We are making a mid year change to equity mutual funds recommended for long term wealth creation.
With the re-categorisation of mutual funds directed by SEBI, many mutual funds have changed their investing focus. This has led to change in expected performance. Given this background, we have re-examined and re-defined our fund selection and portfolio construction algorithm.
As a result of the regulatory changes, we have the following impact.
- Each fund needs to clearly spell out its objective, which classification it fits into and adhere to its objectives. As a result, there is little discretion for the fund manager to play the entire market. For example, a large cap fund has to invest more than 80% of its assets in the Top 100 companies by market capitalization.
- As an investor, if you buy a large cap fund, you can be assured of that promise. This is important, as there is no gap between what the fund promises and their investment portfolio.
- Since each fund is clearly demarcated, Scripbox can focus on creating a portfolio with the right mix of mutual funds across various size buckets : large, large & Mid, mid, small cap companies (based on historical statistical analysis) and choose the best performing fund(s) within each classification.
We have written a more detailed article on this. We highly recommend that you read it even if it is a bit technical at times.
What’s the new portfolio?
The 4 funds in the new Long Term Wealth (equity funds) portfolio are:
Large Cap Equity
1. Aditya Birla Sun Life Frontline Equity Fund (G)
2. SBI Blue Chip Fund (G)
3. L&T India Value Fund (G)
4. Mirae Asset India Opportunities Fund (G)
What do our investors need to do?
For investors who have standing instructions (SIPs) in the old portfolio, all you have to do is log in and follow the easy steps to make the change to new portfolio.
For all new investments, the new portfolio will be the one being recommended.