Investing in Indian Stock Market - Fund selection

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zenmusic
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Investing in Indian Stock Market - Fund selection

Post by zenmusic » Thu Jan 18, 2018 4:40 pm

Hello all,

Wanted to get recommendation on a equity portfolio for Indian Stock Market. With lack of good index funds, here are 3 mutual funds I am thinking of building equity portfolio with.

1) IDFC Focused equity fund ( Large Cap equity fund )
2) L & T India value fund ( Multicap Equity fund )
3) HDFC Small cap fund (small cap equity fund

My goal is well diversified, low cost and tax efficient. Only concerned with Equity portfolio for now. Once this is done, will include Bonds.

Any bogleheads versed with Indian stock market portfolios?

Thanks,
Sid

PFInterest
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Re: Investing in Indian Stock Market - Fund selection

Post by PFInterest » Thu Jan 18, 2018 11:01 pm

But why?

Valuethinker
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Re: Investing in Indian Stock Market - Fund selection

Post by Valuethinker » Fri Jan 19, 2018 5:54 am

https://www.barrons.com/articles/invest ... 1400777246

looks like there are a few closed end funds investing in India. IIF in particular.

SlowMovingInvestor
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Re: Investing in Indian Stock Market - Fund selection

Post by SlowMovingInvestor » Fri Jan 19, 2018 7:34 am

It seems like you're talking about funds and ETFs based in India, not US based funds/ETFs that invest in India.

If you are a US person (even if currently resident in India), don't do it. You would be subject to complicated and punitive PFIC taxation.

uberational44
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Re: Investing in Indian Stock Market - Fund selection

Post by uberational44 » Fri Jan 19, 2018 8:26 am

I would highly recommend the emerging markets ETF by Vanguard. There might be great returns in the Indian stock market, but you might find those returns being eaten up by currency fluctuations...
Marketeer investing as a hobby. Interested in modern takes on value investing, passive investing and general contrarianism.

Valuethinker
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Re: Investing in Indian Stock Market - Fund selection

Post by Valuethinker » Fri Jan 19, 2018 9:14 am

uberational44 wrote:
Fri Jan 19, 2018 8:26 am
I would highly recommend the emerging markets ETF by Vanguard. There might be great returns in the Indian stock market, but you might find those returns being eaten up by currency fluctuations...
The conventional problem with the ETFs is a heavy weighting towards China. Diluting any exposure to India.

topcatin
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Re: Investing in Indian Stock Market - Fund selection

Post by topcatin » Fri Jan 19, 2018 9:32 am

Investing in Indian Stock Market is great but don't you need to have an ADAR card and bank account associated with it? I am not sure if it is open to international investors. The returns on Indian stock index funds are in the 25-33% vicinity easily/year. I know all bogleheads including me should never look at past performance, but Indian stock index funds have generally given a solid 25% return but with foreign investments and tax-headaches with India, I tend to stay away from it. I don't own Indian S&P 500 mutual funds (NIFTY INDEX) but know friends who have in India and have done well.
I researched into these but the best is to go with an Index fund (Direct) option if you are interested. Similar to mutual funds in the US, pay attention to entry-load,exit-load fees and expense ratios. The expense ratios for a "direct" fund is usually lesser as it will follow a NIFTY INDEX like the S&P Index in the States and there is no advisor involved.

uberational44
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Re: Investing in Indian Stock Market - Fund selection

Post by uberational44 » Fri Jan 19, 2018 12:01 pm

Valuethinker wrote:
Fri Jan 19, 2018 9:14 am
uberational44 wrote:
Fri Jan 19, 2018 8:26 am
I would highly recommend the emerging markets ETF by Vanguard. There might be great returns in the Indian stock market, but you might find those returns being eaten up by currency fluctuations...
The conventional problem with the ETFs is a heavy weighting towards China. Diluting any exposure to India.
I agree. Still, it has exposure to Brazil, Russia, India and China. A variety of countries would even out currency volatility.
Marketeer investing as a hobby. Interested in modern takes on value investing, passive investing and general contrarianism.

