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These are my mutual fund investments:
UTI Master Plus 91
UTI Opportunity Fund
UTI Equity Fund
Tata Select equity
HDFC Top 200
HDFC Growth Fund
Birla Advantage fund
Birla Equity fund
Birla India opportunities fund
Birla Midcap fund
Tata Income fund
HDFC Balanced Fund
Which funds must I sell to decrease my portfolio?
I would like to stay invested in diversified equity funds (75%) and balanced funds (25%). My investment time frame is five to seven years.
- Susan D'Costa
To arrive at the right conclusion on your portfolio, we would not only need to see the various funds but also the amount of money you have invested in them. Then, we would get a much clearer idea of the actual proportion of equity (shares) and debt (fixed return) in your portfolio.
Also, we would be able to figure out whether your portfolio is centred on any market cap: mid-caps or large-caps. Or, whether a particular sector dominates your portfolio.
It is only then that we can give accurate and concrete suggestions for adjustment.
On our Website, each fund has star ratings that provides a fair evaluation of the long-term performance record of a fund. The ratings take into account performance and the risk taken to achieve those returns.
So, a higher rating will be assigned to a fund that has generated superior returns while taking a lesser risk as compared to its peers.
On this footing, three funds in your portfolio have faired poorly and have managed a two-star rating (five star being the highest): Tata Select Equity, UTI Equity and UTI Master Plus '91.
On the other end, HDFC Top 200, HDFC Growth, Birla Mid Cap are some of the funds which have a good long-term performance record.
Two funds -- HDFC Balanced and Tata Income -- would contribute to the debt allocation in your portfolio.
If you think your debt allocation is insufficient, consider HDFC Prudence, which is easily the pick of the balanced funds and has a much superior performance record than HDFC Balanced. Balanced funds as you are aware, invest in both equity and debt.
Similarly, you can find better options than Tata Income in the category of medium-term debt funds. The fund's current five-star rating is the result of an exceptional return that it delivered in one day in October 2005, rather than because of good performance on a consistent basis.
I have a SIP in the following funds:
HDFC Top 200 - 12 months
Fidelity Equity 6 months
Franklin Flexi Cap - 2 months
ICICI Discovery Fund 2 months
ULIP premium of Rs 1,500 per month
I plan to increase my investments in HDFC Top 200 and Fidelity. This is what I have selected for further investments.
DSPML Top 100 Equity Fund
Pru ICICI Emerging STAR Fund
HDFC Core & Satellite Fund
What do you think?
- C P Srinivasa
A look at your portfolio reveals one concern: you have only one fund (HDFC Top 200) which has a long track record of good performance.
The remaining funds are all quite new.
You have not mentioned how much each of these funds account for in your portfolio. But we would advise you to ensure that core funds account for a lion's share. Core funds are those that couple good returns with stability.
To understand what should constitute your core funds, read The best funds to invest in.
At the moment, HDFC Top 200 is the only fund in your portfolio which is suitable for the role of core holding. It must be said, though, that the other funds you plan to invest in have shown promise in their short performance history so far.
Pru ICICI Emerging STAR, for example, has raced away to deliver returns in excess of 90% in the last one year. But it is heavily into mid- and small-cap stocks, in line with its investment objective. Consider a small investment in it.
DSPML Top 100 has been an average performer in the category. But its performance is encouraging if we consider the fact that it has managed these return despite being a large-cap fund launched in the middle of the mid-cap boom.
Similarly, HDFC Core & Satellite Fund is a good offering. While both of them have the potential to emerge as funds that can play the role of core holdings in a portfolio, it is still early days for them.
These funds have seen only the good times so far and are yet to pass through testing times to prove their mettle.
In a nutshell, you can consider these funds in small proportion, while funds like HDFC Top 200 should lead the portfolio.
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