I want to start a systematic investment plan (SIP) of Rs 5,000 per month. I have picked HDFC Top 200 (Rs 1,000) and IDFC Premier Equity Plan A (Rs 2000). Are these two good funds? Could you suggest one more fund in which I can invest the remaining Rs 2,000? I am currently invested in Reliance Vision, SBI Infrastructure Fund Series I, ICICI Prudential Infrastructure and Sundram BNP Paribas Select Midcap. Should I continue to hold them or should I exit?
- Nimit
Since you have not mentioned the amount that you have invested in the funds that you already have in your portfolio, it's not possible for us to know your exposure to these funds. For any long term portfolio, diversified large-cap funds that can generate more stable returns in the long run should form the core, accounting to around 80 per cent. Funds investing in mid-cap stocks or companies from a specific theme or sector tend to be more volatile, hence are unfit as a portfolio's core holdings.
Funds like HDFC Top 200, BSL Frontline Equity, and Magnum Contra are some of the good large-cap diversified equity funds that have proved their suitability as core funds. You may consider investing equally in any two of these via SIP.
While Reliance Vision (diversified equity) is an average fund, ICICI Prudential Infrastructure (thematic fund) and Sundaram BNP Paribas Select Midcap (Mid-cap fund) are good performing funds. You may continue holding them. Since you already have exposure to an infrastructure fund, you may exit SBI Infrastructure Fund Series I (close-end fund) when it becomes due for redemption in July 2010. Similarly, do not invest in another mid-cap fund (IDFC Premier Equity) when you already have one in your portfolio.
This article was originally published on May 28, 2010.
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