Balanced Mutual Funds Versus MIPs - Why Balanced Mutual Funds are Superior? - MYREALITY.In, Real Estate, Share Market, Mutual Fund, Insurance
Trending
Powered by Blogger.
Wednesday, October 12, 2016

Balanced Mutual Funds Versus MIPs - Why Balanced Mutual Funds are Superior?

Balanced mutual Funds Versus MIP 
(It's not Apple to Apple, but when it
 comes to waiting period, you can't 
avoid comparing)

By Mr. B. Padmanaban, CFPCM
Certified Financial Planner

When the debt mutual fund taxation moved from 
1 year to 3 years balanced fund is the 
best suitable product considering that 
3 years investment horizon is concerned.

Though past performance may not guarantee in the future, 
it will definitely give the better direction, if somebody 
really understands the data.

Hope the below data will help you to take a best decision forward.

October 8, 2013 and October 7, 2016
7th Oct 13
07-Oct-16
HDFC Balanced
26.23%
19895
28061
HDFC Prudence
25.39%
41.05%
HDFC MIP LT
15.49%
12.15%
October 8, 2012 and October 7, 2015
8th Oct 12
07-Oct-15
HDFC Balanced
20.68%
18708
26845
HDFC Prudence
18.07%
43.49%
HDFC MIP LT
11.55%
12.79%
October 8, 2011 and October 7, 2014
7th Oct 11
07-Oct-14
HDFC Balanced
20.94%
16232
26246
HDFC Prudence
20.66%
61.69%
HDFC MIP LT
11.87%
17.37%
October 8, 2010 and October 7, 2013
8th Oct 10
07-Oct-13
HDFC Balanced
2.88%
20250
19895
HDFC Prudence
-1.22%
-1.75%
HDFC MIP
4.20%
-0.59%




October 8, 2009 and October 7, 2012
8th Oct 09
07-Oct-12
HDFC Balanced
15.03%
16843
18708
HDFC Prudence
12.66%
11.07%
HDFC MIP LT
8.62%
3.56%
October 8, 2008 and October 7, 2011
8th Oct 08
07-Oct-11
HDFC Balanced
23.29%
11328
16232
HDFC Prudence
24.55%
43.29%
HDFC MIP LT
14.76%
12.74%
October 8, 2007 and October 7, 2010
8th Oct 07
07-Oct-10
HDFC Balanced
17.47%
17491
20250
HDFC Prudence
18.36%
15.77%
HDFC MIP LT
12.49%
5.00%
October 8, 2006 and October 7, 2009
8th Oct 06
08-Oct-09
HDFC Balanced
11.10%
12365
16843
HDFC Prudence
15.56%
36.22%
HDFC MIP LT
12.10%
10.85%

I have plotted the BSE - Sensex level versus balanced funds 
and MIP funds from HDFC.

The reason I have chosen HDFC is both MIP and balanced 
are consistent and longer years.

You can compare any other funds also. HDFC used
 only for illustrative purpose, not recommendation from my side!

Mr. B. Padmanaban, CFPCMwww.fortuneplanners.com

Why Balanced Mutual Funds are Superior!!!

1. One thing it clearly shows for the last 6 years, balanced  fund have the ability to beat the broad index Sensex  comfortably in 3 year plus rolling return investments, at the same time it took lesser volatility than the Sensex.

2. Many retired people opt for Senior Citizen Savings Scheme (SCSS) and they are happy to lock their  investments for 5 years, considering the current 
market scenario balanced fund will give you much better return than the SCSS for sure.

3. The only 3 year period it has not delivered is between  October 8, 2010 and October 7, 2013 where the market is flat or -1.75% negative point to point returns.

4. Instead of appreciating all the 7 rolling returns, if someone is arguing that why it can't repeat in the next 3 years?

Yes, it is possible only if the market remains the same level what it is today after 3 years, which is according to impossible if you ask anybody in India, so this question is invalid!!!

5. Instead of pleasing the investor and saying that the client himself does not like volatile why one should look for balanced fund. Take responsibility to make the client understand, it is not really risky in the instrument considering the current scenario and the risk lies only in your mind.

6. The ratio between balanced funds AUM versus MIP is 3:1. This gap should be widened. On paper MIP seems to be less risky and less return compared to balanced fund. In reality, it is not so. If the client is decided to stay for longer years, no need to look up for MIP.

7. Good number of investors feel that MIP means we will get monthly regular income as the name suggests, but it is not so. The name itself is misleading!

8. When the Sensex moved from 19,895 to 28,000 it is only 41%, whereas the balanced fund has delivered 100% which means its literally doubled in the last 3 years.

9. Look at the alpha creation than the Sensex, it is huge. Falling interest rate, both debt and equity will do wonder in these type of funds in the next 3 years as well.

10. I strongly advise all my clients if they opt for 100 in safe investments, I advise them to consider 50% in the balanced funds and in the next 5 years it has the potential to double. Then move 50% to safer funds and again play with another 50% in the balanced fund and continue till your life time. No need to ignore this category just because somebody is old, as long as the investor can wait.

p.s. All the investments are subject to market risks, but we never feel it is risky or subject to market risk when we invest in GOLD or Real Estate. Just because it’s statutory message, many investors feels that it’s risky!

Today, many of us traveled by air, and there is an instruction about safety before it take off and in between also, if there is a turbulence, we hear the message saying that please do not get up from the seat, till the turbulence become normal. Many will not even pay attention to it, because we feel that it will be landed safely and no need to panic.

Similarly, MF investments also like that, longer the tenure your investment will be always safe. In air, rarely it will crash, in MF longer years say 7 to 10 years holding period will never crash!

B. Padmanaban, CFPCM
Certified Financial Planner
9884349173




Balanced Mutual Funds Versus MIPs - Why Balanced Mutual Funds are Superior? Reviewed by S. Chitra on October 12, 2016 Rating: 5 Balanced mutual Funds Versus MIP  (It's not Apple to Apple, but when it  comes to waiting period, you can't  avoid comparing)...

No comments:

Google+ Followers