Wise Wealth Advisors

D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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An annualized return of 32.84%, even while at times being defensive too…

Posted by Muthu on April 21, 2011

Reading the ‘The Emperor of Maladies’ – A biography of Cancer by Siddhartha Mukherjee. 

A well written book and it deserves Puliitzer prize.

This week, one of the residents in our apartment complex who was just 44 years old passed away due to cancer, leaving behind a young son, wife (homemaker) and dependent parents.

I understand that he was doing extremely well in his career and the diagnosis and end, all happened in a matter of few months.

The 64 year old father of a friend of mine too suffered a similar fate this week. Here the diagnosis and the end happened within 2 weeks before even they could understand what was happening.

Very sad events and instances such are always pointers of fragility of life.

Still we all need to plan for long, keeping in mind that we are no different in the eyes of fate and tomorrow is always uncertain.

Struggle and pain – though we love to avoid – may not spare us!

If I write more on this, it would become a philosophical piece.

I’ve been sending you the annual portfolio summary report and I hope to complete the exercise by this month end. Thanks for your encouraging responses.

People who have been investing through SIP for more than 3 years have lot of reasons to smile. People who started last year may have to wait for a while. I’m confident that when one reviews the portfolio, after 5 years of SIP, he would definitely be happier with the decision made.

As far as MIPs are concerned, it would be better to evaluate them after 3 years from the time of investing.

Occasionally I give you the performance details of some fund to give a positive enforcement about the benefits of investing regularly for a long term.

I make it a point not to mention the name of the fund or the product. As far as possible, I do not want to endorse any product in my portal and portfolio construction is always individual specific.

This fund is little unique in nature. Depending upon the market condition, it does not mind moving into cash up to 35% of the portfolio. I think it may not exceed 35% so as to not to loose the ‘equity fund’ tag and the benefits associated with it for the investors.

This fund does well in a volatile market and markets by nature are mostly volatile. Its track record during both bull and bear market too looks good.

This is a multi-cap fund which gives it flexible mandate.

We mentioned some time earlier this year, how one would have done very well in the previous 3 years through SIP mode despite Sensex being lower than what it was 3 years ago.

This fund has also proved the same.

All the data I give below is as of March 31’st 2011- referred as ‘now’

If you’ve invested Rs.5000/- per month in this scheme for last 3 years, it is worth Rs.2.62 lakhs now. This works out to an annualized return of 23.36%

Last 5 years, a period of spectacular rise and fall, an investment of Rs.5000/- per month is worth Rs.4.65 lakhs now. An annualized return of 16.33%

In the fund’s history of 8.41 years (102 months), an investment of Rs.5000/- per month is now worth Rs.17.46 lakhs. An annualized return of 24.83%

I get queries as to whether you can top up SIPs (add an adhoc lump sum to the existing SIP folio). You may do it, provided if the investment tenure is not less than 10 years.

You may add additional amount keeping the above point in mind.

For example, in the fund we are discussing, if you’ve invested Rs.5 lakh as lump sum 8.4 years ago (at the time of inception), the value now is around Rs.78.5 lakhs. An annualized return of 32.84%

Now it is time for disclaimer.

Why disclaimer?

It is both a regulatory requirement and better way of being aware of the nature of the product one is investing in.

Disclaimer: Mutual fund investments are subject to market risks. Past performance may or may not be repeated in future. These products do not offer any guaranteed or assured return. Please read all the scheme related documents carefully before investing.

11 Responses to “An annualized return of 32.84%, even while at times being defensive too…”

  1. Santosh B said

    hey Muthu, hope this finds you doing just fine. Am intrigued to know the name of the fund discussed herein ……. hoping you’d write back with more info. I got a small lumpsum I’d l;ike to invest and am looking for sound advice on. Thanks & regards, Santosh Balakrishnan

    • Muthu said

      Dear Santosh,

      Thanks for taking interest in reading our postings.

      Please read whatever I write in an educational or informative perspective.

      I would suggest that you meet a qualified advisor, give relevant details and take his help in arriving at an investment solution which matches your aspirations, risk profile and investment tenure.

      • Hi Muthu, I chanced upon that you also provide Financial Advisory services. Can you please let me know more about this in detail? I hail from Mumbai from do my service from Goa, where I am for the most part.

  2. gurdev singh said

    hi muthu i have purchased a life insurance policy in which i have to pay 4000 monthly till 15 years and after 15 years i will get 16 lakh.i have just paid 1 year installments. but after reading your articals i think i have made mistake by investing in lic than mutual funds. should i stop paying the installments there and start a sip in mutual funds. please must reply and reply quickly to my gmail address.

  3. Ashutosh said

    In a SIP is it better to invest on daily or month basis. eg if I invest Rs 1000 daily or Rs 25000 p.m , which will return better over 25 years ??

  4. Ashutosh said

    thanks for your reply

  5. Ashutosh said

    would it make sense if the time horizon is shorter say 3 years..

  6. Ashutosh said

    Ok, thanks.
    Your writings have been very insightful and has re-inforced our faith in long term consistent and regular investment habbit.
    Keep on writing and inspiring us all
    with best regards,

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