A list of Recommended Mutual Fund Portfolio's for 2013 . An article by fundsupermart.com

1. Recommended Portfolios For 2013
Author : Dr. Renu Pothen
Our recommended portfolios were launched for the first time on February 26, 2010. Since then
our portfolios have undergone changes depending upon the modifications that we have brought
about in our recommended funds list. As far as our asset allocation stance goes, we became
neutral on India since November 10, 2010. At that time we felt that the Indian market was
overvalued on an absolute and relative basis which forced us to change our stance from over-
weight on equities to neutral. We continue to maintain this stance although valuations look
attractive because we still have concerns on the macro-economic front.
The biggest saving grace for India, from our point, is the government’s willingness to take
responsibility to bring the economy back onto the growth trajectory. We started seeing this ray
of hope since the latter half of 2012 when there was a change of guard at the Finance Ministry.
We are of the view that if the government led by a vibrant Chidambaram and his team of
economic advisors are able to actually walk the talk then the Indian market will be on a winning
streak like last year.
ASSET ALLOCATION IN THE PORTFOLIOS
Table 1: Current Allocations in the Portfolios
Current Portfolio
Moderately
Moderately Moderately Aggressive
Conservative Balanced Aggressive Aggressive
Conservative Aggressive (Global)
(Global)
Bonds 90% 70% 50% 30% 10% 30% 10%
Equity 10% 30% 50% 70% 90% 45% 60%
Global Equity 0% 0% 0% 0% 0% 25% 30%

2. Table 2: Portfolio Fund Allocation Changes
Target Asset Allocation with effect from 1 Feb 2013
Moderately
Moderately Moderately Aggressive
Asset Allocation Fund Name Conservative Balanced Aggressive Aggressive
Conservative Aggressive (Global)
(Global)
DEBT
Ultra Short Term Templeton India Ultra-Short Bond
20 15 10 5 - 5 -
Funds Fund
Short Term PineBridge India Short Term
40 25 20 5 5 5 5
Funds Fund
Canara Robeco Income Fund 15 15 10 - - - -
Income Funds Templeton India Income Builder
- - - 20 5 20 5
Account
Dynamic Bond Birla Sun Life Dynamic Bond
15 15 10 - - - -
Funds Fund
EQUITY
ICICI Prudential Focused
5 10 15 - - - -
Bluechip Equity Fund
Large Cap funds
DSP BlackRock Top 100 Equity
- - - 10 15 10 10
Fund
Mirae Asset India Opportunities
- - - 10 15 5 10
Multicap Funds Fund
UTI Opportunities Fund - 10 15 - - - -
SBI Magnum Sector Funds
Midcap & Small
Umbrella-Emerging Businesses - - - 15 20 10 15
cap Funds
Fund
Dividend Yield
Birla Sun Life Dividend Yield Plus 5 10 10 - - - -
Funds
Contra / Value ICICI Prudentail Discovery Fund - - 10 15 20 10 15
Infrastructure PineBridge Infrastructure &
- - - 10 10 5 5
Funds Economic Reform Fund
Banking &
Reliance Banking Fund - - 10 10 5 5
Financial Funds -
Franklin Asian Equity Fund - - - - - 10 15
Global Funds JPMorgan JF Greater China
- - - - - 15 15
Equity Off-shore Fund
CHANGES IN CATEGORY ALLOCATION
 Fixed Income
For our fixed income investors, we have been advising that 2013 is the year to look out for
duration funds. Similar to the views floating in the market, we also feel that the central bank will
follow a monetary easing path this year but the pace might be slow as there are still some threats
to inflation which has been the biggest cause of concern for the Reserve Bank of India (RBI).
Hence investors with a time horizon of 12 months to 18 months can consider some of our
dynamic bond funds /income funds. We are also of the opinion that there is still some steam left
on the shorter end of the curve and investors who want to take an exposure into fixed income
funds for a period of 3-6 months should consider our short-term funds.
One of the biggest changes that we have made this year in all our portfolios, with the exception
of the aggressive portfolio, is to give some allocation to ultra short-term funds. This step has
been taken as a sort of liquidity measure and in addition to this we also feel that a cushion like
this will enable an investor to use this surplus to increase his equity exposure whenever there
are opportunities in the market.

