Mutual Funds

Your Fund Portfolio

K.Venkatasubramanian K Venkatasubramanian | Updated on February 11, 2018 Published on February 11, 2018

I have been investing for the past five years, through the SIP route, in the following funds: HDFC Balanced (G) – ₹49,657.90; HDFC Capital Builder – Dividend Reinvestment – ₹36,025; HDFC Equity – Dividend Reinvestment – ₹42,327; HDFC-Top 200 fund – Growth: ₹2,48,458 and HDFC-Top 200 fund – Dividend Reinvestment – ₹43,807.

Please help me rejig my portfolio. I am 50 years old and looking to continue investing for 10 more years.

Subramanian OA

Just as you need to invest in five to seven schemes to diversify your portfolio, you must also look to spread investments across fund houses. By investing in schemes of different asset management companies, you will be able to benefit from the varied styles adopted by their fund managers.

You will also be able to hedge yourself if a fund manager quits, as there are cases where several funds are managed by the same person. You should generally not invest in more than two schemes of the same house.

Also, you have taken the dividend reinvestment option.

From April 2018, the dividends of mutual funds will also be taxable at 10 per cent (excluding cess). So if you receive ₹1 as dividend, only 90 paise will get reinvested in the ‘dividend reinvestment’ option.

Please also be aware that dividend from any mutual fund scheme is given by deducting the value from the NAV.

Hence you would be better off putting your money in the growth option.

Coming to your portfolio, you have invested in four schemes from the same house. All four of them have delivered well over the long term. But there is a bit of portfolio overlap in your choices.

HDFC Equity and HDFC Top 200 have very similar top holdings in large-cap stocks. HDFC Equity also has significant mid-cap exposure.

Given that you already have a quality multi-cap fund in HDFC Capital Builder, you could exit the units of HDFC Equity and move the proceeds to HDFC Top 200. Please note that HDFC Equity is a quality fund and our recommendation is only specific to your portfolio.

You could consider starting a SIP in Invesco India Contra, a multi-cap fund with a track record of over 10 years.

You can retain the other funds in your portfolio. As your surplus increases, try to invest in a couple of more schemes from other houses.

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Published on February 11, 2018
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