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Invest in consistent funds with proven track records across categories & fund houses to get the right diversification…

I am 48 and my husband is 51. We have invested in DSPBR Micro Cap Regular, Magnum Emerging Business, Tata Dividend Yield , Birla Sun Life Dividend Yield Plus and HDFC Top 200. We are interested in building a corpus for a long term goal of 12 to 15 years from now. We do not have any commitments with our children. Is it worth keeping these investments for a long time?- Buvana

Fund Scheme  Category  Rating  3-yrs ret (%)  5- yrs ret (%)
BSL Dividend Yield Plus Mid & Small Cap ***** 26.89 20.82
DSPBR Micro Cap Mid & Small Cap **** 21.63 NA
HDFC Top 200 Large & Mid Cap ***** 19.99 20.57
Magnum Emerging Businesses Mid & Small Cap *** 20.88 17.69
Tata Dividend Yield  Mid & Small Cap **** 21.45 20.52
Return as on July 25, 2011, Rating as on June, 2011
Investing in five funds of which four are mid- and small-cap fund does not amount to diversification. You need to invest in good and consistent funds with a proven track record across categories of funds and fund houses to get the right diversification. Your current investments do not offer you any diversification in style. As you still have 12-15 years investment horizon adopt an investment philosophy such as the core and satellite approach to build a portfolio of funds that offers diversification and will help in achieving long-term wealth creation. This approach will provide the necessary stability and growth for long-term wealth creation. Ideally, you should look at investing 70-80 per cent in core funds and the remaining in satellite funds.
You can have 2-3 funds as core holdings comprising large-cap and large- and mid-cap funds, with the satellite component with sector funds and multi-cap funds to achieve long-term wealth appreciation. This way, the investments have the ability to absorb shocks as well as have the potential to earn higher returns over various market cycles.



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