Mutual Funds

Your Fund Portfolio

Parvatha Vardhini C | Updated on March 15, 2020 Published on March 15, 2020

I have mutual fund holdings as regular schemes. Is it possible to convert them to direct schemes? If yes, please explain how.

Suresh Kumar

It is not possible to convert from regular to direct schemes seamlessly. In case you wish to move, you will have to shift out of all your investments in regular plans through a normal sale/redemption transaction with capital gains tax implications. You can then reinvest the proceeds in direct plans.

Investments in direct plans can predominantly be made with either the individual mutual fund house (online or offline), CAMS or Karvy which are Registrar and Transfer Agents (online or offline) or through the Mutual Funds Utility portal.

When moving to direct plans, you must remember that if you are investing in tax-saving schemes, which have a three-year lock-in, or close-ended funds, you can move out only after the lock-in has ended.

Similarly, you will have to also bear an exit load if you redeem within the investment period for which the exit load is applicable for a particular fund.

If you do not want these hassles, you can stop your current SIPs in regular plans and continue to retain the corpus you have created so far in regular plans itself.

You can take a call to sell the units at a later date depending on your need.

Your incremental SIPs or lump-sum investments can be made in direct plans.

I am an avid reader of your section in the BusinessLine. I started investing in direct plans of six different mutual funds, each with an SIP of ₹5,000 per month, with the sole aim of capital appreciation. The funds are: Aditya Birla Sun Life Frontline Equity and Franklin Templeton India Equity from June 2018 onwards, and Invesco India Contra, Mirae Asset Large Cap, Motilal Oswal Multicap 35 and SBI Magnum Multicap, from August 2018 onwards.

Now that I have completed at year one year of investments in all of them, I am thinking of assessing their performance against respective benchmarks, but am at a loss as to how to do the same. I did try multiple online avenues but wasn't satisfied. Therefore, I request your team to consider my request to objectively assess my portfolio and suggest any changes if required.

Paritosh Jaiswal

You currently invest one-third of your portfolio in large-cap oriented funds (ABSL Frontline Equity and Mirae Large Cap) and the remaining two-thirds in multi-cap funds.

This allocation suits a medium-to-high risk appetite and we are assuming that you are comfortable with this allocation.

To understand how your investments are doing, you can assess the SIP returns of your investments in each of the six funds and compare them with the SIP returns of the respective benchmarks of the funds.

To do this, you can use calculators that are freely available online. A quick check of your portfolio performance reveals that while the SIP returns of ABSL Frontline Equity and Franklin India Equity are underperforming the SIP returns of their respective benchmarks by 1-3 percentage points, the other funds have scored 3-5.5 percentage points higher than their respective benchmarks for the period of investment.

Though two of your funds are lagging, considering that you have been investing since June 2018 only and the markets have also been turbulent during this period, it is too early to take a call to shift based on the returns clocked as of now. Four of the six funds that you have chooen have a good long-term track record and have been accorded 3-5 stars by Portfolio Star Track MF Ratings. Invesco Contra and Motilal Oswal Multicap 35 have not been rated by us due to the thematic nature of the former and the relatively shorter track record of the latter (yet to complete five years, having been launched only in April 2014).

But both funds do show promise and there is no reason to worry as of now.

You can continue investing in all the funds for another year and then take a call.

Send your queries to

Published on March 15, 2020

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