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Making a Choice

For long-term investing, build a portfolio that is built on the core and satellite principle

I am salaried person and want to invest Rs 5,000 monthly across five funds. Kindly suggest which one to select from HDFC Top 200, Reliance Regular Savings, IDFC Premier, SBI PSU or any other fund? I have a ten year time frame
- Abhishek Agarwal

Investing in mutual funds through SIPs works well especially over a ten-year time frame. You are embarking on a good start. The funds that you have short-listed are good except SBI PSU, which is a very recent fund and is yet to establish a track record and performance. If diversity is what you are looking at with 5 funds; its not the best way to approach. We suggest you take a core and satellite investment philosophy, wherein you allocate 30:70 in core and satellite funds. The core funds will be those with an exposure to large cap funds. And the satellite will have exposure in mid- and small-cap funds. This way, you will get the necessary boost on the combined portfolio returns in the initial years. As you approach the end of your investment horizon, you can move your investments into only large-cap funds.

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