3. In this context, we would like to inform our investors that Templeton India Ultra-Short Bond
Fund has replaced BNP Paribas Money Plus Fund in our portfolios. We have also made a change
in our short-term fund with PineBridge India Short Term Fund replacing Templeton India
Short-Term Income Plan in all our 7 portfolios. A relatively small fund which saw its corpus
grow from INR 83 crore in February 2012 to INR 649 crore in December 2012, the fund has
been able to put good numbers on the table despite the conservative stance that it adopts.
As far as duration funds go, we have not taken any exposure to gilt funds since we believe that
these funds are a tactical allocation which requires active management. In this scenario,
investors who want to take an exposure into gilt funds should do so after having consulted their
financial advisors.
On the other hand, in the case of income funds, our top pick of last year - ICICI Prudential
Income Plan, has been replaced with Canara Robeco Income Fund in our conservative,
moderately conservative and balanced portfolios while Templeton India Income Builder
Account finds a place in our moderately aggressive and aggressive portfolios.
Finally, Birla Dynamic Bond Fund, which was a part of all our portfolios last year, currently gets
an allocation only in the conservative, moderately conservative and balanced portfolios.
 Equity
Large-cap funds
We have considered ICICI Prudential Focused Bluechip Equity Fund as the best bet for our
conservative, moderately conservative and balanced investors. We are of the view that a fund
with a concentrated portfolio should be able to maintain the consistency in performance for
those investors who are risk averse. On the other hand, DSP BlackRock Top 100 Equity Fund
has made an entry into our moderately aggressive and aggressive portfolios. The active
management being followed in this fund is the reason behind this decision. On the other hand,
UTI Dividend Yield Fund, which we have been recommending to our conservative, moderately
conservative and balanced investors, has been replaced with Birla Sun Life Dividend Yield Plus.
This is on account of the review that has happened in our recommended funds for 2013.
Multi-cap funds
We took a stand this year that UTI Opportunities Fund is more suitable for investors falling in
the moderately conservative and balanced categories as it has more than 80% of its assets
concentrated in large-cap stocks. On the other hand, Mirae Asset India Opportunities Fund has
been included in moderately aggressive and aggressive portfolios. The tactical allocation of 10%-
15% that the fund manager uses to generate the extra alpha makes it a good bet in these
portfolios.
Mid-cap funds
Our investors would be surprised to see our top mid-cap funds like HDFC Mid-cap
Opportunities and IDFC Sterling Equity Fund not finding a place in our portfolios this year.
Although these funds continue to be in our recommended list, we thought of presenting a set of
new funds in the mid-cap segment. In this case, SBI Magnum Sector Funds Umbrella -
Emerging Businesses Fund, the best performing fund on our platform gets an allocation in our
moderately aggressive and aggressive portfolios.

4. This fund managed by R Srinivasan takes an aggressive stance in its mid-cap stocks while we
feel that the increased allocations being made into the large caps will definitely help it to tide
over any volatility that the fund might face in the coming months.
Another addition made this year is ICICI Prudential Discovery Fund, a value fund with a mid-
cap tilt. We are of the view that if our investors have the patience to wait for 3 years till the
stocks in the portfolio unlock their value then this is the best bet that we can consider in this
space.
Sector funds
As for our sectoral allocation, we continue to be positive on the banking and infrastructure
space. In the former, our preferred fund remains Reliance Banking Fund. In the case of the
latter, PineBridge Infrastructure & Economic Reform Fund has replaced ICICI Infrastructure
Fund. Since we already have a pure banking fund in our moderately aggressive and aggressive
portfolios, it would be better to take an exposure into a fund whose entire portfolio allocation is
into infrastructure stocks and this will, in turn, aid diversification that is required in our
portfolios.
Global funds
Mirae Asset China Advantage Fund has been replaced by JP Morgan JF Greater China Equity
Off-shore Fund on account of the changes that have been made in the recommended funds for
this year.
CHANGES IN FUNDS INCLUDED IN THE PORTFOLIOS
Table 3: New fund additions and old fund deletions
Changes in scheme
Category Old New
Ultra Short Term Fund BNP Paribas Money Plus Fund Templeton India Ultra-Short Bond Fund
Short Term Funds Templeton India Short-Term Income Plan PineBridge India Short Term Fund
Income Funds ICICI Prudentail Income Plan Canara Robeco Income Fund
Templeton India Income Builder Account
Gilt Funds ICICI Prudential Gilt Fund Investment Plan -
Large cap Funds Franklin India Bluechip Fund DSPBR Top 100 Equity Fund
Multi cap Funds L&T Equity Fund Mirae Asset India Opportunities Fund
SBI Magnum Sector Funds Umbrella-Emerging
Mid & Small cap Funds IDFC Sterling Equity Fund
Businesses Fund
HDFC Mid-Cap Opportunities Fund -
Contra / Value Funds - ICICI Prudential Discovery Fund
Dividend Yield Funds UTI Dividend Yield Fund Birla Sun Life Dividend Yield Plus
PineBridge Infrastructure & Economic Reform
Infrastructure Funds ICICI Prudential Infrastructure Fund
Fund
JPMorgan JF Greater China Equity Off-shore
Global Funds Mirae Asset China Advantage Fund
Fund

5. CONCLUSION
Our portfolios were revamped on February 1, 2013 and our factsheets from next month will take
into consideration these changes.
Please feel free to get back to us on research.ind@ifastfinancial.com if you require any
clarifications in our model portfolios.
Dr. Renu Pothen is Research Head with iFAST Financial India Pvt Ltd.
DISCLAIMER
iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds of any of the
Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially
interested in any such. Any advice herein is made on a general basis and does not take into account the specific investment
objectives of the specific person or group of persons. Past performance and any forecast is not necessarily indicative of the future or
likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions
expressed herein are subject to change without notice.