The Hindu Business Line : FUND TALK

I have invested in the mutual funds mentioned in the list. I want to reduce my exposure from 32 funds to 10. Please suggest Top 10 Funds for further investments (after selling my current holding). Also suggest from the list 1. What are all the funds I need to hold, 2. What are on the funds for further investments.

My investments: ABN Amro Opportunities Fund, ABN Amro Equity, Birla Sun Life Infrastructure Fund, Birla Sun Life Top 100 Fund, Chola Mid cap Fund, Chola Multicap Fund, DSP ML Equity Fund, DSP ML India T.I.G.E.R.Fund, DSP ML Opportunities Fund, DSP ML Top 100 Equity Fund, Fidelity Equity Fund, Franklin Templeton India Flexi Cap Fund, Franklin Templeton India Prima Fund, HDFC Top 200 Fund, Kotak Mahindra Midcap Fund, Kotak Mahindra Opportunities Fund, Principal Infrastructure & Services Fund, Principal Large-cap Fund, Prudential ICICI Discovery Fund, Prudential ICICI Emerging Star Fund, Prudential ICICI Infrasture Fund, Reliance Growth Fund, Reliance Vision Fund, SBI Blue Chip Fund, SBI Magnum Multi-cap Fund, SBI Magnum Multiplier Plus 93, Sundaram CAPEX Opportunities Fund, Sundaram India Leadership Fund, Sundaram S.M.I.L.E. Fund, Sundaram Select Midcap Fund, Tata Equity Opportunies Fund, and UTI Leadership Equity Fund.

R. Sathiyamoorthy

Coimbatore

To prune your portfolio to ten funds, we will suggest the following approach:

Of the list of funds you own, DSP ML Opportunities, Franklin Prima, HDFC Top 200, Reliance Growth, SBI Magnum Multiplier 1993 and Sundaram Select Mid-Cap should form part of the core portfolio of ten.

You can add HDFC Equity, HDFC TaxSaver, Franklin Bluechip and SBI Magnum Contra to complete the core portfolio of the funds

You will get a good mix of large- and mid-cap funds with this portfolio.

We prefer funds with a track record of at least five years. The following funds have been around for a shorter period; we do, however, like their performance and investment approach. Prudential ICICI Discovery, Prudential ICICI Emerging Star, Sundaram Capex Opportunities, DSP ML Top 100 and Kotak Midcap. We suggest you own these dark-horse funds over at least a couple of years and cut your portfolio size by phasing out exposures in the others.

You should prune your portfolio over two years, as rushing to complete the process will not be a proper choice.

Even as you attempt this exercise, make sure you do not invest in new fund offers (unless there is a compelling theme) or belured by dividend announcements.

If you invest in so many funds and then decide to cut the portfolio to size, you will suffer sizeable costs. These will cut into your returns.Owning a laundry list of funds will make tracking and managing difficult. The quality of entry and exit decisions will suffer. In this backdrop, your idea to whittle the portfolio to ten appears right.

You can enhance exposures in the `chosen ten' through systematic investments plans. In the five dark horse funds (those with a track record of less than five years) indicated, do not add exposures; retain them.

Review the performance of the `chosen ten' at regular intervals. We believe the chosen ten plus the five dark-horses will deliver attractive returns over a five-year period.

S. Vaidya Nathan

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