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Ramalingam Kalirajan  |5295 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 09, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Avijit Question by Avijit on Mar 02, 2024Hindi

Sir, i have been investing in Large cap direct MF , shall i close them and move to largege cap index fund ? Same startegy for mid , small and mirco cap ?

Ans: Transitioning from actively managed mutual funds to index funds requires careful consideration of your investment objectives, risk tolerance, and market dynamics.

While index funds offer lower expense ratios and passive management, they may not always outperform actively managed funds, especially during market fluctuations or when specific sectors outperform the broader market.

Here's a breakdown of factors to consider:

Large Cap Funds: If your large-cap direct mutual funds have consistently underperformed their benchmark indices, or if you prefer a more passive approach with lower costs, transitioning to large-cap index funds could be an option. However, ensure you understand the implications of switching, including potential tax consequences and performance variations.
Mid, Small, and Micro Cap Funds: These segments of the market often require active management to identify promising opportunities and manage risks effectively. While index funds may provide broad exposure, actively managed funds can capitalize on market inefficiencies and deliver potentially higher returns. Evaluate the track record of your existing funds and consider consulting a Certified Financial Planner to determine the best approach based on your investment goals and risk profile.
When transitioning between funds, consider the following:

Tax Implications: Exiting existing investments may trigger capital gains tax liabilities. Assess the tax implications of switching funds and evaluate whether the potential benefits outweigh the costs.
Performance Comparison: Compare the historical performance of your current funds with relevant index benchmarks. Evaluate factors such as consistency, risk-adjusted returns, and fund manager expertise before making a decision.
Cost Analysis: Consider the impact of expense ratios and transaction costs on your investment returns. While index funds typically have lower costs, ensure that the benefits justify any potential performance trade-offs.
Diversification: Review your overall portfolio diversification and ensure that any changes align with your asset allocation strategy and long-term financial goals.
Ultimately, the decision to switch from actively managed funds to index funds should be based on a thorough assessment of your individual circumstances and investment objectives. Consulting with a Certified Financial Planner can provide valuable insights and personalized guidance tailored to your specific needs.

there are some advantages to consider direct funds, and the cost savings can be significant in the long run. However, there are some potential benefits to using a regular MFD:

Advantages of Investing Through a Mutual Fund Distributor (MFD):

Personalized Advice: MFDs can be helpful for beginners or those who lack investment knowledge. They can assess your risk tolerance, financial goals, and investment horizon to recommend suitable mutual funds. This personalized guidance can be valuable, especially if you're new to investing.
Convenience: MFDs handle all the paperwork and transactions on your behalf, saving you time and effort. They can help with account setup, SIP registrations, and managing your portfolio across different funds.
Investor Support: MFDs can be a point of contact for any questions or concerns you may have about your investments. They can provide ongoing support and guidance throughout your investment journey.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Nikunj Saraf  |308 Answers  |Ask -

Mutual Funds Expert - Answered on Sep 27, 2022

Planning to start investment in following MFs from next month. Time Horizon is 8-10 years. Goal: To get 20% (or 33% more than Nifty 50) return overall in 8-10 years. Will pull out as soon as I see 20% (or 33%+ on nifty 50) in total at 8-10 years, otherwise will pull out individual MFs from 10-12years with best CAGRs achievable. Planning to buy a house next year with a loan of 70 lakh, will clear the home loan with that money. All are direct. 1. Quant Active: 10K 2. Nippon India Small Cap Nifty Index: 5k 3. Nippon India Mid cap Nifty Index: 5k 4. Quant Infrastructure Fund: 5k 5. Quant Tax Fund: 3k 6. SBI Consumption opportunities: 2.5k 7. ICICI prudential Bharat Consumption Fund :-2.5k Will double as soon as I see a 13% drop in Nifty for the time horizon mentioned and keep on doing that till the time it reaches within 3% from the top. Let me know if I need to change the funds or the funds are okay. Would replacing small or mid cap index funds with smallcap funds like SBI Smallcap Fund or Canara Robeco Small Cap fund be a better thing?
Ans: Hi Amrit, In accordance with your goals and current MF selection. I could see you have selected multiple sectoral funds which are aggressive risk & allocated proportion is more than advisable. Therefore, I suggest you concise the schemes with the amount in sectoral funds.

Furthermore, you can replace the small-cap and mid-cap index funds with small-cap funds such as SBI Small Cap Fund or Canara Robeco Small Cap Fund in order to improve your portfolio.

