March and April are critical months when it comes to personal funds. You either get a high out of wiggling out of any taxing situation or you then get into a funk when you realise that you have to then go and declare your next set of investments for the year ahead. Any way it goes, these permutations and combinations do raise hackles and at times do call for a swig of fresh lime sodas that soothe parched throats (lime ‘n’ soda’s my poison).
Now while sorting out my financials, I decided to also reassess my mutual fund investments made nearly a decade back. I am averse to taking risks and I can safely say that the four mutual funds in which I invested were some crazy train stuff that I felt I could handle then. So far following are the results.
Franklin Templeton Tax Shield (Dividend) – This was a well thought out investment considering it was my first. In 2007 I needed two things. One, save on tax by making an investment and two, make an investment that would in turn give me returns. With these sole criteria I began pouring over newsletters, business pages and asking CAs and bank officers in the family for tips on how to manage my funds. Through popular choice and with a strong recommendation from Karnataka Bank I took up the Franklin Templeton Tax Shield (Dividend) fund. This mutual fund came with pedigree – a good track record that saw everyone who invested swear by this fund. Seven years later, this has turned out to be the star performer among all my mutual funds. Besides the initial tax advantage, this fund has been giving me consistent dividends that have reasonably tidied over the principal amount. It is indeed a star performer and though the dividends have reduced in amount over the last few years it still works out in the long run.
SBI Magnum Tax Advantage Fund – The fund started off badly. Again, dividend related and while providing the initial tax shelter, this fund sputtered out a few dividends and then there was silence. However a slight upturn resulted in this fund climbing out of the doldrums. At one point in time I saw my principal amount reduced to half. In this scenario, the fund has made quite a recovery and I decided to encash it with a negligible profit on this.
SBI Magnum Tax Gain Scheme – Now this was one star fund that went bust. At one point in time SBI Magnum Tax Gain Scheme was the darling of investors. The great Indian middle class embraced this fund like never before. I did too and the first few years were super rosy. I managed to get my initial highest dividends from this product and boy did it make me a happy man. And then came the 2009 slump. Dividends did keep coming even though the initial investment shrunk to nearly half. And while the fund has picked up slowly, the funny part is dividends keep coming unlike the Tax Advantage fund scenario where the product performed well but no dividends were paid out. For now I have decided to keep this fund with a view that it may reach its high of 2005-07 soon. With elections almost done and the next lot ready to set claim I am looking forward to a climb in the numbers.
Fidelity India Growth Fund (now called L&T India Large Cap Fund) – This investment was pure rush. With dividends coming in, I used that amount to make a risky but high return investment in Fidelity India Growth Fund. Not only that, I opted for the Growth model in this fund, meaning I would not get any dividends till I closed the fund at a possibly successful level. Expecting it to grow, I saw the fund tank. Not completely, but almost. And then the fund was bought over by L&T and with the rechristening there have been some positive improvements. Being a risky investment, I have always been there without any expectations, but there was just that tiny hope that I could have a goldmine on my hands. I have decided to keep this fund too considering the electoral and global market dynamics. It will always be a risk and with its good performance of late I expect this fund to claw its way to a profitable venture for me. It’s working hard for now with a healthy net asset value (NAV).
It’s been entertaining studying the markets and playing around with the investments. The initial playfulness has given way to careful scrutiny as I wait and watch what happens over the three mutual funds that I retain. Quoting Jim Morrison, “I think the highest and lowest points are the important ones. Anything else is just…in between. I want the freedom to try everything.”