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Mutual Fund Expert - Answered on Jun 30, 2023

With over 16 years of experience in the mutual fund industry, Ulhas Joshi has helped numerous clients choose the right funds and create wealth.
Prior to joining RankMF as CEO, he was vice president (sales) at IDBI Asset Management Ltd.
Joshi holds an MBA in marketing from Barkatullah University, Bhopal.... more

Asked by Anonymous - Jun 27, 2023Hindi

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Hi, I recently redeemed approx 38 L worth of MFs, after a careful review of my portfolio and then deciding to exit from a couple of funds, only to subsequently reinvest those in some better ones, albeit the tax liability, which I decided to treat is a sort of "Exit Load"... NOW, while my portfolio manager has suggested me on some funds which he feels I should re-invest this amount, but I am of the opinion that I must hold the amount in my bank for the time being- and wait for some time before reinvesting, given the ultra-high market valuation as of now. I am in a dilemma on whether it will be worthwhile to re-invest the entire amount in one go... or put it in some Liquid fund now and then invest through SIP for over the next 6 months or so. Besides this, should I consider the reinvestment in Direct funds, instead of Regular type... which may deprive my Portfilo advisor from his own earnings. All along he has been advising me free of cost, simply because I have been investing through him, in Regular Funds. Though I do want him to stay connected to me and not lose on his own income, but then the delta between Direct and Regular funds is gradually widening over the time, and one can see that from the difference of the NAVs of Direct and Regular of most funds. Keeping the sentiments aside, in-principle what should be the right strategy to choose? Since last so many years, I did not use to have much time to do research and then invest. So I needed someone to advise me on which fund to invest, how much and when etc. But now I am retired and can spend more time to do my own research... but then it would mean knocking out the advisor, who have been with me over last 12-15 years.? Please advise.

Ans: Hello and thanks for writing to me. There are multiple parts of this question and let us tackle them one by one.

One question pertains to whether you should stop investing thru your adviser and switch to direct plans. You first need to evaluate whether your advisor has helped you achieve your financial goals well and in a manner that you were comfortable with. You also need to understand that choosing the right mutual fund by yourself is not just a matter of having time to study markets and funds but requires experience, knowledge and skills that one attains over time. Do you believe that you will be able to pick up these skills quickly? You need to deeply think about this and then make a decision.

On to the other part of where to invest a corpus of around Rs.38 Lakh, there are always reasons to not invest and reasons to invest. SIP's are simple and for most people, an effective tool for wealth creation, simply because you keep taking consistent steps towards your goal. If you feel markets are too overvalued and expect a correction, then your strategy of investing via SIP's over 6 months may be a good idea, but if markets rise and you miss out gains, you may regret sitting out on the sidelines. To come to the mechanics of your, a systematic transfer plan where you invest in a liquid or overnight fund and instruct the AMC to switch corpus into an equity scheme of your choice. This way you get the returns of a liquid fund and the ability to switch the funds from the source scheme (liquid fund in this case) to an equity or any other scheme of your choice.

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