Plumbline Handpicked Mutual Funds Jan 2018: One Change, more to come?

PLumbline is my list of handpicked mutual fund started in Sep 2017 for beginners to accompany the freefincal robo advisory template. This month, one fund from the list has been removed as AMCs have started to fall in line with SEBIs mutual fund classification rules. Before we begin, my second book, Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want is now available for only Rs. 49 (50% off on the Kindle edition). You can read the book on your browser or mobile (no Kindle device needed). Grab it now or gift it to a young earner!

What is plumbline and how should I use it?


Plumbline FB - Plumbline Handpicked Mutual Funds Jan 2018: One Change, more to come? A plumb line is used to fix the vertical and therefore the horizontal. This list hopes to help new investors do the same. 
Pic credit: Mr. atm

1: PlumbLine is a boring list of mutual funds. It will NOT change from month to month unless there is a significant change in the fund’s strategy or dip in performance or some other special situation. So please do not look forward to it. Also, there are plenty of good mutual funds that are not part of PlumbLine. If your funds are different, you are probably better off. Do not worry about it.

2:  Do not use PlumbLine for confirmation of your choices! PlumbLine is meant for young earners and first-time investors after they have used the robo advisory template.

3: If tomorrow the funds in the list change, you will have to take a call on what you need to do, based on the fund performance from the date in which you invested. I cannot help you here, other than talk about how to review.

Disclaimer

On its own, this list has no meaning and unless you are able to look at it in the right perspective and context, it will not help you. The hope is that the robo template will try and provide such perspective which still has to be processed and interpreted by you.

Finally, I am only human and more than capable of making mistakes. Also, I am a below average investor and fund picker or analyzer. I am not a fan of looking into the fund portfolio. I prefer funds with a narrow investment mandate. I am sure you will agree that most of the picks are lame and obvious.and that this list is a no-brainer and nothing special.

If the funds here stop performing in future or have credit defaults issues, all I can do is to modify the list (if required).  I WILL NOT BE IN ANY WAY RESPONSIBLE FOR YOUR INVESTMENT CHOICES, CAPITAL GAINS OR LOSSES. 

If a PlumbLIne fund is present in your portfolio, it means nothing.

If none of your funds is present in the PlumbLine list, it means nothing.

MUTUAL FUNDS ARE SUBJECT TO IGNORANCE RISKS AND MARKET RISKS. PLEASE READ AND UNDERSTAND ALL SCHEME RELATED DOCUMENTS BEFORE INVESTING.

FAQ on Plumbline

1. Why are X, Y or Z funds not part of plumbline  —> Plumbline is my list. Don’t expect me to make a list that matches your expectations.

2. The funds you have listed are not even 4-star funds  —> I don’t care. Star ratings are injurious to your mental and fiscal health. Comparisons are injurious to peace of mind and plumbline is just plain bad.

3 Plumbline does not feature the top funds from your monthly screener  —> Yeah because I did not consult it. Plumbline is a qualitative assessment of a funds investment strategy, mandate and performance.

Plumbline Jan 2018

Plumb line 2018 - Plumbline Handpicked Mutual Funds Jan 2018: One Change, more to come?

Why has DSPBR Treasury Bill fund been removed? Because its investment mandate has changed and it will no longer operate as a short-term gilt fund: Death of a good mutual fund: DSP BlackRock Treasury Bill Fund

I am an investor in the fund, what should I do? Nothing! It is now an ultra short-term fund. Its credit risk profile has increased perhaps a little bit more interest rate risk. Don’t lose sleep about it. Continue to hold after reading the new investment strategy and if you are comfortable with it.

As more AMCs fall in line with SEBI regulations, I am afraid there will be a few more changes.

What about Quantum Dynamic Bond which was on the watchlist last time?

Dec 2016:

Money market (liquid/cash) ~ 28%

long-term bonds (>9Y) ~ 71%;

Sep 2017

Money market ~ 12%

very llong-term(>12Y) ~ 50%

Nov 2017

Money market ~ 18.5%

Still 83% exposure to >10Y bonds.

As on 19th Jan 2018, the exposure to >10Y bonds has come down to about 47%. Therefore, it stays. The fund has stemmed its fall – not as much it should have on an absolute level and certainly not as well as few other funds (guess which ones?!). Its performance since Sep 2017 when long-term yields started moving up gradually has been about “average”. That is too short a term to judge harshly. So it stays for now.

Check out the performance of funds on this list

Request: If you receive an email from the AMC that your fund (any fund) has changed its investment mandate (fundamental change in attribute), please forward that email to me (freefincal at Gmail)

Announcement: Last year I spoke at a few corporate gatherings (eg. RBI, Asian paints). That is, I discussed basic money management with employees. If you are interested in hosting such an event, you can get in touch. There is no fee involved other my travel expenses and I shall talk about only the absolute basics for employees to start thinking about money in the right way and hopefully implement it.

Opinion: I have removed the freefincal Q/A segment from this year because the questions are frankly a bit tiresome. If you found it useful, let me know and I will continue it.

 

Want to conduct a sales-free "basics of money management" session in your office?
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6 thoughts on “Plumbline Handpicked Mutual Funds Jan 2018: One Change, more to come?

  1. Freefincal Q&A is more than useful Professor. One reason being people from all walks of life ask different kinds of questions to seek your advice. I for one, asked a few questions before and got your advice. Please continue it if you can.

  2. Hi Prof
    Big Fan !

    I must say, Plumbline is a very exhaustive list.

    will it be useful if we can have a tentative % allocation for each type of fund ? Say, we have one more column of tentative % allocation for a person who starts with 10000 Rupees or 1 lakh.

    This will help us all to have a sort of clarity about the fund allocation and which fund deserves to have the max allocation.

  3. Q&A was a great section Pattu. I saw questions that were so varied and so interesting that it increased my knowledge a lot. Pls continue if possible

  4. Sir, I saw your analysis of HDFC Top 200 (published in 2013) where you had mentioned it as a compelling pick. Why did it not make it to the plumbline?

  5. Sir,

    If I am investing in debt funds for a retirement that is 20 years away, is investing in long term/ income funds ok or should I only think about the short term debt funds ?

    My second question is about senior citizens saving scheme – is it ethical/ legal to invest in my parents name to take advantage of the higher interest rate ?

    Thanks in advance,
    S

    1. 1: long term funds are okay if you recognise risk
      2:If you invest in your parents name, it is their money. After they die, if you have siblings, they can demand a share!

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