The Hindu Business Line : Picking right funds at right time is great challenge

Experience has taught me a few things. One, listen to your gut, no matter how good something sounds on paper. Second, you're generally better off sticking with what you know. Third, sometimes your best investments are the ones you don't make: Donald Trump

DID you read the last bit carefully? Has it prompted you to think about the mutual funds that you never invested in but others - neighbours, uncles, office colleagues - did and are quite unhappy about the outcome? You have reason to rejoice, for you did not succumb to temptations.

The point is, MF investors, big or small, often lose because they failed to allocate to the right funds at the right time. Identifying the best options is arguably the biggest challenge that an investor faces.

It cannot be overcome easily - an investor may have to put in great loads of homework before he or she actually strikes gold.

As experts point out, equity fund enthusiasts need to stay committed to their beliefs and start a regular programme of allocating to good MFs, especially the ones with successful track records. They must stay the course, and not be swayed every now and then by short-term considerations.

Predicting highs and lows is virtually impossible. In such a situation, diversified funds, ones that maintain broadbased portfolios, are very often a smart bet.

Quite a few diversified funds have performed noticeably well and an average investor may decide to spread his surplus over some of them. A few correct choices will make a difference to his overall returns.

As things stand, market participants are generally maintaining their long-term outlook on stocks. A steady GDP growth is expected to strengthen India's place in the world economic scene.

The country will still be an attractive investment destination and overseas players will keep India firmly on their radar screens. A number of sectors are likely to do well in the days ahead. These will attract decent allocations too.

In the near term, a good monsoon will boost the FMCG sector. Cyclical industries will brace themselves for another round of good profitability. Hopefully, FIIs will again start allocating to India.

On a different note, investors will now watch out for new-comer Fidelity Equity Fund, which is available for on-going sales. The scheme's IPO is understood to have collected Rs 1,500 crore. Will the market continue to remain interested in such a fund? Will investors wait to see how it shapes up over the next few quarters and more? Only time will tell...

Fund houses have lined up quite a few IPOs. The likes of Pru ICICI, Sundaram, ING Vysya and Standard Chartered are waiting for regulatory approvals.

StanChart MF has devised two products, each with an interesting name - Classic and Premier. These are its very first attempts to dabble in equities. StanChart MF, as every one knows, has been entirely focused on debt all this while. Its inclination towards equities is, therefore, quite a curious move.

Feedback may be sent to nilanjan@thehindu.co.in

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