From THE HINDU group of publications
Sunday, June 24, 2001


Personal Finance | Previous | Next

Monitoring mutual funds

Rangarajan. K, Chennai

I WOULD like to share my experience as an investor, and also comment on monitoring mutual funds.

The investment policies I follow are:

*Plan and make substantial investments in the equity market at the time of crash. Going by experience, this has been happening, on an average, once in two years.

*For dividend yield, I primarily rely on mutual funds, and for capital appreciation, I go to the equity market.

For investment in the equity market, upon reviewing the company's management and its fundamentals, one broadly follows the following rules:

*Pick up a stock that is below par or when its PE is in single digit.

*Pick up a stock that does not meet the rule cited above when its current level is lower than that reached in the last three-five years.

This policy has given an average return of around 30-45 per cent.

Coming to the mutual funds, these are good bets for dividends and capital appreciation. However, one should not pick up a mutual fund at par value. It should be picked up when the NAV is below par, say, Rs 7 or less. However, you can make an exception to this rule based on the dividend yield and the average NAV during the previous three years.

SEBI should impose some guidelines suggested here on the mutual funds. When the NAV is below par, no AMC fees should be paid to the sponsor for that period.

Also, an investor who has subscribed to an initial subscription of a mutual fund scheme should be charged no levy when he/she exits or makes additional investment.

Mutual funds too should follow certain norms when they issue general advertisements on their products. All advertisements of mutual funds should disclose the highs and lows (on a yearly basis) of the fund and the months and years when the NAV was below par. This should be in addition to the details of dividend declared.

Would you like to share your experience as an investor? Write to us at

Section  : Personal Finance
Previous : `Disciplined will make money'
Next     : Option Basics -- V

Stocks | Bonds & FDs | Mutual Funds | Industry | Markets | Personal Finance | Opinion | Indicators |

| Index | Site Map | Home

Copyrights © 2001 The Hindu Business Line

Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line