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unclescrooge
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Re: Investing in Indian Stock Market - Fund selection

Post by unclescrooge » Fri Jan 19, 2018 12:09 pm

topcatin wrote:
Fri Jan 19, 2018 9:32 am
Investing in Indian Stock Market is great but don't you need to have an ADAR card and bank account associated with it? I am not sure if it is open to international investors. The returns on Indian stock index funds are in the 25-33% vicinity easily/year. I know all bogleheads including me should never look at past performance, but Indian stock index funds have generally given a solid 25% return but with foreign investments and tax-headaches with India, I tend to stay away from it. I don't own Indian S&P 500 mutual funds (NIFTY INDEX) but know friends who have in India and have done well.
I researched into these but the best is to go with an Index fund (Direct) option if you are interested. Similar to mutual funds in the US, pay attention to entry-load,exit-load fees and expense ratios. The expense ratios for a "direct" fund is usually lesser as it will follow a NIFTY INDEX like the S&P Index in the States and there is no advisor involved.
Given the consistent, long term depreciation of the rupee, a majority of these gains are offset by currency devaluation.

topcatin
Posts: 78
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Re: Investing in Indian Stock Market - Fund selection

Post by topcatin » Fri Jan 19, 2018 12:30 pm

unclescrooge wrote:
Fri Jan 19, 2018 12:09 pm
topcatin wrote:
Fri Jan 19, 2018 9:32 am
Investing in Indian Stock Market is great but don't you need to have an ADAR card and bank account associated with it? I am not sure if it is open to international investors. The returns on Indian stock index funds are in the 25-33% vicinity easily/year. I know all bogleheads including me should never look at past performance, but Indian stock index funds have generally given a solid 25% return but with foreign investments and tax-headaches with India, I tend to stay away from it. I don't own Indian S&P 500 mutual funds (NIFTY INDEX) but know friends who have in India and have done well.
I researched into these but the best is to go with an Index fund (Direct) option if you are interested. Similar to mutual funds in the US, pay attention to entry-load,exit-load fees and expense ratios. The expense ratios for a "direct" fund is usually lesser as it will follow a NIFTY INDEX like the S&P Index in the States and there is no advisor involved.
Given the consistent, long term depreciation of the rupee, a majority of these gains are offset by currency devaluation.
You are right about the value of rupee. Sorry I should have been clear. The OP is most likely from India but resides in the States or is in India. For investors having ties back to India, investing in mutual funds in India is an option and can be a good investment but not for investors who don't have any ties to India. Hope that makes sense. If I were to invest $10000 in a S&P fund here in the states, it will probably give me 8% - 9% return where as in India it is an easy 15-25% return atleast historically depending on funds. But due to constant change in tax-laws/rules, it is becoming a challenge to invest in India.

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unclescrooge
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Re: Investing in Indian Stock Market - Fund selection

Post by unclescrooge » Sat Jan 20, 2018 2:05 am

topcatin wrote:
Fri Jan 19, 2018 12:30 pm
unclescrooge wrote:
Fri Jan 19, 2018 12:09 pm
topcatin wrote:
Fri Jan 19, 2018 9:32 am
Investing in Indian Stock Market is great but don't you need to have an ADAR card and bank account associated with it? I am not sure if it is open to international investors. The returns on Indian stock index funds are in the 25-33% vicinity easily/year. I know all bogleheads including me should never look at past performance, but Indian stock index funds have generally given a solid 25% return but with foreign investments and tax-headaches with India, I tend to stay away from it. I don't own Indian S&P 500 mutual funds (NIFTY INDEX) but know friends who have in India and have done well.
I researched into these but the best is to go with an Index fund (Direct) option if you are interested. Similar to mutual funds in the US, pay attention to entry-load,exit-load fees and expense ratios. The expense ratios for a "direct" fund is usually lesser as it will follow a NIFTY INDEX like the S&P Index in the States and there is no advisor involved.
Given the consistent, long term depreciation of the rupee, a majority of these gains are offset by currency devaluation.
You are right about the value of rupee. Sorry I should have been clear. The OP is most likely from India but resides in the States or is in India. For investors having ties back to India, investing in mutual funds in India is an option and can be a good investment but not for investors who don't have any ties to India. Hope that makes sense. If I were to invest $10000 in a S&P fund here in the states, it will probably give me 8% - 9% return where as in India it is an easy 15-25% return atleast historically depending on funds. But due to constant change in tax-laws/rules, it is becoming a challenge to invest in India.
True, but how many Indians actually go back to India? :mrgreen:

