My MF buying in 2016

As many of my regular readers will know, I had been investing in MF through SIP between 2008 all the way through to October 2015. Based on my experience of more than 7 years in MF investing and a much longer period of more than 2 decades in building a direct stock portfolio, I came to the conclusion in 2015 October that SIP was not the right way to invest in MF. After stopping the SIP’s I wanted to invest a certain amount through the year 2016. If you are interested in why I wanted to stop SIP, go ahead and read the posts in my blog.

My investments in MF are in the following funds and I was having SIP of 10000 Rs every month in each of them:-

  • ICICI Prudential focused Bluechip
  • ICICI Value Discovery
  • HDFC Midcap opportunity
  • DSP BR Micro cap

In 2016 I wanted to invest the same amount as before but it was to be based on the market levels rather than in a time dependent manner. Also, I was not worried if I could not invest the entire amount in this calendar year. After all, it is better to buy MF at an NAV of 45 rather than 50, by waiting for some time.

The proof of the pudding is always in the eating, so let me describe for you how my plan has worked out so far in 2016.

  • I have made 3 purchases in the period January to March 2016.
  • My overall investment goal was 4.8 lacs, out of which I have invested 60 %.
  • After March, I have not really got a buying opportunity as I do not want to buy any MF with the Nifty being more than 8000. I am happy to roll over the surplus to 2017.
  • My average buying price of the MF and their current price are as follows:-
    • DSP BR Micro cap – Average NAV 38.5 , CMP 54.3
    • HDFC mid cap opportunities – Average NAV 35.7 , CMP 47.6
    • ICICI Value Discovery – Average NAV 105.4 , CMP 129.3
    • ICICI Focused Blue chip – Average NAV 26.7 , CMP 32.9

I feel that my overall strategy of buying MF has been way more effective than SIP. At the end of the day I want to invest low and redeem at a high, which is the basic idea of any equity investment. Yes, I may not be able to invest the entire 4.8 lacs in this calendar year but that does not matter to me.

I am absolutely certain that Nifty will breach 8000 in the short term and I will buy more MF when that happens.

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13 thoughts on “My MF buying in 2016

  1. Very well explained, i was excited seeing 3 of my funds in your list, after reading your blog i am trying to incorporate your logic which to me looks right.

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  2. Hello,

    I think there is a fundamental difference in between the way we track Stocks and Mutual Funds.

    The argument you make above holds good for:
    – When the Index falls, the NAV of your MF would fall.
    I am not sure this argument holds good as the MF which holds an umbrella of stocks might stay flat / might rise when Index falls (specially true for a fund like PPFAS which invests in multiple markets)

    – Intrinsic value of stock
    There are multiple ways of defining the intrinsic value of stocks, and investing when some threshold is breached. How do you get that for a MF ?

    – You mentioned you have a yearly target to invest (like Rs 40k * 12); but you also have the capability to invest all of this in one go..
    For most salaried individuals, they do not have the yearly investments held in cash; and this is where monthly SIPs help…

    I understand your strategy of buying MFs on dips in Index, but still not sure how can you predict a good NAV to enter ?

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    • In general the NAV of a MF scheme will fall if the benchmark index falls. Of course, you have to look at the right index. The fall may not be to the same extent but that does not really matter.
      I do not need to know the intrinsic value of an MF. In any case as the holdings are dynamic, so will be the value. The important point is I will try to buy as low as possible, knowing fully well that I will not be able to get to the lowest value. As an example DSP BR Micro cap fund NAV is about 54 now and I will be quite happy to buy is at 47-48. It does not matter that I bought it at 35 earlier this year.
      As for the money availability part, I have addressed this in a post in my blog already. You can read it to see how it can be done quite easily.
      Bottom line – almost anything is better as compared to an automated monthly SIP, which in my opinion is totally senseless.

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      • Thanks for the revert; thinking on the same lines, one approach which can be taken is to track the XIRR return from your MF; and if and when it falls below a benchmark (say 12%), you add more units.

        That way you are ensuring that you buy at dips and not tied with monthly SIPs.

        Million dollar question is : what should be the benchmark at which you will pump in more.

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  3. Dear Sir,

    Say I have an investment with FT Prima Fund(NIFTY 500), ICICI Pru Value Discovery fund(S&P BSE 500), and HDFC MidCap Opp fund(NIFTY MIDCAP 100)

    Are you saying I need to track the individual indexes and decide when to buy, in other words are you saying just tracking NIFTY will not be enough? I am asking this specifically for MF investments not stocks.

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      • Alright, that’s a bit complex than I actually thought. I know in this blog post you said you will wait for NIFTY to go near 8000 and make the MF investment, is it not different from tracking individual indexes? How a retail investor know the correct(roughly) value of an index mapped to a Mutual Fund and then take the decision of whether or not to invest?

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