I want to invest in technology-oriented funds. I had already started an SIP of Rs 2,000 per month in DSPML Technology.com. I am planning to start one in Birla Sun Life New Millennium. I don't mind doing this for a few years. I specifically choose these two funds since both of them do not have a 100 per cent technology sector investment.
-Laxmikant Kolapkar
We have one question for you: Why two sector funds? Your aim as an investor should be to diversify your portfolio. Even if you are very bullish on technology, you could consider a single sector fund. A look at the portfolios of both funds reveals that four out of the top five holdings are identical. Besides, most diversified equity funds also have technology as a large sector holding. So if you hold other such funds, you are well invested in this sector.
The days of tech companies delivering fabulous returns are over. They will still deliver, but you cannot expect stupendous growth from them anymore. And the rupee appreciation has certainly hit them hard.
You say that you picked up these two funds because they do not invest only in technology. But since almost 80 per cent of each of their portfolios is in tech, that is a very high concentration.
Birla Sun Life New Millennium is not a great performer compared with its peers. In fact, its ranking has consistently dipped from 2003 when it held the no. 1 slot to no. 5 in 2006. DSPML Technology.com, on the other hand, has been a great performer consistently doing well.
Besides taking second place to Technology.com in performance, New Millennium is also a more concentrated offering. New Millennium places larger bets. For instance, its top five stock holdings account for 42.22 per cent while it is 38.84 per cent for Technology.com.
Stick to just one sector fund. DSML Technology.com is a smart choice.
This article was originally published on August 21, 2007.
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