Everyone aspires to go back to their home country, but how many truly leave? Half of my Indian friends in grad school swore they were going back. That was 20 years ago, and they're all still here!

Most of them bought condos in Bangalore too, and now they're complaining that they can't sell them or they can't easily repatriate the money. Plus the rupee devalued 50%, offsetting any gains.

Valuethinker
Posts: 34680
Joined: Fri May 11, 2007 11:07 am

Re: Investing in Indian Stock Market - Fund selection

Post by Valuethinker » Sat Jan 20, 2018 4:04 am

uberational44 wrote:
Fri Jan 19, 2018 12:01 pm
Valuethinker wrote:
Fri Jan 19, 2018 9:14 am
uberational44 wrote:
Fri Jan 19, 2018 8:26 am
I would highly recommend the emerging markets ETF by Vanguard. There might be great returns in the Indian stock market, but you might find those returns being eaten up by currency fluctuations...
The conventional problem with the ETFs is a heavy weighting towards China. Diluting any exposure to India.
I agree. Still, it has exposure to Brazil, Russia, India and China. A variety of countries would even out currency volatility.
Those exposures are relatively small.

Cannot check now but C 40 per cent last I checked to China. And also Taiwan. China is the main driver of EM indices especially given impact on Brazilian exports.

Valuethinker
Posts: 34680
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Re: Investing in Indian Stock Market - Fund selection

Post by Valuethinker » Sat Jan 20, 2018 4:06 am

topcatin wrote:
Fri Jan 19, 2018 12:30 pm
unclescrooge wrote:
Fri Jan 19, 2018 12:09 pm
topcatin wrote:
Fri Jan 19, 2018 9:32 am
Investing in Indian Stock Market is great but don't you need to have an ADAR card and bank account associated with it? I am not sure if it is open to international investors. The returns on Indian stock index funds are in the 25-33% vicinity easily/year. I know all bogleheads including me should never look at past performance, but Indian stock index funds have generally given a solid 25% return but with foreign investments and tax-headaches with India, I tend to stay away from it. I don't own Indian S&P 500 mutual funds (NIFTY INDEX) but know friends who have in India and have done well.
I researched into these but the best is to go with an Index fund (Direct) option if you are interested. Similar to mutual funds in the US, pay attention to entry-load,exit-load fees and expense ratios. The expense ratios for a "direct" fund is usually lesser as it will follow a NIFTY INDEX like the S&P Index in the States and there is no advisor involved.
Given the consistent, long term depreciation of the rupee, a majority of these gains are offset by currency devaluation.
You are right about the value of rupee. Sorry I should have been clear. The OP is most likely from India but resides in the States or is in India. For investors having ties back to India, investing in mutual funds in India is an option and can be a good investment but not for investors who don't have any ties to India. Hope that makes sense. If I were to invest $10000 in a S&P fund here in the states, it will probably give me 8% - 9% return where as in India it is an easy 15-25% return atleast historically depending on funds. But due to constant change in tax-laws/rules, it is becoming a challenge to invest in India.
If US resident avoid pfic funds like the plague, I believe. So that would include Indian mutual funds?

gotester2000
Posts: 377
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Re: Investing in Indian Stock Market - Fund selection

Post by gotester2000 » Sat Jan 20, 2018 5:32 am

zenmusic wrote:
Thu Jan 18, 2018 4:40 pm
Hello all,

Wanted to get recommendation on a equity portfolio for Indian Stock Market. With lack of good index funds, here are 3 mutual funds I am thinking of building equity portfolio with.

