Investor Neophyte | Value Research It's a good strategy to start with a balanced fund and then move to other categories
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Investor Neophyte

It's a good strategy to start with a balanced fund and then move to other categories

I am new to investing and have started SIPs in five funds for Rs2,000 each from December 2010. This investment is for the next three years. I intend to use the accumulated corpus to make the down payment for a house that I plan to buy. Kindly advise me on my selection.
- Rakesh Ranjan

For someone who is new to investing, your selection of funds is good. However, purposely or inadvertently, you have ended up creating an aggressive portfolio. What makes your portfolio aggressive is a 40 per cent exposure to mid- and small-cap funds. Besides, another 40 per cent of the portfolio consists of multi-cap funds (which would also have investments in mid- and small-cap stocks).

In HDFC Top 200, a large- and mid-cap fund, you have a great fund that has weathered several market cycles and remained a top performer.

Another point to be noted about your portfolio is that both the multi-cap funds belong to the same fund house. This means that you will not get the benefit of diversification in style that you would have if you had invested in multi-cap funds belonging to two fund houses. You could have selected ICICI Prudential Dynamic or Quantum Long Term Equity instead of Reliance Regular Savings Equity. Both these funds have better ratings and better track records. As you have just started investing, you can still change over to these funds. Also, remember that multi-cap funds are aggressive funds that need to be monitored regularly. Make sure that you track their performance and make changes if the performance of any of them falters.

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