I propose the following as the first trade for the ValueMonk (VM) portfolio.
PURCHASE OF A SHORT TERM DEBT FUND
The idea is that we would like to seek alpha in the markets through our value investing approaches. But that alpha must come over time. Till that happens, we can safely earn high interest through a short term bond market fund.
Investment Thesis
The interest rates in India are at an all time high. RBI will probably take another 100 bps hike (maximum) over the next 6 months. However, if the corporate earnings and growth indicators show signs of slowing down - RBI may halt the same. The idea is that if we can lock in receiving interest at these high rates, then once the rates come off - the yields will drop and the price of bonds or debt mutual funds will rally.
I have shortlisted the following three funds based on Sharpe Ration and Expense Ratio:
- HDFC High Interest S/T Growth
- Templeton India S/T Income Growth
- Reliance S/T Growth
Please revert back with your comments of this idea. I will later call for votes once the idea has been discussed. Let us participate whole heatedly in these dicussions guys to have any meaning to this initiative.
this is a good idea, i was on the lookout to invest in MFs myself. And its a good way to prevent inflation eating away ur money.
ReplyDeleteHow have to picked these 3 funds. My concerns -
1) all three have sell or strong sell ratings on moneycontrol
2) there are other funds in the same category giving better returns with lower expense ratios
3) have a look at this link - http://www.valueresearchonline.com/funds/h2_fund_compare.asp?objective=compare&mode=snapshot&select1=5923&select1=1204&select1=1499&select1=2874&select1=3155&select1=8195&submit=Get+Data
UTI Short-term Income Inst seems best of the lot,
4) expense ratio info is not very forth coming. hence most of the research tools are around equity, mf research is a pain.
Good fund identified man!! real star!!
ReplyDeleteCan you dig deeper and do some more comparisons with other funds based on expense ratio and sharpe ratio so that we can buy the best possible fund
I will research this.
ReplyDelete