1) IDFC Focused equity fund ( Large Cap equity fund )
2) L & T India value fund ( Multicap Equity fund )
3) HDFC Small cap fund (small cap equity fund

My goal is well diversified, low cost and tax efficient. Only concerned with Equity portfolio for now. Once this is done, will include Bonds.

Any bogleheads versed with Indian stock market portfolios?

Thanks,
Sid
1. If you are a US person(NRI/green card/citizen) most fund houses will not allow you to invest in their schemes in India due to FATCA complications.
2. Active funds have significant alpha over benchmark indexes and etf.
3. You can open an account with a stock broker and invest in stocks of top 2 companies in 7-8 leading categories - it will be a well diversified, low cost, low taxes and good return equity portfolio - all this makes sense if you are going to invest in rupees else I would not bother.

david1082b
Posts: 238
Joined: Fri Jun 09, 2017 12:35 pm

Re: Investing in Indian Stock Market - Fund selection

Post by david1082b » Sat Jan 20, 2018 8:18 am

topcatin wrote:
Fri Jan 19, 2018 12:30 pm
unclescrooge wrote:
Fri Jan 19, 2018 12:09 pm
topcatin wrote:
Fri Jan 19, 2018 9:32 am
Investing in Indian Stock Market is great but don't you need to have an ADAR card and bank account associated with it? I am not sure if it is open to international investors. The returns on Indian stock index funds are in the 25-33% vicinity easily/year. I know all bogleheads including me should never look at past performance, but Indian stock index funds have generally given a solid 25% return but with foreign investments and tax-headaches with India, I tend to stay away from it. I don't own Indian S&P 500 mutual funds (NIFTY INDEX) but know friends who have in India and have done well.
I researched into these but the best is to go with an Index fund (Direct) option if you are interested. Similar to mutual funds in the US, pay attention to entry-load,exit-load fees and expense ratios. The expense ratios for a "direct" fund is usually lesser as it will follow a NIFTY INDEX like the S&P Index in the States and there is no advisor involved.
Given the consistent, long term depreciation of the rupee, a majority of these gains are offset by currency devaluation.
You are right about the value of rupee. Sorry I should have been clear. The OP is most likely from India but resides in the States or is in India. For investors having ties back to India, investing in mutual funds in India is an option and can be a good investment but not for investors who don't have any ties to India. Hope that makes sense. If I were to invest $10000 in a S&P fund here in the states, it will probably give me 8% - 9% return where as in India it is an easy 15-25% return atleast historically depending on funds. But due to constant change in tax-laws/rules, it is becoming a challenge to invest in India.
"Easy 15-25% return"? Huh? This is not how reality works. The experience of every nation in the past shows that stock returns are not easy and are not predictable going forward either. How come India crashed in 2008? Not so easy really. Easy imples you can buy and hold and be guaranteed a return, not have a 50% crash due to a crisis that didn't even have anything to do with your nation.

I imagine Indian stock index funds are a recent innovation, only appearing during recent huge bull markets or just before. Why not look at the returns for Indian indexes from as far back as you can go, to give a better understanding? Americans don't use the last 8 years of fund returns as a proxy to understand their historical returns.

