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Please tell me what is your view is about my portfolio: I have about Rs 50,000 invested in Birla Advantage Fund, Rs 2,000 in Birla Opportunities Fund (I will add to this through the systematic investment plan), Rs 7,500 in Morgan Stanley Growth Fund and Rs 11,500 in the HSBC India Opportunities Fund?

Shibu

Ernakulam

In our view, your choice of funds and the proportion invested in each fund offer scope for improvement. We usually advocate that investors should hold the core part of their portfolio in diversified equity funds with a five-year record of consistently beating the indices and their peers.

Based on this yardstick, we would suggest that you switch a significant portion of your portfolio to two of the following funds: HDFC Top 200 Fund, Franklin India Bluechip Fund, Templeton India Growth Fund or HDFC Equity Fund.

Based on the break-up you have provided to us, Birla Advantage Fund now accounts for about 70 per cent of your portfolio of Rs 71,000. Though this fund has improved its performance in 2003 and 2004 after unimpressive returns in the preceding three years, it has a less consistent track record than the funds suggested above.

As for your other choices, Birla India Opportunities fund and HSBC Opportunities Fund have fared well over the past couple of years; but both these funds are yet to build a track record over different market cycles, spanning a four or five year period. However, these funds can form a small part of your portfolio — say, 30 per cent.

Though Morgan Stanley Growth Fund has an unimpressive track record, exiting the fund now is not inadvisable. As the fund is close-ended, you can currently exit it only through the market route and this will involve cashing out at a substantial discount to the intrinsic value of your units.

You should consider switching a substantial portion of your investments — say, 60 per cent of it — into two of the five funds with a good five-year record.

Queries may be e-mailed to mf@thehindu.co.in, or sent by post to Business Line, 859/860 Anna Salai, Chennai 600002.

Aarati Krishnan

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