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Importance of Fund Selection

When building a portfolio, always start with an equity diversified fund…

I am 25 and started my career in July 2007. I started my SIP investment with Tata Infrastructure. The fund's returns are negative but I am expecting this sector to turn around this year and hence I am continuing this SIP. Later on, to diversify my portfolio, I added four other funds. Your comments please.
Mathusoothanan

If one looks at your portfolio right now, it is fairly well diversified. What's even interesting is the international flavour the portfolio has. However, there are numerous issues that need to be addressed here.
You got a lot of things right. You started investing early in a disciplined fashion via a systematic investment plan (SIP). Where you faltered was in fund selection. When building a portfolio, always start with an equity diversified fund, not a thematic or sector one. The latter should be added to your portfolio at a later stage. You did the reverse. Why are there two funds from the same fund house? With a portfolio of just five funds, each should have been from a different asset management company (AMC) to ensure complete diversity. You can continue with this portfolio but do ensure that the bulk of the investment goes into the ‘Equity: Large & Mid Cap’ funds and add another from the ‘Equity: Large Cap’ category.



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