Calm and steady wins the race

Often it is not what you do but what you don't do that decides how much wealth you can create over the long run. Not prone to panic in tough markets or shuffling funds because of short-term slippage in their returns, Basab Ghosh, a Delhi-based civil engineer, has been able to accumulate a healthy retirement kitty, mainly through mutual funds. Mr Ghosh worked with various Indian and multinational companies before he retired from a multinational in 2012.

Though Mr Ghosh started out with his mutual fund investments way back in 1986, when UTI Mastershare was flagged off, his 'serious' stint with investing kicked off in 2005, since he isn't a finance expert. Mr Ghosh was based in Sharjah then and used to regularly consult an accounts executive from Karvy Computershare, who used to help him with investing. "I asked her how I could know more about investing on a regular basis and she directed me to Value Research Online. I started going through it and realised that it was extremely useful to help me select investments as well as manage my portfolio."

As a person who likes to make up his own mind, Mr Ghosh likes to wade through data on fund portfolios and performance and apply tools to make inter-scheme comparisons.

Asset allocation and mutual funds
Currently his portfolio is split in the ratio of 27 per cent in equity and 38 per cent in debt, while 35 per cent is in balanced funds. While he's quite happy with the long-term returns from his portfolio, it hasn't been a smooth run all the way. "I haven't always made good returns. I did suffer losses on my portfolio as the markets went through a rocky phase during the 2007-2008 period." But the market rally since then has helped him recoup those losses and his portfolio sports a double-digit return now.

The lion's share of that portfolio is parked in four-five balanced funds, with some long-term equity performers as well. What funds have given him the best returns over the years? Mr Ghosh reels off HDFC Equity (now HDFC Flexi Cap Fund), Aditya Birla Sun Life Frontline Equity, IDFC Premier Equity (now IDFC Flexi Cap Fund), HDFC Prudence (now HDFC Balanced Advantage Fund) and also HDFC Balanced (now HDFC Hybrid Equity Fund). Reliance Banking Fund (now Nippon India Banking & Financial Services Fund) has also chipped in from time to time.

Showing resolve
Mr Ghosh has noted, like many other investors, that the ratings of HDFC Equity (now HDFC Flexi Cap Fund) have slipped in the last year or so. Ditto with IDFC Premier Equity (now IDFC Flexi Cap Fund). But he has taken a decision to stay with both the funds. "While recent performance of HDFC Equity (now HDFC Flexi Cap Fund) has not been great and the fund has slipped in the Value Research ratings from five stars to three stars and below, I have had a good long-term experience from the fund and so I have decided to stay invested." Similarly, he continues to prefer IDFC's funds. "I have found they are pretty stable. I prefer funds which don't take too much of a hit in bad times," he says.

"I don't get panicky when I see a fund slipping in the ratings. Over the years I have observed that if a fund's one-year returns are not great, that inevitably impacts three- and five-year returns as well. I prefer to invest based on long-term performance, rather than short-term returns." In fact, he recommends that Value Research should not revise its ratings very often because investors should be encouraged to stay the course.

While he may not react to every blip in fund ratings, Mr Ghosh does like to watch over his portfolio quite closely. "I do not change my funds often, but check on my portfolio almost daily. I am careful about updating my portfolio for dividends and other changes."

For the future, Mr Ghosh says he would love to see many more tools that allow him to run 'what-if' scenarios on the funds he owns, compare them to peers and graph their relative returns. He would also like to be alerted whenever a fund in his portfolio is downgraded.

This story first appeared in February 2016.

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