Update – Initiated position in amazon. Mostly because of AWS only.
Got the increment and hence sip in mutual fund changed a bit. Did not add any new mutual fund, just increased the SIP amount
The logic behind selection of mutual fund.
- In active category, I prefer relatively low AUM and low beta mutual funds.
- In passive category, low expense ratio with low tracking error and AUM above certain threshold.
- For debt funds, I prefer short term debt fund with a very good amount of AUM and from trusted fund house, prefably from big reputed banks.
Current SIP structure(out of 100% that goes into mutual fund)
Icici prudential short term debt fund – 20
Navi nasdaq 100 – 20
UTI midcap 150 quality 50 – 10
Navi nifty 50 – 10
Parag parikh tax saver – 22.5
Canara robeco small cap – 17.5
As mostly, index fund outperform the active funds in usa, hence nasdaq 100 index fund is selected.
As most of the large cap fund underperform the benchmark, hence nifty 50 index fund.
As in midcap category, wanted to select something with low beta and similar performance to midcap 150 index, hence selected midcap 150, quality 50. Also, in index fund, we don’t have to think much about, how performance of mutual fund depends upon the universe of stocks in which mutual fund can invest due to regulatory concerns and its AUM.
Also in midcap, universe of stocks is 150 and hence any good fund manager might not outperform the benchmark due to regulatory concerns over limited number of stocks he can invest most money in. Hence it is better to buy complete universe(same as large cap).
In active funds, I have a lot of belief on Ajay khandelwal of canara robeco small cap and Rajeev Thakkar of parag parikh. To take advantage of their complete ability of picking good stocks and investing, we should choose funds managed by them with low AUM(universe of stocks in which a mutual fund can invest decreases with increase in AUM) and funds where they can invest in most of the stocks as per regulations like tax saver, flexi cap or small cap.
Disclosure – Have started working for one of the company in whose mutual fund I invest my money.
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