I have four SIPs of Rs 5,000 each in HDFC Equity, Birla Mid Cap, Reliance Vision and Reliance Diversified Power. I am 32 and have a high risk appetite. Further, I intend investing for at least 10 years. I want to start two more SIPs of the same amount. Please suggest some schemes based on my existing exposure.
Your portfolio is quite aggressive with 57 per cent of your funds allocated to mid- and small-cap companies. The portfolio is overweight on the basic and engineering sector, with an allocation of more than 20 per cent to it. The bane of this skewness is your stake in Reliance Diversified Power. The fund invests close to 31 per cent of its assets in basic and engineering space, with a rather high concentration of mid- and small-cap companies.
In spite of this, we would not recommend that you exit or reduce your investment in Reliance Diversified Power. There are two reasons for this; firstly, it is one of the best performing specialty equity funds. Secondly, the other three funds in your portfolio are aligned well to maximize returns without taking on too much risk. This, however, does not mean that you should blindly maintain your holdings in Reliance Diversified Power. Today with the economy's insatiable hunger for infrastructure, the fund has performed very well, but like all industries, this segment will also go through natural business cycles of boom and bust.
As regards additional SIP, divide Rs 10,000 between your existing SIPs in HDFC Equity, Birla Mid Cap and Reliance Vision. We see no need to add or redeem any funds. With an increase in investment in these funds, your exposure to Reliance Diversified Power will reduce automatically.