Aggressive Portfolio | Value Research Be aware of the risks that mid- and small-cap funds pose
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Be aware of the risks that mid- and small-cap funds pose

I have invested in five funds via SIPs over the past three years. Please let me know if these are good investments and whether there is a need to modify my holdings.
- Deep Kalra

You have selected good funds and all of them are rated highly by us. You have also demonstrated a regular investing temperament, especially through 2008 when the markets were down. The result of such discipline is an unrealised gain of Rs 2 lakh on a combined investment of Rs 2.97 lakh. The 90 per cent equity exposure via the five funds that you have has helped you make this significant gain. However, you should be aware that your portfolio is high on risk with two mid- and small-cap funds, besides a fund that has a large- and mid-cap exposure. Mid- and small-cap funds rise faster when the markets rise and also fall faster when the markets fall.

The fund whose performance has been disappointing is the infrastructure fund. It is a thematic fund that rides on a cycle and has narrow diversification. Such a fund can have a place in your portfolio but in a limited amount, provided you don’t have adequate exposure to the theme through your other diversified equity funds. Moreover, a turnaround in the infrastructure sector is expected. Unless you need the money urgently, you may hold on to the fund. However, there is a lesson herein: make it a habit to track your investments regularly and make necessary changes if the funds in your portfolio start to under perform.

Assorted Funds
Scheme Name   Category  Star Rating   3-year return (%)  5-year return (%)  
DSPBR Micro Cap Reg Mid & Small Cap ***** 0.63 - 
HDFC Mid-Cap Opportunities Mid & Small Cap ***** 6.97 - 
HDFC Top 200 Large & Mid Cap ***** 9.52 20.99 
DSPBR Top 100 Equity  Large Cap **** 4.88 20.35 
L&T Infrastructure  Infrastructure  ** -16.76 - 
Data as on January 19, 2011

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