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Which are the best Five Star Funds?

Dhirendra Kumar addresses investors' queries on Fund ka Funda, a weekly financial show on Star News

Please advise best five star rated funds for sip.
For a long term investment, HDFC Top 200, DSP ML Equity, Magnum Contra and HSBC Equity can be considered for investment via SIP. All these are five star rated funds with a good performance history.

UTI Leadership Equity. Hold it or sell?
- Nirmal

UTI Leadership Equity was launched in January 2006 and has been a below average performer till date. You should consider investing in well rated funds which have a good track record. Exit from the fund and shift to better performers.

I want to invest Rs 1 lakh rupees for my 6 month old daughter. Where should I invest?
- Raj Sarawat

Choose from well rated performers like HDFC Top 200, Reliance Vision, Birla Frontline Equity or Sundaram Select Focus. Avoid investing the amount in one go and opt for a systematic investment plan to deploy the amount over 6-12 months.

In which mutual fund I should invest so that I can earn higher return with no risk?
- Shikher, Korba

No risk, No Return! Equity Mutual funds have associated market risks and it is impossible to time the future movement of the market. If you are risk averse, avoid investing in equity funds unless you have a long term horizon. If you opt for equity funds, invest via SIP.

I want to invest Rs 10000 per month through sip for 3 years. Which fund is better Kotak Opportunities or Reliance Growth?
- R. Arumugam

Both funds selected by you are amongst well rated performers. Kotak Opportunities is a large cap oriented fund which is less aggressive than Reliance Growth, which is mid cap heavy. You can split your investment equally into these funds.

I want to invest Rs 1000 pm for 20 years. Please advice where to invest.
- Ravindra

You should choose two diversified funds for your investment (Rs 5000 each) for 20 years. Some good options can be DSP ML Top 100, Birla Frontline Equity, Sundaram Select Focus or Reliance Vision.

What is the difference between MIN and KYC?
- Mukesh Bokaro

AMFI had initially come up with MIN (mutual fund identification number) for investments exceeding Rs 50,000. MIN was scrapped soon after its implementation. Recently, AMFI has again decided to have a MIN like procedure for investments which is now called KYC (know your customer). Currently, KYC is only applicable for investments exceeding Rs 50000 (one time)

How is Reliance Tax Saver fund?
- P.D Ahuja. Alwar

Reliance Tax Saver is a relatively new tax saver and has been an average performer till date. There are various well rated tax saver which you can opt for. Some good options are SBI Magnum Tax Gain, Sundaram Tax Saver, Birla Sun Life Tax Relied 96 and HDFC Tax Saver.

I want to invest Rs 40000 each in Reliance Diversied Power Sector fund, UTI Energy and DSP ML Tiger. Please advise me
- Ashutosh Kumar, Bhopal

You have selected well performing funds (barring UTI Energy – Which has been an average performer) but the overall portfolio is high on risk due to selection of all sectoral funds. Ideally, you should opt for diversified funds if you wish to mitigate the risk. If you are comfortable with above average risk, opt for DSP ML Tiger and two diversified equity funds.

Advice schemes of 10 per cent plus tax free return for 5 years. Amount is Rs 1 lac.
- Adwait Saxena

If you are risk averse, consider Arbitrage Funds. These funds have minimal associated risks and have delivered 6-8 per cent annually. The tax tratement is similar to equity funds. Some options – JM Arbitrage Advantage, SBI Arbitrage Opportunities.

Another option can be to consider equity diversified funds. Invest you amount via SIP of around 6-12 months.