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Diversify Across Styles

Diversification is not achieved by numbers; you should diversify across styles first…

I am 27 year old and have started SIP investments of Rs 2,000 per month in seven mutual funds since last month. Is this the correct portfolio? Do i need to add or delete any funds?
- Vinit



Schemes  Category  Rating  3-yrs ret (%)  5-yrs ret (%)
DSPBR Top 100 Equity  Large Cap ***** 10.78 15.34
ICICI Pru Dynamic  Multi Cap **** 12.41 14
IDFC Premier Equity  Mid & Small Cap ***** 15.04 20.2
HDFC Prudence Hybrid: Equity-oriented ***** 17.86 17.7
HDFC Top 200 Large & Mid Cap ***** 15.58 17.16
HDFC Taxsaver Tax Planning **** 14.76 10.91
HDFC Equity Multi Cap ***** 18.11 17.17
Returns as on April 26, 2011 Ratings as on March 31, 2011

While you have selected seven good funds, it is not the way to start investing with overlaps in fund categories. Diversification is not achieved by numbers; you need diversification in style as well as category of funds with the right investment allocation that will achieve long-term wealth creation. You have age on your side and we are recommending an aggressive portfolio of six funds for you. These are funds that offer diversification in style and investments. Allocate 25 per cent of your investments to HDFC Equity and Fidelity Equity; 15 per cent in DSPBR Micro Cap and IDFC Premier Equity Plan and the balance 20 per cent equally in BSL Dynamic Bond and AIG World Gold.

This portfolio should help you in the long run with wealth creation. Do make sure to track the performance of these funds at least once a year and make any changes to them if necessary.



Suggested Portfolio
Schemes  Category  Rating  3-yrs ret (%)  5-yrs ret (%)  
IDFC Premier Equity Mid & Small Cap ***** 15.04 20.2 
HDFC Equity Multi Cap ***** 18.11 17.17 
Fidelity Equity Large & Mid Cap ***** 12.5 15.04 
DSPBR Micro Cap Mid & Small Cap **** 12.88 NA 
BSL Dynamic Bond Debt: Income **** 8.8 8.78 
AIG World Gold International Not Rated NA NA 
Returns as on April 26, 2011 Ratings as on March 31, 2011


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