Mutual Fund Corner: Status of segregated portfolios and benefits, pitfalls of DIY investing

In this episode of ‘Mutual Fund Corner’, Prableen Bajpai, founder of FinFix Research has talked about the current status of the segregated units. Also, later in the show Mohit Gang of Moneyfront has discussed what DIY investors should watch out for.

Bajpai said, “As per the AMFI data, we have about 800 crore, but this actually is not a true representation of how much money is actually segregated. When we talk about the segregated portfolios, these are just across seven fund houses and that too limited to about five to seven categories overall.”

On what is the possibility of recovery from side pockets on Voda Idea, Bajpai said, “Voda Idea had two papers, one was due in July 2020 for which principal as well as the interest amounts have paid. Now, the second one is due in September 2023 and this is currently having a credit rating of CARE as ‘B Plus’. ‘B Plus’ is below the investment grade and that is why it has been side pocketed."

On DIY investors, Gang said, “DIY investing is when an investor himself or herself wants to go out on a digital platform and do things or handle investments on own. Basically, they want to take complete control. Typically, the benefit of such a thing is that it offers a seamless execution, right, from evaluating the schemes to execution to monitoring, basically.”

“If your platform is only offering you regular plans, then the whole objective of going digital and not going through a distributor or an intermediary kind of gets defeated. There could be other benefits though, and we can argue about it. But the prime objective is to be able to invest in direct plans," he added.

On distinguishing regular plans and direct plans, he said, “Every scheme which you buy, which is a direct plan will have the word ‘direct’ in it. It is a very categorical requirement from SEBI that scheme which is direct plan will have to carry the word ‘direct’. The second important way of looking at it is by checking the expense ratio of this scheme. So, most of these platforms will also show the expense ratio of the scheme. A direct plan expense ratio will always be much lesser than the regular plan expense ratio.”