topcatin
Posts: 78
Joined: Tue Sep 15, 2015 6:58 am

Re: Investing in Indian Stock Market - Fund selection

Post by topcatin » Mon Jan 22, 2018 11:36 am

david1082b wrote:
Sat Jan 20, 2018 8:18 am
topcatin wrote:
Fri Jan 19, 2018 12:30 pm
unclescrooge wrote:
Fri Jan 19, 2018 12:09 pm
topcatin wrote:
Fri Jan 19, 2018 9:32 am
Investing in Indian Stock Market is great but don't you need to have an ADAR card and bank account associated with it? I am not sure if it is open to international investors. The returns on Indian stock index funds are in the 25-33% vicinity easily/year. I know all bogleheads including me should never look at past performance, but Indian stock index funds have generally given a solid 25% return but with foreign investments and tax-headaches with India, I tend to stay away from it. I don't own Indian S&P 500 mutual funds (NIFTY INDEX) but know friends who have in India and have done well.
I researched into these but the best is to go with an Index fund (Direct) option if you are interested. Similar to mutual funds in the US, pay attention to entry-load,exit-load fees and expense ratios. The expense ratios for a "direct" fund is usually lesser as it will follow a NIFTY INDEX like the S&P Index in the States and there is no advisor involved.
Given the consistent, long term depreciation of the rupee, a majority of these gains are offset by currency devaluation.
You are right about the value of rupee. Sorry I should have been clear. The OP is most likely from India but resides in the States or is in India. For investors having ties back to India, investing in mutual funds in India is an option and can be a good investment but not for investors who don't have any ties to India. Hope that makes sense. If I were to invest $10000 in a S&P fund here in the states, it will probably give me 8% - 9% return where as in India it is an easy 15-25% return atleast historically depending on funds. But due to constant change in tax-laws/rules, it is becoming a challenge to invest in India.
"Easy 15-25% return"? Huh? This is not how reality works. The experience of every nation in the past shows that stock returns are not easy and are not predictable going forward either. How come India crashed in 2008? Not so easy really. Easy imples you can buy and hold and be guaranteed a return, not have a 50% crash due to a crisis that didn't even have anything to do with your nation.

I imagine Indian stock index funds are a recent innovation, only appearing during recent huge bull markets or just before. Why not look at the returns for Indian indexes from as far back as you can go, to give a better understanding? Americans don't use the last 8 years of fund returns as a proxy to understand their historical returns.

Completely agree that India crashed in 2008 and so did we in the States. I also agree we cannot speculate and predict. I went by the 15-25% return by looking at what historically the Indian-stock Index has returned and it has not been that long like in the US where you can go back easily 20+ years. Leaving the Indian Stock Index aside, on the flip-side the Indian banks have a fixed-deposit similar to CD's offered in the States which gives a 7-8% rate return :). This rate has been consistently offered by the bank for years. Again, all this is great only if you have ties back to India. I know a lot of people who left for good and never returned back. You have people on both sides of the isle :)

zenmusic
Posts: 8
Joined: Mon Jul 10, 2017 1:31 am

Re: Investing in Indian Stock Market - Fund selection

Post by zenmusic » Wed Feb 07, 2018 2:53 pm

topcatin wrote:
Fri Jan 19, 2018 12:30 pm
unclescrooge wrote:
Fri Jan 19, 2018 12:09 pm
topcatin wrote:
Fri Jan 19, 2018 9:32 am
Investing in Indian Stock Market is great but don't you need to have an ADAR card and bank account associated with it? I am not sure if it is open to international investors. The returns on Indian stock index funds are in the 25-33% vicinity easily/year. I know all bogleheads including me should never look at past performance, but Indian stock index funds have generally given a solid 25% return but with foreign investments and tax-headaches with India, I tend to stay away from it. I don't own Indian S&P 500 mutual funds (NIFTY INDEX) but know friends who have in India and have done well.
I researched into these but the best is to go with an Index fund (Direct) option if you are interested. Similar to mutual funds in the US, pay attention to entry-load,exit-load fees and expense ratios. The expense ratios for a "direct" fund is usually lesser as it will follow a NIFTY INDEX like the S&P Index in the States and there is no advisor involved.
Given the consistent, long term depreciation of the rupee, a majority of these gains are offset by currency devaluation.
You are right about the value of rupee. Sorry I should have been clear. The OP is most likely from India but resides in the States or is in India. For investors having ties back to India, investing in mutual funds in India is an option and can be a good investment but not for investors who don't have any ties to India. Hope that makes sense. If I were to invest $10000 in a S&P fund here in the states, it will probably give me 8% - 9% return where as in India it is an easy 15-25% return atleast historically depending on funds. But due to constant change in tax-laws/rules, it is becoming a challenge to invest in India.

So I should have clarified in my OP. It's not for me it's for my mother who resides in India. I do reside in US and my investments are all low cost index funds. As I start to build a portfolio for my mom, I just found it harder and harder to utilize the same bogleheads principles for Indian stock market. I was just curious to understand how the bogleheads in India invest in Indian stock market. How do they choose funds to create a portfolio?

