@Dr Bhavdeep Ahuja
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Dentists keep on asking me this - who are investing in Mutual Funds and continuously asking reviews and queries regarding their Mutual Fund Portfolios.
What I have seen is that they have bought mutual funds akin to as if they are buying vegetables or fruits.
How?
One of them showed me his portfolio in which he is already having 24 funds across 19 different mutual fund categories in his portfolio.
ICICI Pru launched a NFO on 28 June which closes today on 12 July - ICICI Prudential FlexiCap
Then he asked me whether this particular NFO is good to invest in?
I replied depends on your risk profile and whether you need it in your portfolio or not.
He replied, but it is available at Rs.10 NAV.
I said so what?
I asked and said, Rs.10 doesn’t mean it’s cheap – the money this new fund is going to collect will further invest at current market levels only.
So, if the market comes down by 20% this fund can also come to Rs.8 NAV which another fund with Rs.1000 NAV will also drop to Rs.800 NAV.
Rs.10 NAV doesn’t make that fund a cheaper opportunity to invest, the percentage risk on that investment will remain the same.
Mutual Fund Portfolios should strictly be based on your risk profile, asset allocation, and financial goals.
Once you have made a portfolio based on strategy and professional help, the only thing you have to do is to top-up the same strategy whenever you have a surplus and rebalance your portfolio at regular intervals.
Buying new funds because you have more surplus to invest is like buying new fruits from the market because you have already tried mango, apple, banana, etc.
So, Stop Buying Mutual Funds like fruits and stick to your strategy because only a disciplined approach and quality portfolio will generate consistent performance in the next 10 & 20 years, not the recently performing sector-specific mutual funds or the new funds.
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