Mutual Funds

Your Fund Portfolio

K Venkatasubramanian | Updated on February 02, 2014


I am 38. I invest ₹2,000 each, through SIP mode, in the following schemes - HDFC Top 200, Franklin India Bluechip, HDFC Mid-Cap Opportunities, ICICI Pru Discovery and Birla SL Frontline Equity.

Since elections are due in a few months’ time, should I continue with these SIPs or pause till May/June 2014?

-Balaji

If your intention is to save for the long term, you should not be worried about any event, even if it happens to be something as important as election results.

True, in May 2009, we did have massive rallies on two successive days when indices hit the upper circuit within a few minutes of market opening.

But then, you should have already been invested at that time to reap the benefit. In 2004, markets corrected by over 30 per cent between January and May, but the next three years saw the best-ever rallies in the Indian markets. But this does not mean that there is a set pattern. In 2004, the economy was well-poised and was starting to grow at 8 per cent levels. In 2009, the markets rallied after a massive correction post the global financial meltdown in 2008.

If you have an investment horizon of 10-15 years — which is a must for achieving returns that beat inflation and reaching long-term goals — then blips of 10-15 per cent either way close to or after elections should not matter. Of course, your portfolio should consist of quality funds so that you gain from rallies.

So, continue investing through the SIP mode. If you need the money immediately, say, within one-two years, we suggest you move out of equity funds.

Coming to your portfolio, consider some modifications in it. You can stop further SIPs in HDFC Top 200 and Franklin India Bluechip as their performance over the past couple of years has not been very encouraging.

Though these schemes have an excellent long-term track record, you must wait for their performance to show improvement.

Instead, invest ₹2,000 each in ICICI Pru Top 100 and Axis Equity, two large-cap funds that have delivered well over the past few years. Retain HDFC Mid-Cap Opportunities, ICICI Pru Discovery and Birla Sun Life Frontline Equity.

Review the performance of the schemes in your portfolio once every year and take corrective action, as and when necessary. Also, invest in other avenues such as debt (PPF, RDs and NSC), gold and, if possible, real estate to create a balanced portfolio.

I have been investing ₹1,000 each in SBI Magnum Global, SBI Emerging Businesses, HDFC Top 200, HDFC Prudence, ICICI Pru Focused Bluechip Equity and Reliance Equity Opportunities through the SIP route.

Kindly analyse my portfolio and give feedback. Also, please suggest one more good fund to invest through SIPs.

- Arun Ravi

There are three points to keep in mind with regard to your selection of funds. For the amount that you are investing currently — ₹6,000 — you should not put your money in more than three schemes, as it would dilute your portfolio.

Next, you have chosen multiple funds from the same fund house, which would deprive you of the benefits to be gained from the investment styles of different scheme managers. There also appears to be very little focus in your choice of schemes, with funds having very varied mandates being chosen.

Retain ICICI Pru Focused Bluechip and Reliance Equity Opportunities.

While the former is a large-cap fund, the latter is a multi-cap fund with a strong mid-cap bias.

Both have a proven track record of delivering strong returns over the long term.

Invest ₹3,000 in ICICI Pru Focused Bluechip and ₹1,500 in Reliance Equity Opportunities.

HDFC Top 200 has been underperforming over the past couple of years as is the case with HDFC Prudence, a balanced scheme. Stop further SIPs in these funds and keep a tab on their performance.

Investing in either of the two mid-cap funds — SBI Magnum Global and SBI Emerging Businesses — must be based on your risk appetite. If you can take higher risks, invest the balance ₹1,500 in SBI Magnum Global.

But given that you had a balanced fund in your portfolio earlier, it may be advisable to put the amount (₹1,500) in HDFC Balanced, a quality hybrid fund.

Choose this option if you prefer less volatility in your portfolio.

You have also asked for another scheme to invest in. It is advisable to split the extra amount you wish to invest across the three schemes mentioned above.

Published on February 02, 2014

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