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Avoid Duplication

Reduce your holdings by doing away with duplicate funds to ensure proper portfolio diversification

I have SIP investments in HDFC Prudence, HDFC Top 200, HDFC MIP Long Term, DSPBR Micro Cap, Reliance Regular Savings Balanced, IDFC Premier Equity and BSL Frontline Equity. Is this a good selection for long-term investment of five years? I have additional Rs 2,000 a month to invest for my son for 5-15 years; please suggest a fund and your opinion on my investments.Anirban

Scheme Name  Category  Rating  3-yr ret (%)  5-yr ret (%)
Birla Sun Life Frontline Equity Large & Mid Cap **** 18.52 18.16
DSPBR Micro Cap Reg Mid & Small Cap **** 20.89  -
HDFC MIP Long-term Hybrid: Debt-oriented Conservative ***** 14.79 11.71
HDFC Prudence Hybrid: Equity-oriented ***** 24.73 19.41
HDFC Top 200 Large & Mid Cap ***** 22.2 19.36
IDFC Premier Equity Mid & Small Cap ***** 22.18 27.94
Reliance Regular Savings Balanced Hybrid: Equity-oriented **** 21.13 15.43
Rating as on 30th Jun 2011
Returns as on 13th Jul 2011

You have selected good funds, which are backed by performance history and proven track record. However, seven funds comprising two large- and mid-cap funds, two mid- and small-cap funds and two funds that are from the equity-oriented hybrid category does not amount to diversification. You need to reduce your holdings to 4-5 funds which be easily achieved by doing away with the duplicity of funds that you have from the same category. As for the additional Rs 2,000 that you have; invest in the existing funds as they are all good investment options for the long term. Make sure you invest regularly and track the performance of these funds regularly.

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