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A Top Blend

Fund selection must meld with tax awareness to make for a great investment combination

I have invested small amounts in Franklin Smaller Company Fund, HDFC Long Term Equity, ICICI Prudential Services Industry Fund, SNBP Select Midcap, UTI Opportunity and Magnum Global. I want to redeem some of them.

With passing time, so many funds become very unmanageable. Proof thereof would be that till now you must have numerous statements of different companies. While in the coming days, these might get consolidated into one, yet at the moment, confusion should be avoided.

Be that as it may, most of the amounts look to have been invested in a particular period of time. You should retain one or two funds out of these and we recommend Sundaram Select Midcap or UTI Opportunity. In the long run, the combination of these two makes for a more aggressive portfolio that would be very promising.

But one also has to consider that most of the funds in which you have invested would have exit loads, like Franklin Smaller Company Fund which came into being not too long back. Secondly, you must also see whether most of your investments are older than a year? If they are, then there would not be any tax implications, but if not, then the profit would be taxable. Therefore, correct thing to do would be to wait till the investment achieves a year’s maturity, so that whatever your profit is, it does not decrease by 10 per cent, which you would have to pay in the form of short-term capital gains tax.

However, if you want to retain this investment for a 8-to-10-year period, then you should consolidate the maximum amount of your money in UTI Opportunity or Sundaram Select Midcap.

I hold Reliance Growth Fund units in my name and separately in my wife’s name. I have been invested in the fund for the last two-and-a-half years, but have withdrawn from it somewhat around a month back. Should I invest in another Reliance fund? Please comment.

Reliance Growth is a good fund and Reliance fund house has a lot of equity funds, but most of them are not as promising as they were till 2006-07. So, instead of investing in any other Reliance family fund, one should go for some other fund. There are a lot of equity funds in the Reliance fund family which are either average performers now or are struggling. Some sectoral funds do good from time to time. But you should look for something else other than Reliance.


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