Mutual Funds

Your fund portfolio

K Venkatasubramanian | Updated on January 23, 2018


I am a regular investor in mutual funds through the SIP (systematic investment plan) and lumpsum routes.

I intend to start another couple of SIPs where I would like to park ₹3,000 each. Is it better to choose HDFC Prudence or HDFC Balanced? Is HDFC Equity better or HDFC Top 200?

Pratik Doshi

Investing systematically every month is a good way to average the cost over the long term and accumulate a large corpus. Lumpsums require timing and the entire amount is exposed to market risks.

You have chosen all funds from the same house. In order to diversify, it is important to invest across different fund managers so that you benefit from varied styles and also avoid concentration risks.

HDFC Balanced has done better than HDFC Prudence over the last three years, though the latter does have a strong long-term track record. You can invest in HDFC Balanced.

Both HDFC Top 200 and HDFC Equity have done well over a 7-10 year time frame. However, since you already have a fund from the HDFC stable, choose another scheme from a different house.

Invest ₹3,000 in Franklin India Prima Plus, mainly a large-cap fund with minor exposure to mid-caps. The scheme has a proven track record.

I am 46 and work for a private company. I have ₹5 lakh in an FD with a nationalised bank. After tax deduction annually, I get around 6 per cent interest. It is due for renewal next month.

I don’t want to continue with the FD. Kindly suggest where I can invest this sum, so that it takes care of inflation. I will need this money after six years for my son’s college education.

I would like to invest in a scheme that gives maximum returns with low risk. I would also like to invest ₹5,000 from next month. Kindly suggest suitable schemes.

Suresh

As you have correctly noted, post-tax, fixed deposits give returns that generally tend to be lower than the inflation rate.

Since you need this money for your son’s education, you cannot take too many risks. But what you can do is invest the ₹5 lakh in an FD and take a monthly interest payout.

This monthly interest component can be invested in Canara Robeco MIP and Birla Sun Life MIP II – Wealth 25. These are quality monthly income plans and have delivered well over the last five years.

You will also get indexation benefit for staying invested for more than three years. So post-tax, you can expect to beat inflation reasonably.

Coming to the SIP you wish to start, you can invest ₹2,500 each in HDFC Balanced and L&T Equity. The former is a quality balanced scheme, while the latter is a large-cap scheme with a strong performance record.

I am 42. I know it’s a bit late for starting SIPs in mutual funds. My income is variable and ranges from ₹30,000 to ₹1 lakh a month depending on the fortunes of my business.

I have two children and wish to save for their education, marriage and for my retirement.

Mandar Kulkarni

It is never too late to start investing in funds for long-term goals. However, since you have variable income, it is challenging to suggest a suitable plan.

If you can save about ₹5,000, at least, after meeting all your monthly expenses, start a systematic plan in mutual funds.

In case of higher income in any month, you can put a small lumpsum in the chosen schemes.

Before doing all this, you must build an emergency fund worth three-six months’ expenses. You must also take a term cover and a medical insurance policy immediately, in case you have not already done so.

Since you are just starting out, go for schemes that invest predominantly in large-cap stocks. Once you gain comfort with investing in mutual funds, consider adding mid-cap funds later on.

Invest ₹2,500 each in ICICI Pru Focused Bluechip and Birla Sun Life Top 100. These schemes invest in large-cap schemes and have delivered over the long term.

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Published on April 12, 2015
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