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There are no changes in our equity mutual fund SIP portfolios this month

Mahindra Mutual Fund Badhat Yojana Regular – Growth

Here is our update on our equity mutual fundSIPportfolio recommendations in November. And the the happy news is that there are no changes in these portfolios.

< Mutual Funds launched its recommended equitymutual fundportfolios to invest through SIPs in October 2016. Since then, we have been closely monitoring the schemes in the portfolios and coming out with an update in the first week of every month.

Our reason to launch these portfolios was simple. We know that many investors find it very difficult to stitch together a few schemes (or create amutual fund portfolio, in technical parlance) that would help them to meet their various long-term financial goals. This is especially true for new investors.

Sure, creating a mutual fund portfolio involves several complicated steps. To begin with, an investor should shortlist a few schemes with a consistent long-term performance record. Then s/he should pick the ones that are in line with their risk profile andinvestmentobjectives. Then the biggest problem: how to fix the composition of the portfolio? The task doesnt end here. They also need to monitor and review the performance of the portfolio regularly and take remedial steps if needed.

That is why m Mutual Funds decided to launch equity mutual fund SIP portfolios. We have created equity mutual fund SIP portfolios for three different individual risk profiles: conservative, moderate and aggressive. We have also considered three SIP baskets between Rs 2,000-5,000, between Rs 5,000-10,000 and above Rs 10,000 while creating these portfolios. These are the schemes that made it into our recommendation:

Recommended portfolios for conservative investors

Recommended portfolios for aggressive investors

Note, we have assumed that the investor is investing with an investment horizon of at least five years.

ET.com Mutual Funds has employed the following parameters for shortlisting the equity mutual fund schemes.

1. Mean rollingreturns: Rolled daily for the last three years.

2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.

i) When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.

ii) When H is less than 0.5, the series is said to be mean reverting.

iii) When H is greater than 0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series

3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.

Z = Y/number of days taken for computing the ratio

4. Outperformance: It is measured by Jensens Alpha for the last three years. Jensens Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). Higher Alpha indicates that the portfolio performance has outstripped the returns predicted by the market.

[Risk Free Rate +Betaof the MF Scheme * (Average return of the index – Risk Free Rate

5. Asset size: For Equity funds, the threshold asset size is Rs 50 crore

ET.com Mutual Funds has employed the following parameters for shortlisting the debt mutual fund schemes.

1. Mean rolling returns: Rolled daily for the last three years.

2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.

i) When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.

ii) When H is less than 0.5, the series is said to be mean reverting.

iii) When H is greater than 0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series

3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.

Z = Y/number of days taken for computing the ratio

4. Outperformance: Fund Return Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund.

Asset size: For Debt funds, the threshold asset size is Rs 50 crore

ET.com Mutual Funds has employed the following parameters for shortlisting the hybrid mutual fund schemes.

1. Mean rolling returns: Rolled daily for the last three years.

2. Consistency in the last three years: Hurst Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.

i) When H = 0.5, the series of return is said to be a geometric Brownian time series. These type of time series is difficult to forecast.

ii) When H 0.5, the series is said to be mean reverting.

iii) When H0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the series

3. Downside risk: We have considered only the negative returns given by the mutual fund scheme for this measure.

Z = Y/number of days taken for computing the ratio

i) Equity portion: It is measured by Jensens Alpha for the last three years. Jensens Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). Higher Alpha indicates that the portfolio performance has outstripped the returns predicted by the market.

[Risk Free Rate + Beta of the MF Scheme * (Average return of the index – Risk Free Rate

ii) Debt portion: Fund Return Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the fund.

5. Asset size: For Hybrid funds, the threshold asset size is Rs 50 crore

(Disclaimer: past performance is no guarantee for future performance.)

Planning to invest in mutual funds to build a retirement corpus? Here is what you should know.

(%)Mirae Asset Tax Saver Direct-G2.12-3.40-0.408.8114.88Invest NowAxis Long Term Equity Direct-G5.601.186.7013.3613.34Invest NowMirae Asset Tax Saver Reg-G1.96-3.77-1.276.9513.30Invest Now

– Returns less then 1 year are absolute and above 1 year are annualised.

– Returns of 1 year are absolute and above 1 year are annualised..

Start Investing with ICICI Prudential Mutual Fund. Click Here

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