WhiteMaxima
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Joined: Thu May 19, 2016 5:04 pm

Re: Investing in Indian Stock Market - Fund selection

Post by WhiteMaxima » Wed Feb 07, 2018 3:43 pm

Why single market? it is too risk. political, currency, economical. just by total int'l fund you will couple of % of india.

SlowMovingInvestor
Posts: 602
Joined: Sun Sep 11, 2016 11:27 am

Re: Investing in Indian Stock Market - Fund selection

Post by SlowMovingInvestor » Wed Feb 07, 2018 3:49 pm

WhiteMaxima wrote:
Wed Feb 07, 2018 3:43 pm
Why single market? it is too risk. political, currency, economical. just by total int'l fund you will couple of % of india.
The OP said his mother (who is presumably an Indian resident) wants to invest in the Indian stock market. Even if Indian residents can hold intl funds, presumably she wants to be exposed to the Indian market as much as possible.

I can't say much about funds resident in India, but I've seen that US based iShares ETFs/funds that follow the Indian market tend to have fairly high expense ratios, 0.75%- 0.93% or so. Either the transaction costs are high (hard to believe that is so for large stocks), or someone's making money :).

If India resident Index funds are that expensive, it might make sense to get active funds after all ! I'm also not sure how efficient the Indian market is, how good the indexes which cover India are etc. I've seen that US based active Indian Mutual funds have outperformed index ETFs.

gotester2000
Posts: 377
Joined: Sun Nov 12, 2017 1:59 am

Re: Investing in Indian Stock Market - Fund selection

Post by gotester2000 » Thu Feb 08, 2018 12:51 am

zenmusic wrote:
Wed Feb 07, 2018 2:53 pm
topcatin wrote:
Fri Jan 19, 2018 12:30 pm
unclescrooge wrote:
Fri Jan 19, 2018 12:09 pm
topcatin wrote:
Fri Jan 19, 2018 9:32 am
Investing in Indian Stock Market is great but don't you need to have an ADAR card and bank account associated with it? I am not sure if it is open to international investors. The returns on Indian stock index funds are in the 25-33% vicinity easily/year. I know all bogleheads including me should never look at past performance, but Indian stock index funds have generally given a solid 25% return but with foreign investments and tax-headaches with India, I tend to stay away from it. I don't own Indian S&P 500 mutual funds (NIFTY INDEX) but know friends who have in India and have done well.
I researched into these but the best is to go with an Index fund (Direct) option if you are interested. Similar to mutual funds in the US, pay attention to entry-load,exit-load fees and expense ratios. The expense ratios for a "direct" fund is usually lesser as it will follow a NIFTY INDEX like the S&P Index in the States and there is no advisor involved.
Given the consistent, long term depreciation of the rupee, a majority of these gains are offset by currency devaluation.
You are right about the value of rupee. Sorry I should have been clear. The OP is most likely from India but resides in the States or is in India. For investors having ties back to India, investing in mutual funds in India is an option and can be a good investment but not for investors who don't have any ties to India. Hope that makes sense. If I were to invest $10000 in a S&P fund here in the states, it will probably give me 8% - 9% return where as in India it is an easy 15-25% return atleast historically depending on funds. But due to constant change in tax-laws/rules, it is becoming a challenge to invest in India.

So I should have clarified in my OP. It's not for me it's for my mother who resides in India. I do reside in US and my investments are all low cost index funds. As I start to build a portfolio for my mom, I just found it harder and harder to utilize the same bogleheads principles for Indian stock market. I was just curious to understand how the bogleheads in India invest in Indian stock market. How do they choose funds to create a portfolio?
Use morningstar or valueresearch to select funds :

1. Do a 3 fund active mf portfolio - 1 large cap, 1 mid cap and 1 small cap in different fund houses

OR

2. Choose a couple of multi cap MF schemes.

Invest using direct mode in growth equity schemes - LTCG of 10% has been recently introduced in equity.

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