Looking for passive balanced/multi-asset fund (FoF) for retirement planning.
This is inspired from NPS where allocation is fixed and not based on intelligence of fund manager. Something like which has fixed allocation (no dynamic change) and updated quarterly/yearly to target allocation. Since this is passive fund, it includes only ETFs and cash(liquid fund)
The fund I am looking for should have
CORE Equity indixe ETFS
Satellite Equity Factor index ETFs
Debt index ETF
Gold ETF
Cash/liquid
Something like
Asset Class
Example
%
Equity Core
Nifty 50 ETF
20
Equity Core
Nifty Next 50 ETF
20
Equity Satellite
Nifty Low Volatility ETF
15
Equity Satellite
Nifty Alpha ETF
15
Debt
Long term bharat bond ETF
10
Gold
Gold ETF
10
Cash
Liquid
10
**
Dream Fund
The example here is Aggressive/Equity heavy and India centric… and those Equity ETFs have lot of underlying Equity overlap, However I am fine with it. (I think) I understand risks and (I think) I have sufficient hedge because of untouched PPF, EPF.
Question is, are their any fund houses which offer such kind of FoF? There is a ICICI fund but the allocation % is variable, which I don’t agree. And I couldn’t find other fund with similar offering.
Better, shouldn’t Mutual funds come out with products which allow consumer to “design” the portfolio, if consumer do not want to rely on Fund manages intelligence.
Would like understand community opinion/comments about such fund.
People keep making things complicated, even when the most successful investors of the century keeps advising , a passive index etf is more than you need.
Yes, I agree. In fact for last few years I am only investing in Index (Funds… which is in inline with ETF suggestion)
OK, let me try to explain.
Now I am approaching to retirement, now dowm side protection is important for me. I think typically after retirement wealth preservation takes priority over wealth accumulation for average investors
There is enough evidence (permanent portfolio, NPS) and well as theoretical proof (efficient frontier in portfolio management) to suggest that investing in un-coreleated assets provide better downside management or better returns at specified risk level.
Now almost all hybrid/Multi assets retirement oriented funds in India works on this principle. However whatever funds i have came across (except NPS) relies on Mangers predication ability for allocation percentage among different asset class.
e.g NPS did phenomenally well for downside protection but its not strictly passive.
So I am looking for retirement fund is completely Passive (uses sector agnostic Index ETFs) and does not require fund manager to predict which asset class require more allocation.
Yes. I assumed he already wanted to go into retirement mode.
If that is the case, then Short term capital gains of conservative hybrid funds are also taxed as per slab. So if he wants to do SWP on conservative hybrid, those will be taxed similarly.
Yes this seems to be logical. however
I am 5-10 years away from retirement and would be dependent on this fund for next 30-40 years. The plan I am doing now has to remain effective for next 50 years (at least on paper), esp last few years of life I may not be sharp enough to take decisions, may be gullible enough to come under influence of some scamster. Forget scamsters, even bank relationship managers are very good at misleading senior citizens to meet their own targets.
One of the way I think (and I may be completely wrong also to reduce retirement buckets to 1-2 or at the max 3 so that I don’t have to take decisions.
And that’s the reason I am looking for passive hybrid fund which does not depend on fund managers intelligence for next 50 years.
Agree , so there will be always decision making should i opt for liquid fund or for FD . And may be every couple of years i have to revisit decision. At the end I think there would be always next 6-12 months money in FD even if its tax inefficient.
That’s what I am trying to see if some fund offers aggressive (tax efficient) hybrid fund with some downside protection (by including un-correlated assets) and completely passive (do not depend on fund manager for selection or asset allocation).
I started this thread to get some idea, if such or similler fund exists? If not, why fund mangers do not see value in it? Am I missing something in big picture here?
Having one year’s (or two years’) expenses in FD should be fine even from the tax perspective. But having 30% in FDs, as @Vij suggested, may end up being a big drag.
True. However, once the 3-year period is up (which will pass faster than we think!), the more advantageous taxation on LTCG from non-equity funds should make a big difference for a large corpus. In contrast, interest from FDs will be taxed at slab rates in perpetuity.
yes… Finally its going to boil down creating multiple buckets and rely on NPS (which is untested and do not have good reputation in other countries for similar schemes)
Problem which I foresee is suggestions similar to invest these in 4-5 high-quality debt funds" makes things vulnerable. I might be able to make sound judgment in 50s in selection but may not be able to do in 80s. And what if my life partner is blessed with much more longevity? It may be problem in taking such decisions alone.
I understand that this is more or less theoretical discussion. However in uncertain world I would prefer to put my major bets on completely passive (for both asset selection and asset allocation) hybrid fund for next 50 years. Maybe two funds, one is aggressive and one is conservative.
You are right and u reminded me of one thing. The importance of your spouce being financially capable of handling what you have painstakingly built in any eventuality.
Hence passing on knowledge and making them fully aware of the products and how it works is equally important.
I Remember my father opening fd with companies directly for smaller amounts as he was chasing higher interest rates. Everything was manual then. We used to get printed post dated cheques for the full tenor of the deposit from uti
Had to peal out the cheque and deposit it every month. After my father passed away mother had a difficult time to consolidate everything. On occasion she used to be upset of this burden but his intention was to get the extra 1 Rs for his family. Felt bad but had to Close all the companydeposits and put in bank as the survivor knew only bank deposits.
Need to say this. Communication to companies at that time was thru inland letters (post)and each of the company was so compassionate that they did every thing possible to refund the money at the earliest.