IDFC Sterling Equity Fund

IDFC Sterling Equity fund is one of the best performing funds in its category. This fund is being managed by Kenneth Andrade, master of small and midcap funds. It had consistently beaten all funds in similar category until 2011 but performance has cooled off since. The fund’s management style makes it a good bet for those who can downside risk. The fund was earlier known as IDFC Small & Mid Cap Equity.

Where does IDFC Sterling Equity fund invest your money?

IDFC Sterling Equity is a mid cap fund which means most of your money will be invested in medium sized companies. About 53.75% of the fund’s money is allocated to stocks of mid size companies, 23.99% to stocks of small size companies and the remaining to those of large companies. Mid size stocks can give kicker returns as they turn into large stocks but this happens not so frequently.

Suitable for what?
  • Creation of wealth
  • Lifestyle needs
Not Suitable for?
  • Retirement Corpus
  • Child's Education
  • Child's Marriage
  • Buying Home
How much to invest?

Minimum one time investment is Rs 5000 and minimum SIP is Rs 1000 per month. Make IDFC Sterling Equity Fund as part of your core portfolio. Do not do the mistake of investing in too many mutual fund schemes. At any point of time do not have more than two mutual fund schemes in your core portfolio. Core portfolio is investments that are made for your basic goals. IDFC Sterling Equity Fund can be part of the core portfolio.

Our recommendation for fresh investment
Recommended
Our recommendation for existing investment
Recommended
How has IDFC Sterling Equity performed in the past?

If you had invested Rs 1 lakh when the fund was launched in Mar 2008 your value of investments would be around Rs 2.04 lakhs. The fund has been giving at around 14.86% every year for those who stayed invested for last 5 years.

Assume you had invested Rs 10,000 every month in IDFC Sterling Equity through SIP for the past 5 years today you would have around Rs 9.03 lakhs.

How will IDFC Sterling Equity perform in the future?

Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to do well. When the companies do well their stock prices follows their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%.

Mutual fund schemes that have exposure to mid size companies tend to show results when their bet on few companies comes true. We advise you to avoid too much of star gazing and future prediction. Be reminded that equities are one of the asset classes that have the potential to beat inflation. Your aim for satellite portfolio should be to earn higher returns than from a diversified large cap fund.

When to review the performance?

Once you invest in the fund do not get into the habit of checking the NAV daily or monthly. Review the performance once a year. Too much attention is not good.

What charges apply?

A onetime fee of Rs 100 is charged on investments over Rs 10, 000 made through distributors. If you are a first time investor in mutual funds an additional Rs 50 is charged to cover KYC expenses. This is deducted from your investment and can be skipped if you buy directly from the mutual fund via their website or offices.

If units are sold within a year an exit load of 1% is deducted from your total returns. No exit load applies for units withdrawn post one year. Expense ratio of IDFC Sterling Equity Fund is 2.37%. This is charged to recover the fund management company’s expenses on securities’ transactions, commissions, registrar fees, etc. Your mutual fund returns will be total returns less expense ratio. 

When to enter?

Now! There is no good time to invest rather than now. Do not try to time the market and especially if it is an SIP. Do not follow news channel and other experts trying to know the right time to invest. In the long run it does not matter. Mutual fund is unlike a stock where you are looking at the right price. This job will be done by the mutual fund scheme manager. If you have planned your investments and decided on the amount you want to invest do not think further, just go ahead.

 

When to exit?

Withdraw when your goals are closer to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.

What are the tax implications?

The returns in a mutual fund are absolutely tax free, provided you do not withdraw within 1 year. IDFC Sterling Equity does not qualify for sec 80C ELSS benefits.

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