GEMGAZE

February 2016 

How do you fancy having your own fund manager to try to boost your long-term savings? They would keep a close eye on where you are invested, sell funds that were failing and buy new ones that are about to soar. It sounds ideal — and it is possible. Increasing numbers of investors are turning to ‘fund of funds’, a type of investment where one fund manager picks a whole range of funds for you based on how much risk you are willing to take. Typically, the money is invested in other investment funds — these in turn invest in other companies. These types of funds help you take less risk because your cash is spread across a greater number of funds and companies. So if one fund’s performance starts to fall off a cliff, you should, in theory at least, be able to rely on some of the others to prop it up. Of course, the fund manager is not actually working just for you — but you and a host of other like-minded investors. For many investors, fund of funds take away the headache of deciding on which funds to buy and which to sell. Instead you hand those decisions over to a full-time fund manager.

All the GEMs from the 2015 GEMGAZE have performed reasonably well through thick and thin and figure prominently in the 2016 GEMGAZE too. 

FT India Life Stage Fund of Funds Gem

Franklin Templeton AMC offers five plans based on life stages that will suit your age profile – FT India Life Stage FoF 20s, FT India Life Stage FoF 30s, FT India Life Stage FoF 40s, FT India Life Stage FoF 50s Plus, and FT India Life Stage FoF 50s Floating Rate. The first four plans were launched in November 2003 and the last plan was launched in July 2004. All these are plans of a single fund that has assets of around Rs 78 crore. The AUM of each plan is Rs 13 crore, Rs 7 crore, Rs 13 crore, Rs 10 crore, and Rs 35 crore respectively. The top three sectors in the portfolio are finance, chemical, and engineering. The allocation to equity tapers from 80% in the first plan to a measly 20% in the last plan. The one-year returns of the plans are -4.78%, -1.18%, 1.88%, 3.84%, and 4.6% respectively. While the expense ratio for the plans is 1.21%, 1.7%, 1.84%, 1.87%, and 0.79% respectively, the portfolio turnover ratio is 5%, 6%, 7%, 3%, and 3% respectively.

ICICI Prudential Advisor Fund Gem

ICICI Prudential Mutual Fund offers Fund of Funds through five plans launched in November 2003: ICICI Prudential Advisor–Very Aggressive, ICICI Prudential Advisor–Aggressive (ICICI Prudential Advisor Series – Long Term Savings Plan w.e.f. December 6, 2013), ICICI Prudential Advisor–Moderate, ICICI Prudential Advisor–Cautious, and ICICI Prudential Advisor–Very Cautious (ICICI Prudential Advisor Series – Dynamic Accrual Plan w.e.f. June 17, 2015). The AUMs of the Very Aggressive, Aggressive, Moderate, Cautious, and Very Cautious Plans are Rs 4 crore, Rs 6 crore, Rs 5 crore, Rs 2 crore, and Rs 5 crore respectively. The top three sectors in the portfolio are finance, technology, and energy. The allocation to equity is 19.8%, 58.84%, 40.65%, 34.49%, and 0% respectively. The one-year returns of the plans are -1.01%, -5.67%,-4.02%,-2.19%, and 9.78% respectively. While the expense ratio for the plans is 0.74%, 0.73%, 0.72%, 0.74%, and 0.64% respectively,  the portfolio turnover ratio is 4%, 8%, 6%, 3%, and 0% respectively.

Birla Asset Allocation Plan Gem

Birla Asset Allocation Plan is an open-ended fund of funds, launched in January 2004, which offers three plans – Aggressive, Moderate, and Cautious. The AUM of Aggressive, Moderate, and Cautious Plans is Rs 10 crore, Rs 6 crore, and Rs 3 crore respectively. The top three sectors for all the plans are finance, automobile, and healthcare. The allocation to equity is 74.1%, 48.55%, and 23.1% respectively. The one-year returns of the plans are -3.62%, -1.02%, and 0.81% respectively. The expense ratio for all the plans hovers around 0.02%.

FT India Dynamic PE Ratio Fund of Funds Gem

FT India Dynamic PE Ratio Fund of Funds’ investment strategy is unique. Its portfolio is invested in a mix of equity and debt. But unlike the usual balanced fund, it changes this mix based on market levels (the price-earnings multiple of Nifty) at the end of each month. If the Nifty PE is at a rock-bottom 12 times or less, 90-100% of the portfolio goes into shares, with very little in debt. If the PE crosses the danger zone above 28 times, the portfolio is fully switched into debt. At PE bands that fall in between, the equity portion can vary from 30-70%. This fund does not invest directly in stocks or bonds, but redirects your money into two other well-managed funds – Franklin India Bluechip Fund and Franklin India Short-term Income Plan, the former invested in large-cap stocks and the latter in long term gilts and bonds. At present, the fund holds 50.09% in Franklin Bluechip Fund and 49.91% in Franklin India Short-term Income Plan. The AUM of the fund is an impressive Rs 753 crore. The top three sectors in the portfolio are finance, energy, and technology. This predominantly large cap fund has an allocation to equity of 50.09% at present. The one-year return of the fund is -0.13% as against the category average of -2.19%. While the expense ratio is at 1.78%, the portfolio turnover ratio is 37%.