I had invested Rs 25,000 each in HDFC Top 200, HSBC Equity, Reliance Growth and Magnum Taxgain in April 2009. At the time of investment, all of these funds were 5-star rated, but now I notice that their ratings have fallen to a 4-star level. Have I bought into good funds or not? Also, tell me where to invest a sum of Rs 2-3 lakh for a period of around 3 years.
- M. Amarnath
Your fund selection is good as all of the above-mentioned funds have a good track record. Picking funds through the 5-star rated method is a good way of selecting top-notch funds. But do note that 4-star rated funds are also “investment-grade”. Though the above funds’ ratings have come down to four stars, they have been able to generate superior risk-adjusted returns over the past. So, you must stick to your funds.
Coming to your second query, you can consider investing the additional Rs 2-3 lakh in the same funds that you already have. You have built up a sound portfolio and increasing the number of funds that you hold puts an unnecessary burden of tracking them properly.
Do remember not to invest all the money in one go. Rather, divide the money into your existing funds and spread the investment over six months to one year. You can also think of adding one debt fund to provide stability to your portfolio.
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