VR Logo

Diversify To Fare Better

Don't build a portfolio with funds of a similar style & from the same fund house…

I am 40 now and wish to work for 25 more years. I have equity exposure in stocks and mutual funds, but I have redeemed them all in the recent bull run for a healthy profit to fund a home for which the loan is a small amount. I now want to have a corpus at retirement age and can invest Rs 10,000 per month. I am not averse to strong equity exposure. I have chosen HDFC Top 200, HDFC Prudence and HDFC Equity; are these good funds? I wish to build a corpus of Rs 3 crore.
- Saugata Sen

It is encouraging to come across someone who has profited from investing and used the proceeds to buy a house. You still have 25 years to invest and going by your current contribution of Rs 10,000 a month towards investing, it will build a corpus of Rs 1.89 crore if the investments earn 12 per cent annualized returns or Rs 3.2 crore if the same investment earns 15 per cent. The key is in investing regularly and systematically.

Schemes  Category  Rating  3-yrs ret (%)  5-yrs ret (%)
HDFC Top 200 Large & Mid Cap ***** 18.81 17.03
HDFC Prudence Hybrid: Equity-oriented ***** 19.7 17.42
HDFC Equity Multi Cap ***** 20.55 16.86
Returns as on April 4, 2011 Ratings as on March 31, 2011

You have chosen really good funds that have a proven track record and performance history to match. However, it lacks in style diversification as all the funds are from the same asset management company. What you need is diversification in type of funds and numbers, which you can with the suggested portfolio of six funds that forms an aggressive portfolio with 80 per cent equity exposure. Make sure you continue investing regularly and track the performance of your investments at least once a year to check its progress or alter the holdings to achieve your goal of long-term wealth creation.

Suggested Portfolio
Schemes  Category  Rating  3-yrs ret (%)  5-yrs ret (%)
IDFC Premier Equity Plan  Mid & Small Cap ***** 18.09 19.72
HDFC Equity Multi Cap ***** 20.55 16.86
Fidelity Equity Large & Mid Cap ***** 16.33 14.88
DSPBR Micro Cap Reg Mid & Small Cap **** 14.15 NA
BSL Dynamic Bond Reg Debt: Income **** 8.89 8.76
AIG World Gold International Funds Not Rated NA NA
Returns as on April 4, 2011 Ratings as on March 31, 2011

Post Your Query