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Get Wealthy With SIPs

Investing in equity funds through SIPs is the right way to long-term wealth creation…

I invested Rs2 lakh in 5-star rated funds like HDFC Top 200, BSL Frontline Equity, Reliance Growth, IDFC Premier Equity and DSPBR Top 100 Equity. My horizon is above 15 years. Kindly suggest what percentage of amounts should I invest in various categories?
Manoj Kumar

Existing Portfolio
Schemes  Category  Rating  3-yrs ret(%)  5-yrs ret(%)
DSPBR Top 100 Equity Large Cap ***** 9.72 13.55
HDFC Top 200 Large & Mid Cap ***** 14.6 15.35
BSL Frontline Equity Large & Mid Cap **** 10.33 14.92
IDFC Premier Equity Mid & Small Cap ***** 14.31 18.37
Reliance Growth Mid & Small Cap **** 8.18 12.11
Returns as on May 11, 2011 Ratings as on April 30, 2011

Investing regularly through systematic investment plans (SIPs) in equity mutual funds is the right step towards long-term wealth creation. It is not clear if your investments are in lumpsum or through SIPs. If it is in lumpsum, you will be better of by initiating SIPs for a long-term investing strategy.

You should adopt a core and satellite approach when building a mutual fund portfolio. This will give your mutual fund portfolio the necessary stability and growth for wealth creation.

Ideally, you should look at investing 70-80 per cent in the core funds such as ‘Equity: Large Cap’ and ‘Equity: Large & Mid Cap’. The balance can go to satellite funds such as Equity: Mid & Small Cap as well as sector funds and thematic funds. The latter are all much more risky when compared to the core holdings. Yet, they are needed to offer necessary boost to your overall portfolio returns.

We suggest you re-think your investment in Reliance Growth. Consider substituting it with DSPBR Micro Cap or HDFC Mid-Cap Opportunities. Both funds fall in same category but have a proven track record and performance history on.

Finally, make sure that you invest regularly and systematically and track their performance periodically.

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