Your fund portfolio, 5 questions to ask
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Your fund portfolio, 5 questions to ask

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Get a grip on these straighforward issues and your mutual fund portfolio will certainly stay in good shape.

Get a grip on these straighforward issues and your mutual fund portfolio will certainly stay in good shape.

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Your fund portfolio, 5 questions to ask Your fund portfolio, 5 questions to ask Document Transcript

  • Your fund portfolio: 5 questions to askGet a grip on these straightforward issues and your mutual fund portfolio will certainly stay ingood shape.Author : iFast Content TeamI have been following Chuck Jaffe’s column for years. This week, I thoroughly enjoyed the onetitled Father’s Day investing advice where he very interestingly pens down 5 mutual fundquestions that his dad regularly quizzed him on when he called for a long chat, which invariablyused to be on Father’s Day.Here are the mid-year portfolio evaluation queries. In fact, they serve as a good guideline for allof us who have mutual fund portfolios.1) Do I have anything that lost too much?Losses make all of us nervous in different degrees. It varies according to our temperament andhow much we have invested in that particular loss-making investment.Since Jaffe’s father was no exception, they re-framed the question by defining how muchdownside he could sit through, and for how long.“Beyond raw performance, examine relative results; there were several times where my fatherheld a fund to diversify his portfolio, saw a stretch where the returns made him uneasy butnever triggered a sell because the fund was still among the best in its peer group. Not wanting tochange his asset allocation, he had no reason to expect to do better by changing horses. Thatsaid, this question reaffirmed the range of performance he was looking for, and the reasons whyhe allocated assets to fit his needs and desires.”2) Do I have anything that made too much?Sounds odd? You are right. Jaffe himself admits that it is a nice problem to have. But Jaffe’sfather was wise in recognizing that out-of-character moves change an overall portfolio.One may want to dig deeper to find out why a fund is delivering a superlative performance. Itcould turn out to be taking much more risk that you had bargained for. However, it need notalways be a case where you have to cut loose. Jaffe suggests that if something spikes upward,you may want to lock in the profits, or re-balance to target allocations.3) Has anything changed with the funds? Are any going on or coming off “the watch list?”Rash decisions are not advisable in investing. So a fund creating concerns from the above twoquestions moves first to a status of “one to watch.”Jaffe explained that once his father began to lose confidence in a mutual fund, he began lookingfor confirmation that he was right, or a sign that he was being too rash.“Funds that went through manager changes or any corporate upheaval were automaticallymoved to the watch list, if only to make sure that the character of the investment did not changein the months before our next portfolio review.”4) Is there anything new I should buy?Even though his father’s portfolio was diversified, Jaffe explains that there are areas of themarket that an investor might want to cover, or new investment issues that might be better thanwhat’s in the portfolio.“As my dad got older, he wanted to do more with less, meaning his preference was for fewer
  • funds, but in recent years – as interest rates stayed low and he wanted to diversify his incomestreams – we looked at new dividend-oriented exchange-traded funds and some closed-endfunds to at least consider whether something new would get him re-excited about the overallportfolio.”As a general rule, Jaffe’s father followed the “look but not touch” rule. But just knowing what isout there and making a conscious decision not to go for the new and improved is better thansitting still with a portfolio wondering if every new issue might look better than what you’vegot.5) Should I do anything differently in this market?Jaffe gives a final bit of advice. A solid portfolio is a mix of good funds, an appropriate assetallocation and a strategy that makes you comfortable no matter what the market is doing. Foraverage investors, market conditions don’t warrant a portfolio overhaul.With that in mind, however, if the market’s direction or potential is making you lose sleep atnight – or has you dreaming of bigger things -- it’s okay to adjust to your sleep factor or toindulge your winner’s imagination to a point.Heres why you should consider investing in mutual funds.To buy and sell mutual funds online, click here.Disclaimer: iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual fundsof any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or bematerially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or saleof any mutual fund. No investment decision should be taken without first viewing a mutual funds scheme information documentincluding statement of additional information. Any advice herein is made on a general basis and does not take into account thespecific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, andlegal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative ofthe future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise.Opinions expressed herein are subject to change without notice. Please read our disclaimer on the website. Please read ourdisclaimer in the website. Risk Factors: Mutual funds, like securities investments, are subject to market risks and there is noguarantee against loss in the Scheme or that the Scheme’s objectives will be achieved. As with any investment in securities, the NAVof the Units issued under the Scheme can go up or down depending on various factors and forces affecting capital markets. Pastperformance of the Sponsor/the AMC/the Mutual Fund does not indicate the future performance of the Scheme. The name of theScheme does not in any manner indicate the quality of the Scheme, its future prospects or returns. Please read the Statement ofAdditional Information and Scheme Information Document carefully before investing.