VR Logo

Diversify Properly

Having similar kind of funds in your portfolio doesn't offer worthwhile diversification or style…

I am investing Rs 10,000 Canara Robeco Equity Tax Saver, HDFC Taxsaver, ICICI Pru Tax Plan, Magnum Tax Gain and DSPBR World Gold fund through SIPs for two years. Is this the right approach to investing? I can add additional Rs 10,000 very month to invest; what other funds can I invest in?
- Madhavan

Schemes  Category  Rating  3-yrs ret (%)  5-yrs ret (%)
Canara Robeco Equity Tax Saver Tax Planning ***** 24.01 22.33
DSPBR World Gold  International Not Rated 5.36 NA
HDFC Taxsaver Tax Planning **** 22.12 16.22
ICICI Prudential Tax Plan Tax Planning **** 18.19 14.73
Magnum Taxgain Tax Planning *** 10.58 13.65
Returns as on June 30, 2011 Ratings as on May 31, 2011

In your hurry to invest, you have made investments mostly in tax planning funds. Having four tax planning funds does not offer your portfolio diversification or style. While Canara Robeco Equity Tax Saver and HDFC Taxsaver are good funds, the other tax planning are not the first choice investment in this category. Moreover, investing in an international fund works when your portfolio is well diversified and you are looking to gain from the global exposure that this fund brings.

You should build a portfolio which is well diversified and offers you stability and growth. We are suggesting a selection of five funds to form a growth-oriented portfolio with 70 per cent equity exposure. You can retain your investment in at most two tax planning funds and divert the rest of the investments equally across these five funds. Collectively they offer good diversification. Continue investing regularly and evaluating the performance of the funds at least once a year. You can also invest the additional sum that you have in this portfolio.

Suggested Portfolio
Schemes  Category  Rating  3-yrs ret (%)  5-yrs ret (%)
BNP Paribas Bond Regular Debt: Income ***** NA NA
Fidelity Equity Large & Mid Cap **** 18.44 19.51
HDFC Top 200 Large & Mid Cap ***** 21.6 20.63
ICICI Prudential Dynamic Large & Mid Cap **** 17.52 18.76
Reliance Equity Opportunities Multi cap **** 24.28 18.47
Returns as on June 30, 2011 Ratings as on May 31, 2011


Post Your Query