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I invested in five diversified equity funds:
1. Franklin India Prima
2. HDFC Equity
3. Tata Pure Equity
4. DSPML Opportunities
5. HSBC Opportunities
I would like to stay invested for around 10 to 12 years. I would also like to invest around Rs 20,000 every month through a Systematic Investment Plan.
What do you think of my current investments? Is it wise to add Magnum Contra to my portfolio?
Where can I track the performance of these funds?
- Ross Finch
As far as your current investments go, you are on track. All the funds have good performance records.
Magnum Contra has performed well in the last few years. The fund manager, Sandip Sabharwal, has displayed the ability to pick the right stocks early enough to make the most of their upside potential. Read A great fund to invest in to see our view on this fund.
We would not recommend you add any more funds to your portfolio. Keep a track of your funds and consider a shift to another fund or an addition to your portfolio only if your current funds start consistently lagging in their performance.
Continue to invest in the current funds via an SIP. It is the best way to invest in a fund. A time horizon of 10-12 years should hold your equity portfolio in good stead.
You could log onto our website, Value Research Online, to see the performance of your funds. You could also set up a portfolio there to track it.
We also publish a monthly magazine, Mutual Fund Insight, that analyses mutual funds.
I am planning to invest in high return, low-risk funds. Since these funds publish their portfolios, why must I invest in them? Can I not just invest in the companies they have invested in?
Am I too smart or the opposite?
- Sathyan Nair
The portfolio of a mutual fund is never static; it keeps changing.
A fund manager forms a view about a company and invests in it if he finds the investment worthy.
Once his targets are met, or if his view changes due to any other reason, he sells the stock and looks for other options. Therefore, keeping a close track of the fund's portfolio on an individual basis and trying to closely follow the fund manager is bound to be both tough and time consuming.
The essence of investing in a mutual fund is hassle-free and convenient investing. You will miss out on both.
Also, a fund manager has to declare his investments periodically. During the time between his last and current disclosure of portfolio (tells you how much he has invested and where), he might have sold some stocks at a great price. But, by the time he lists the changes in his portfolio and you decide to follow suit want to sell, the price of that stock may have fallen. Or he may have bought some stocks at a cheap rate. But, by the time you go to buy them, they may be overvalued.
We believe that an individual should allocate his time to investment decisions in proportion to what they contribute to his income. If trying to follow a fund manager starts eating into the time you need to devote to your primary occupation, it may not be worth it.
Lastly, a fund manager has the muscle of crores of rupees through which he can build a diversified portfolio. An investor in his individual capacity may not be able to build such a portfolio for the lack of such a huge investment amount.
For instance, you may have Rs 5,000 to invest in a mutual fund but you will not be able to buy 20 stocks with it.
As a result, your investments will lack diversity and balance.
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