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Selecting The Right Fund

Pick funds that have a good track record & high rating, and continue reviewing their performance

I have Rs 5,000 SIP in Reliance Equity Fund since mid 2010. However, the fund's performance has been going down steadily. I do not plan to withdraw the investments in this fund as I am hopeful it will turnaround. Should I invest the Rs 5,000 in another similar fund?
-- Sukanya Roy

The performance of Reliance Equity has been on the wane and you are right in stopping your SIPs in it. Most investors are optimistic about their investments and hold on to investments that go bad in the hope of a turnaround; you are no different. Considering you started investing in md-2010, your investments will not be much, but do realize that there is an opportunity loss that you incur by not utilizing the existing funds into a better performing fund which has scope for better returns.

Your strategy to start SIP investments in a similar fund is laudable. You should consider investing in BSL Frontline Equity or HDFC Top 200, which are amongst the best large- and mid-cap funds in the category.

There is a lesson for you; select a fund that has a good track record and performance history and high rating to begin with and continue reviewing the performance of your funds frequently to make any changes.

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