I began investing in mutual funds in June 2005 and right now they comprise 70 per cent of my liquid assets. Most of my investments have been lump sum and not an SIP. I am 50 years old and propose to hold the funds for a period of five years. Please suggest measures to improve the quality of my portfolio.
-N Nachiappan
One look at the ratings of your funds is sufficient evidence of the quality of your portfolio. We must congratulate you for the excellent fund selection.
A closer look reveals that 49 per cent of your portfolio is invested in large cap companies, 38 per cent in mid caps and another 13 per cent in small cap companies. You have achieved this through seven large-cap oriented funds, two mid- and small-cap funds and three other funds. We would like to point out that the returns generated through investment in these seven different large-cap oriented funds can be accomplished by just two or three core holdings. It is here that there is scope for trimming your portfolio.
You could look at retaining Reliance Vision, Magnum Contra and HDFC Equity. Furthermore, any future investments should be limited to these funds. Do not add anymore funds to your portfolio but continue to keep a close eye on the performance of your funds vis-à-vis the diversified equity peer group.
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This article was originally published on September 20, 2007.
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