Investing: Hemant Rustagi

My systematic investment plan (SIP) is up for renewal. However, when I called up my mutual fund distributor, he said they do not sell mutual fund schemes now. I am told the fund house will not accept renewal from any other distributor unless I get a no-objection certificate (NoC) from my existing distributor. What should I do?
Thankfully, you are not at his mercy to continue. Investors always had the option to either approach the fund house directly to renew their SIPs or start a new SIP through another distributor. No NoC was ever required to do this. To reiterate this, the Securities and Exchange Board of India issued a circular on December 11 that no NoC was required if an investor wished to avail of the service of another advisor for his existing portfolio or opted to deal directly. You have to simply write to the fund house and it will make the necessary changes.

With the Union Budget signaling that infrastructure will be the government’s focus, should I go for an infrastructure fund? Or should I select good infrastructure stocks? I have a five-year horizon.
Considering the infrastructure deficit in India, there was a need for an increased focus on the sector. As regards an investment strategy to benefit from this, the choice between a fund and stocks depends on your ability to select the right stocks and to analyse and monitor the progress of the companies regularly. In the absence of any expertise, an infrastructure fund can prove to be an ideal investment vehicle. The fund manager’s decision-making is supported by in-depth research. You can choose from a number of infrastructure funds, based on the quality of the portfolio as well as a good and consistent performance track record.

I am a retired person. I am looking to put around 20 per cent of my corpus in mutual funds which will give me regular income in the form of dividends. Which category of funds will you suggest?
One product that fits your bill is a monthly income plan (MIP). MIPs have a dual objective of generating regular income and growth of capital. To achieve these, the amount mobilised is invested in debt, money market as well as equity and equity-oriented instruments. MIPs are basically ultra conservative balanced funds wherein the debt portfolio provides the stability and the equity portfolio enhances the chances of improving returns. This asset mix, over a period of time, has the potential to provide better returns than fixed deposits and debt funds. The key, however, will be to opt for funds that cap the equity exposure to 10-15 percent. This not only helps restrict the risk but also compels the fund manager to rebalance the portfolio from time to time to maintain the committed asset allocation. However, it is important to know that even restricted exposure to equities can cause fluctuations in returns.

Hemant Rastagi is chief executive officer at Wiseinvest Advisors. Send your queries at yourmoney@bsmail.in