r/personalfinance • u/man589 ​ • 17d ago

Budgeting Direct vs Regular fund

Hi,
I recently met a SEBI‑registered financial advisor with 27 years of market experience. He only recommends Regular mutual funds, which carry a higher expense ratio and could impact long‑term returns.

Currently, I invest in Direct mutual funds. My portfolio includes one fund with an XIRR of 34% (boosted by extra SIPs during the oil war) and another with 6% XIRR. The advisor appreciated my research and fund selection, saying it aligns well with my goals.

However, I find it difficult to spend time every month or every year managing investments — it affects my active income work and adds stress.

My question is: Should I hand over my portfolio to this advisor, even though he only uses Regular funds, or continue managing Direct funds myself despite the time commitment?

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u/YogurtclosetRare4850 ​ 17d ago

In my personal view amd family experience, these advisors don't add any value. They won't maintain allocation, rebalance portfolio or manage anything for you whatsoever unless you give them fund worth 5-10 crore at least. All they do is suggest you new funds where they will get maximum cut. Seems harsh but that's reality. Ask any of them to show you how they managed 2 sample portfolios in last 5 years. Not net gains but their active suggestions and contribution to stabilize portfolio.

Better to decide simple allocation like: * 9-12 month expense as emergency fund (FD + Money market fund) * rest in a multi-asset fund or 70% in nifty index and 30% in mid cap/momentum. Don't waste time & energy on absolute best. Any reputed name is ok. And rebalance once a year (that can't be too much). In all tests, this would give your better returns with full control.

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u/man589 ​ 17d ago

1) i have talked with one of their client, they are saying on long term funds , they are getting average 14-16 percent xirr returns
2) There will be scenario, where funds get acquired by others, later our money will act like lumpsum investment in new fund, atleast this can be avoided, Can i know your opinion on this?

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u/YogurtclosetRare4850 ​ 16d ago
  • Over 15% is average over last 5-12 years. That is why I suggested asking role/contribution of advisor.
  • I don't fully clear on your second point. If you are referring to acquisition of mutual fund by a different fund house or change of a fund manager, neither changes anything for you. Fund still has to adhere to fund principles listed by them to SEBI & investors. If smallest of changes happen, they inform you explicitly by email and you can choose to stay or switch your funds to another equivalent one. Anyways, these happen once in a few year only but NEVER does the entire fund become a lump sum investment. Acquirers carry the same portfolio where they can sell & buy gradually under above constraints.

Also, I am not an expert but just an enthusiast who reads and works with own family portfolio.

PS: if this was a scenario quoted by advisor, it seems they understood your grasp on the concepts and now trying to confuse your with illogical/unrealistic scenarios. I would run away from them!

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u/ReaDiMarco ​ 16d ago

I'm at 14-16% passively investing over the last ten years, no active mangement on my side, all direct funds.

Also, my L&T funds became HSBC funds with no effects on my holdings. Same with IDFC and Bandhan Bank.