Additionally, you can introduce Flexi cap & mid cap categories to your selection. Diversify your portfolio with different categories and AMCs.

..Read more


Moneywize   |124 Answers  |Ask -

Financial Planner - Answered on Mar 10, 2024

Asked by Anonymous - Mar 09, 2024Hindi
I have been investing in mid-cap MFs. Shall I close them and move to index funds as market looks overheated? Same startegy for small and mirco-cap MFs?
Ans: Deciding whether to switch from mid-cap mutual funds (MFs) to index funds depends on several factors, and the current market condition (overheated or not) is just one piece of the puzzle. Here's a breakdown to help you decide:

Mid-Cap vs Index Funds:

• Risk: Mid-cap funds generally involve higher risk than index funds. Mid-cap companies are more volatile, so the fund's value can fluctuate more significantly. Index funds, by nature, tend to mirror the market, offering a more stable ride.
• Return Potential: Historically, mid-cap funds have offered the potential for higher returns than index funds. However, this is not guaranteed, and past performance doesn't necessarily predict future results.
• Management: Mid-cap funds are actively managed, meaning a fund manager tries to pick stocks that will outperform the market. Index funds are passively managed, simply tracking a specific market index.

Current Market Conditions:

Overheated Market: If you believe the market is overheated, there could be some logic in moving to a less volatile option like an index fund. However, trying to time the market can be difficult, and you risk missing out on potential gains if the market continues to rise.

Other Factors to Consider:

• Investment Timeframe: If you have a long-term investment horizon (over 5 years), you may be able to stomach the volatility of mid-cap funds. However, if you need your money in the short term, index funds might be a safer option.
• Risk Tolerance: How comfortable are you with potential losses? If you can't handle large swings in your portfolio value, index funds might be a better fit.
• Your Investment Goals: What are you hoping to achieve with your investments?

Small and Micro-Cap MFs:

The same logic applies to small and micro-cap MFs. They generally involve even higher risk than mid-cap funds but also have the potential for even higher returns. Carefully consider your risk tolerance and investment goals before investing in them.

Here are some recommendations:

• Do your research: Learn more about mid-cap vs index funds and understand the risks involved in each.
• Consult a financial advisor: A professional advisor can help you assess your individual situation and make informed investment decisions.
• Consider a diversified portfolio: You don't have to choose between all mid-cap or all index funds. You can have a mix of both in your portfolio to balance risk and reward.

Ultimately, the decision of whether to switch from mid-cap MFs to index funds is up to you. By considering all the factors involved, you can make an informed choice that aligns with your investment goals and risk tolerance.

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Latest Questions
Nayagam P

Nayagam P P  |2471 Answers  |Ask -

Career Counsellor - Answered on Jul 25, 2024

Presently Im a class 12 commerce student and i want to join BCA for my degree next year but i dont know what are the careers after BCA.
Ans: Adella, first of all, shortlist top 5-10 colleges to get admission for your BCA.

Know the Eligibility Criteria / Admission Process / Entrance Exams (such as CUET & other Private Colleges' its own Entrance Exams) you will have to appear in.

There are multiple career options after BCA, but depends upon which specialization you will choose, which specilizations are available in the college you will join & which all skills you will upgrade. Some of the examples of specializations available for BCA are:

1) Software Development
2) Cyber Security
3) Data Analytics
4) Web Development
5) Mobile Application Development
6) Networking & System Administration
7) Cloud Computing
8) Digital Marketing
9) Multimedia & Animation
10) AI & ML
11) Full Stack Development & More.

After you get admission into BCA in any college:

1) Try to maintain a good academic performance.
2) Involve in co/extra-curricular activities.
3) Keep upgrading your skills, as recommended by your college faculties.
4) Start researching about the Recruiters/Companies visited your college for Campus Recruitment.
5) Have a Professional LinkedIn Profile.
6) Put Job Alerts related to your domain in LinkedIn.
7) Get notifications of job vacancies and go through the JD (Job Description) of each.
8) Know the Job Market Trends & keep analyzing how it changes till your 3rd year.
9) Connect with Professionals of your domain, get their advice/views/opinions for your Career Growth
10) At the end of your 3rd year, start applying for jobs through LinkedIn, matching your Profile and also prepare for your Campus Interview.

All the BEST for Your Bright Future.

To know more on ‘ Careers | Education | Jobs’, ask / Follow Us here in RediffGURUS.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.


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