A dedicated reader of Mutual Fund Insight indicates his investing philosophy and how he manages to stay tuned to the investment world:
Greetings.
I have been a regular reader of your magazine and have learnt a few lessons.
I read with interest your article on Losses in Tax Saver Funds. Based on that I had advised my daughter to invest in Fidelity Tax Saver. I noticed the investment turned positive last week! And, I must state that it was the last of our investments to turn positive.
We never made any bulk investments but did so only through a systematic investment plan (SIP). When we had some extra money, we put it in an income fund through a systematic transfer plan (STP) into an equity fund. While it ensured we made no ‘killing in the market’, neither did we get killed.
We regularly balance our portfolio every quarter as it helps us spread investments in different sectors and keeps gains and losses in moderation.
We limit the number of funds and stocks to 50 and 10 respectively. We opted for them after careful scrutiny and rarely shifted from them, even though, sometimes it led to losses, but we don’t have the wherewithal to track more than that.
We read offer documents with care and tracked the fund managers record. While it did not help us choose the good ones, it helped us avoid the bad ones! For example, a fund manager in a TV interview talked about positive aspects of investing in clean energy and energy savings related companies. We were impressed with the analysis. Then we looked up all the funds managed by this person and saw that the investments made in that sector was a measly 2.4 per cent. We continued to watch these funds for a dramatic rise, but none came. Now we avoid funds managed by this person. Incidentally, none of this person's funds are rated highly by your magazine.
However, I realise that there’s still a lot to learn, even though I’m at the fag end of my career! Here are some concern areas:
We want to invest in the funds you recommend, but we don’t see consistency in your 5-star funds, month-after-month;
We don’t want to make money on other's suffering and look to shun cigarette- and liquor-making companies, but find it difficult to select such funds;
We want to avoid funds dealing in risky companies having questionable business practices. But we have no control over fund managers. We do not mind a loss if they stick to quality companies;
We still need to curb sudden attacks of panic! All the predictions of doom by pundits after election results were announced goaded us to sell a major part of our holdings in equity and shift them to debt;
We have a greater need to check impulse buying, especially if it lead to lots of profit! I bought Satyam Computer Services stock at the peak and turned it into a substantial profit within the week. Its fall post-scam made me realise what a risk I was taking!
Our journey has been enjoyable. Don’t think we spend lots of time poring over fund offer documents! We don’t. We devote a fixed time on weekends to look at our investments, but also take the time out to enjoy a movie.
We read a few magazines that we trust, Mutual Fund Insight included. The work day includes watching Nifty futures in SGX in the morning and guessing what will be the Nifty close, although we do not do anything based on this exercise.
But in this process some of the basics that you keep repeating (it's never frequent enough) have guided us very well. And we want to thank you for it.
— Sathyamurthy
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