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Basing a strategy on general maxims, such as “Sell when you double your
money,” “Sell after two years,” or “Cut your losses by selling when the price falls
ten percent,” is absolute folly. It’s simply impossible to find a generic formula
that sensibly applies to all the different kinds of stocks. Thus wrote America’s
start fund manager of the 1980s Peter Lynch in his Best-Selling Book “One up on
Wall Street.”
Many mutual fund (MF) investors book profits too frequently/shortly or sell their
MF units completely if the stock market starts falling. Or they hold too many
mutual fund schemes in their portfolio. They mistake mutual funds for stocks and
try the ‘diversification’ mantra with too many mutual fund schemes. If you want
to build wealth, such investing mantras do not help you. To start with, selecting
two or three well-diversified equity mutual funds is a good idea. Two or three
well-diversified mutual funds are good enough to make long-term profits for
small investors. The following is a list of seven well-diversified equity mutual
funds with sustainable performance that are worth considering for investors in
India who are interested in wealth creation over the long-term of five to 10
years. You can select two or three funds from this list and start investing at
regular intervals without bothering about the general trend in the markets.
--- The share of large-cap stocks is more than 80 per cent in the portfolio
--- It is managed by Mahesh Patil, a fund manager with good long-term record
--- Large-cap stocks constitute more than 95 per cent in the portfolio
--- This fund aims for consistent returns with little downside risk
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Rama Krishna Vadlamudi, HYDERABAD
February 15, 2011
www.scribd.com/vrk100
www.ramakrishnavadlamudi.blogspot.com
--- During stock market crashes, this fund provides protection to investors
--- During stock market crashes, this fund provides protection to investors
--- Prashant Jain of high repute has been managing this fund for nine years
--- Even though the fund house is small, the fund has built up a great record
--- Atul Kumar has been managing this fund for more than four years
--- The fund manager held 22 per cent in cash as on 31.01.11 and this cash call
was proved correct as markets crashed in the past five weeks.
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Rama Krishna Vadlamudi, HYDERABAD
February 15, 2011
www.scribd.com/vrk100
www.ramakrishnavadlamudi.blogspot.com
--- The fund has done well both in bear markets and bull markets
Notes: The above funds do not charge any Entry Load. However, they charge exit load of about
one per cent if units are sold by investors before 180 days or 364 days from the date of
investing; except Quantum Long-Term Equity fund which charges a heavy exit load of 4 per cent
if redeemed before 180 days.
Other Mutual Fund schemes worth considering are: HDFC Equity, DSP BlackRock Equity,
Templeton India Equity Income, UTI Opportunities, Canara Robeco Equity Diversified, IDFC
Premier Equity Plan A, ICICI Prudential Dynamic, Tata Pure Equity, etc.
1. Well-diversified equity mutual funds with sustainable performance are the best for
long-term investment of five to ten years...or even more. However, past performance
may not be repeated in future.
2. Never borrow to invest in equity mutual funds. Invest only your surplus money which
you may not need in the next three to five years.
5. While selecting mutual funds, check whether they are protecting your money when
the stock markets are in a downward trend.
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Rama Krishna Vadlamudi, HYDERABAD
February 15, 2011
www.scribd.com/vrk100
www.ramakrishnavadlamudi.blogspot.com
--- if you are the type of person to enter the market at peaks, like Sensex level of
20000 and sell at 10000 levels.
--- if you are the type of person to get carried away by the so-called market
experts who say Sensex will reach 25,000 in one year or Sensex will lose 40 per
cent in one year.
--- if you are like the greedy-gullible-sacrificial lambs (or High Networth Investors
with low common sense) who had given blank cheques to a foreign bank based
in Gurgaon and lost crores of rupees in December 2010.
Abbreviations:
MF – Mutual Fund
NAV – Nest Asset Value
About the Author: Passionate about financial markets. Watches Equity, Bond and Currency
markets from a macro point of view. Loves writing articles on financial markets. So far, wrote
more than 100 articles running into about 650 pages of original content, which have attracted
more than 140,000 readers on SCRIBD. www.scribd.com/vrk100
Disclaimer: The views of the author are personal. Please consult your certified financial advisor
before making any equity investments. The author is an equity investor and he has a vested
interest in the stock market movements. It is safe to assume that he has investments in a few of
the above mutual fund schemes.
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