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Lump Sum In Sectors

Investing a lump sum amount in sector funds might be a good idea if it's a small amount…

I invested Rs 17,000 in Birla Sun Life Advantage Fund's NFO in 1995. The value of the investment is now more than Rs 3 lakh. Since, the said fund is not performing as good as some other funds, I want to churn it and would like to invest this entire amount in Reliance Banking Fund, Reliance Pharma Fund and DSPBR Top 100 Equity. Kindly suggest how I should invest this Rs 3 lakh in these funds—lump sum or SIP?
- Pradeep S. Choumal

Congratulations. You are a beneficiary of long-term investing. The performance of BSL Advantage, a large- and mid-cap fund has not been as impressive as it used to be and the fund has been losing out to better performers in the category. Your decision to exit this fund is a good move. By selecting two sector funds to invest your gains you are exposing your investments to greater risks than a broad diversified fund such as BSL Advantage. You should be aware of the risks associated with these funds and invest not more than 10 per cent of your investments in these funds. Investing in lump sum in sector funds may be a better idea, but when investing in DSPBR Top 100 Equity, a large-cap fund, you should invest through SIPs. You can invest the redeemed sum of Rs 3 lakh into a liquid fund and initiate SIPs as well as staggered lump sum investments in the sector funds to spread your investment risks.

Schemes  Category  Rating  3-yrs ret (%)  5-yrs ret (%)
BSL Advantage Large & Mid Cap *** 4.25 8.19
DSPBR Top 100 Equity Large Cap ***** 10.07 16.65
Reliance Banking Banking Not Rated 24.46 26.62
Reliance Pharma Pharma Not Rated 33.05 24.82
Returns as on May 27, 2011 Ratings as on April 30, 2011

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