I use dividends from my mutual fund investments for gradually purchasing shares of Infosys and TCS. I have so far accumulated 100 shares of each company. Is it a good idea? Please advise.
-A C Varman
There is nothing wrong with your strategy. It is a good idea to reinvest your returns in blue chip companies. And the best way to build your position in stocks is to gradually buy shares so that your average cost of acquiring such a stock is low. But you need to be mindful of the overall portfolio exposure to the technology sector. This is because most equity diversified funds have a large portion of their funds allocated to the technology sector, and within this sector, Infosys and TCS tend to be favourite picks. As a result you need to know your cumulative holdings in Infosys and TCS by including the shares held through your mutual fund holdings.
In order to assess this, you can use the portfolio tool on valueresearchonline.com which will view your portfolio holistically and give the exact exposure to these stocks.
This article was originally published on July 06, 2007.
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