Invest with a plan to achieve your financial goals
11-Jan-2011 •Research Desk
What is your view on my portfolio? Is ICICI Prudential ACE a right choice for a blue-chip fund? I would like to discontinue the SIP in UTI Opportunities and start one in Reliance Banking of Rs 3,000. I am sure it’s a theme that will not go out of favour. Your view? Once the DTC comes into effect, I will have to replace the tax saving funds. Which ones must I replace them with? Or should I just increase allocation to the existing funds?
Since we have no idea when the systematic investment plans (SIPs) in each of the funds commenced, we assumed that they all did so on the same date and arrived at a few conclusions on your portfolio.
No one can fault you for your choice of funds, which is excellent. When analysed from the aggregate portfolio composition point of view, it’s also a fairly well diversified one. However, since you want to invest in thematic funds as well as have an exposure to mid- and small-cap stocks, then it would be wise to increase your large-cap exposure. If you go with the suggested allocations, the large-cap exposure rises to 65 per cent.
ICICI Prudential ACE is not a mutual fund but a Unit Linked Insurance Plan (ULIP) from ICICI Prudential Life Insurance. Hence we have refrained from including it in our analysis of your portfolio. The mutual funds which focus on bluechip companies are Franklin India Bluechip and IDFC Imperial Equity.
You say that you want to replace the tax saving funds once the DTC comes into effect. However, you cannot replace it with any other equity linked savings scheme (ELSS) because none of them will qualify for the tax break under Section 80C. Till the DTC comes into effect, you can continue with the two funds that you currently do an SIP into since both are good offerings.
You want to discontinue your SIP in UTI Opportunities, why? What made you invest in the fund in the first place? Has anything changed from your earlier view that prompts you to this decision? You seem to be very positive on the fortunes of the banking sector. However, do realise that most fund managers are betting heavily on that sector right now. If you go for a banking fund your exposure to that sector increases dramatically. We did include the fund you suggested and the overall exposure of your portfolio to Financial Services stands at 26 per cent.