The Hindu Business Line : Will my portfolio deliver?

I have initiated SIPs running over various time-frames in 2004 and 2005, in Franklin India Bluechip and Prima Fund, HDFC Top 200, HDFC Equity, HDFC Long Term Advantage and HDFC TaxSaver, DSP ML Top 100 and Opportunities Fund, HSBC Equity, Sundaram Midcap, Sundaram Leadership Fund and Templeton India Pension Plan. My allocation to equities is about 10 per cent and I have adequate investment in insurance and PPF. Is this portfolio is large? If so, which funds should I axe? Does the core portfolio has the potential to deliver value? Should I continue with SIPs in the funds I mentioned even after they expire in June 05?

Ganapati Srinivas Most of the equity funds that you have chosen to include in your portfolio have an impressive track record. As you have extensively used systematic investment plans, your returns are not vulnerable to the timing of your initial investment. Finally, you have chosen a good mix of funds that invest in large and mid-cap stocks. Your portfolio, even in its current form, has the potential to deliver healthy returns over a five or a 10-year period. But with so many SIPs running over different terms, your portfolio is unwieldy, and may be difficult to track. Keeping track of your investments in equity funds is important for two reasons:

You need to keep tabs on whether the proportion of savings you have invested in equities is becoming too large for comfort.

You need to know if any of your funds is lagging the market and needs to be replaced, especially as you plan to hold your investments for the long term. In order to make your portfolio more amenable to tracking, you could streamline it as follows.

Do continue with the SIPs you have already committed to until their term expires, as there are costs associated with terminating an SIP mid-way.

Take stock of your investments once the SIPs come to an end. Thereafter, re-allocate your savings and commit yourself to SIPs in a smaller number of funds.

Retain Templeton India Pension Plan, as it is a debt-oriented balanced fund, which does not have any good substitutes. Among the pure equity funds, we suggest you retain HDFC Top 200 Fund, HSBC Equity, Franklin Prima, HDFC TaxSaver, and Sundaram Midcap in your portfolio.

For a systematic investing strategy to work well, it has to be continued over a fairly long period of say, 3, 5 or 10 years. Only this ensures that your investments span different phases in the equity market. We find that the bulk of your SIP investment would be between mid-2004 and 2005; during this period, the markets have settled at higher levels, retaining most of the gains of 2003. This makes it important for you to continue your SIP investments. Make your SIP commitments for 6 months at a time. This will ensure that you have some flexibility to review your investment once in six months and switch to a superior fund, if need be.

Take stock of the value of your investments every six months. Replace any fund that under-performs the Nifty for a year. Re-balance your portfolio, if you feel you have too much of your money in equity funds.

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

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