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Have I selected the right funds for SWP

I have invested 40% of my retirement corpus in 4 funds (Growth option) viz. HDFC Balanced Fund, ICICI Prudential Balanced Fund, ICICI Prudential Balanced Advantage Fund and Motilal Oswal Most Focussed Dynamic Equity Fund (15 lakh) each on 16.02.2017. I want to know about selection of funds and I want to start SWP of Rs 7500 pm each from these funds from 1.04.2018 to top up my pension for monthly expenses. I want to know whether it will work or needs some tweaking. I also want to know about some Arbitrage fund (dividend option) to park 50 lakh for 6 months to 1 year period?

Apr 24, 2017 by Surender Kumar, Ahmedabad  |   Mutual Fund

Your selection of funds is good. But please note that ICICI Prudential Balanced Advantage Fund and MOSL Dynamic Equity Funds may not be the right funds for long term SWP. The reason being these funds are dynamic asset allocation funds and keep rebalancing between equity and debts depending upon the market levels.

For example - if the fund manager thinks, the market PE is high he may reduce the equity allocation in the fund and thus protect the downside. Even though these funds may protect the downside upto a greater extent they are unable to capture the rising trend of the market.

For you, balanced funds are the best option as you want to opt for SWP to get regular returns. Balanced funds also does auto rebalancing but that has nothing to do with market levels. It only ensures that the prescribed balanced is maintained between equity and debt irrespective of the market levels.

Yes, Arbitrage funds are good option for short term investments. Check the consistently performing Arbitrage Funds from here https://www.advisorkhoj.com/mutual-funds...

Thanks for writing to Advisorkhoj.

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