
So what you can do is to invest in quality equity funds, mixing growth-based and value-based strategies and across market caps. The readymade timeframe-based portfolios are built like this. Such funds will adapt portfolios based on market opportunities. You will therefore be able to make good returns by investing now.
Alternatively, given your requirement, you can consider the strategy and funds we have explained here. This simply involves index funds.
Point 3: It doesn’t matter whether you invest through SIP for 5 years or multiple lots over 6 months or any other period. The funds in which you should invest will remain the same.
Thanks,
Bhavana
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