Take an example of HDFC Equity, with itโ€™s great history and PJ stature, performance in last couple of years makes it a candidate to get rid of (especially more when you know you can switch to better performing Franklin India Prima Plus).

One Mr. Abhir posted this on my blog a few days ago. I felt a little amused because I have been an investor in Hdfc equity (and Top 200), FT Prima and FT Prima plus. To me what has mattered is a good fund management system. In fact I am happier with Franklin Bluechip, Flexicap….because unlike Hdfc the FT funds have seen change of a manager. We do say that the system matters and not the fund person sitting there, but still we all know that the chief man can bulldoze certain things.

So I did not know (do not know) how to react to this statement by Abhir. I have not switched from these funds for at least 10 years. They are in the growth mode and I am happy to get something over 12% CAGR. I target higher %age of returns in my equity trading portfolio and slightly more than that in my investment portfolio. I frankly do not track it on a month on month basis too. Yes suddenly if I find a Coromandel International or a Cholamandalam Investment’s weight in my portfolio increases I sell a small portion when the price balloons. If I am happy with my portfolio, I am happy. Recently I have sold Hdfc (rare, black swan kinda event !!!) and bought more Chola, Equitas Holding, Indigo…- a very rare occurrence indeed. First time I am selling Hdfc without an intention to buy it back.

Similarly I will shift out of a Hdfc or a Prima Plus when I think I need the money. Or when the manager changes and I am not confident about the new person. In Hdfc life insurance I have a ULIP where i suffered when a good fund manager was replaced by a less than average fund manager…but i Had to live with that as i did not want to surrender the policy at that stage. I liked my ulip’s amc charges – 0.8% p.a. vs about 2% in the Hdfc funds.

However in most of the fund houses my respect for the fund managers does not mean that my respect for the fund house is the same. In some cases I like only the fund manager and not the fund house. In one case I like the fund manager but am skeptical about the fund house.

So to say ‘we must shift from one fund house to another’ sounds good, but rarely is it backed by ENOUGH logic…

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  1. no. Not at all. Ulip is a poor product design. The regulator, shareholders of insurance companies, agents, …everybody LOVES it…personally i bought because the amc was low…but now i realize that i am stuck with a poor manager..felling helpless…cannot do anything else…

  2. I went and read the lines about the ULIP and read again, wondering if it was really your story or the continuation of Abhir’s.
    Some times not knowing the fund manager or changes helps, only recently did I know about a change at IDFC PR equity. Well as long as the fund is doing good why complain.

  3. whenever i hear about ulips, i’m reminded of how i managed to get a full refund of my ulip during free-look period. thankfully they delayed sending the policy for a long time (during which i could educate myself better) & changed the structure without consent & i had enough paperwork to have them issue 100% refund. still gives me shivers as it was a 2.5 lac annual commitment. have slept much better since then ๐Ÿ™‚

  4. Subra sir,
    Very nicely written. I am a bit confused with the following line:

    “I target higher %age of returns in my equity trading portfolio and slightly more than that in my investment portfolio.”
    Can we please have 2 posts only on this line to learn better. PLEASE sir.

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