I am 37 years old. I am investing for long-term (15-20 years) goals. I have the following monthly SIPs running over the last two years: Rs 7,000 each in Quantum Long Term Equity and Fidelity Equity, Rs 5,000 in HDFC Top 200, Rs 4,000 in DSP BR Top 100 and Rs 3,000 in Birla Sun Life Mid Cap.

I have average risk appetite and expect a return of 15 per cent annually. Should I exit Birla Sun Life Mid cap fund given its lacklustre performance and Fidelity Equity as L&T Mutual is not a top notch fund house? Please suggest funds to invest an additional Rs 12,000 a month.

SP We are glad to note that you have given yourself a reasonably long time frame to achieve your goals. We hope you have set yourself a quantifiable goal as well. For instance, wanting Rs 1 crore in 15 years would be a well-quantified goal. Take in to account the effect of inflation, when you build such goals.

Active mutual funds with a good track record hold the potential to deliver the return of 15 per cent that you are expecting. Do not be put off by the two-year record of your funds. The market, after witnessing a rally in 2010, was meandering aimlessly in 2011 and is currently a tad lower than where it was two years ago.

While Quantum Long Term Equity and DSP BR Top 100 have managed to keep your capital intact and generate negligible returns, the others would have marginally eroded your capital in this period. The current value of your holding in Birla Sun Life Midcap is about 5 per cent lower than your investment.

Cost averaging works well in a volatile market. So keep investing. But you can tweak your portfolio a bit. Since you can take some risks and have a long-term horizon, you need not have two large-cap funds. While both HDFC Top 200 and DSP BR Top 100 are good funds, the latter is a little less volatile. Hold it. Exit HDFC Top 200 and switch to HDFC Mid-Cap Opportunities. This fund will take care of your mid-cap exposure with relatively less volatility. Continue SIPs in Quantum Long Term Equity and DSP BR Top 100.

To exit or not

Birla Sun Life Midcap fund did slip in performance in 2010 and over a good part of 2011. But it appears to be on a slow comeback trail now. Its portfolio of stocks too looks promising and a little offbeat. If you are uncomfortable with the fund, you can stop the SIPs but continue holding it. Review performance over the next six months. Check if it beats its benchmark and keeps up with category average. If it does, you can even consider reviving SIPs. Otherwise switch to Religare Midcap.

Moving to Fidelity Equity, your concerns about the new management are not without basis. While L&T Mutual's debt funds have done well, their equity funds, mostly taken over from DBS Chola, have not been top of the league performers. In fact, their equity assets have not grown significantly since their takeover of DBS Chola in 2009.

But having taken over some top funds from Fidelity Mutual, the fund may put in some more effort to retain the past track record and ensure it does not suffer too much redemption.

That said, there could be many investors like you, who may prefer to exit. Such mass exits will cause outflows and prevent the fund from actively investing when it ought to. This may hit performance. If you are too worried, the only option is for you to exit. But given your investment time frame, we believe that you can afford to hold on for some more time. Continue SIPs until such time there is any change in fund manager. You can then stop SIP, hold the fund and watch for a year before taking a call. HDFC Equity is an alternative, if you wish to switch now.

You can invest the additional Rs 12,000 in Canara Robeco Balance (Rs 8,000) and Reliance Equity Opportunities (Rs 4,000) through systematic investment. The former will provide some debt exposure while the latter will invest across equity market-cap segments. SIPs of Rs 38,000 a month if invested for 15 years can yield Rs 2.5 crore, if they generate 15 per cent annually.

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