VR Logo

Moderate Risk Profile

Investors who have moderate risk appetite should have the core of their portfolio in large-cap funds…

My age is 30 and I have Rs 50,000 surplus every month to invest through SIPs. Currently I am investing Rs 32,000 per month in seven mutual fund SIPs; HDFC Top 200, Fidelity Equity, BSL Frontline Equity, HDFC Prudence, HDFC Equity, Principal Emerging Blue Chip and Sundaram Select Mid Cap. I have moderate risk appetite and would like to increase my investments to Rs 50,000. Is my mix of mutual funds well diversified? Should I include Gold ETF in my portfolio? -Vinay

Fund Scheme  Category  Rating  3-yrs ret (%)  5- yrs ret (%)
BSL Frontline Equity Large & Mid Cap **** 15.46 17.86
Fidelity Equity Large & Mid Cap **** 16.24 17.82
HDFC Equity Multi Cap ***** 21.56 19.14
HDFC Prudence Hybrid: Equity-oriented ***** 23 19.35
HDFC Top 200 Large & Mid Cap ***** 18.11 19.06
Principal Emerging Bluechip Mid & Small Cap NR NA NA
Sundaram Select Midcap Mid & Small Cap **** 19.39 16.75
Return as on August,1, 2011, Rating as on July, 2011

You have selected good funds to build your mutual fund portfolio. However, in your hurry to invest across too many funds, you have not only invested in more funds than necessary; you have also selected funds that are similar and overlapping in theme. Having three large- and mid-cap funds or two mid- and small-cap funds does not result in diversification. For diversification you need to have funds across different categories that collectively work towards achieving a financial goal.
First build the core of your portfolio with large- and large- and mid-cap funds accounting for 70-80 per cent of your investments. You should definitely add large-cap funds such as DSPBR top 100 Equity or Franklin India Bluechip
. The remainder of your portfolio can be made of multi cap funds and mid- and small-cap funds, but select a fund which has a performance history and track record to invest in instead of Principal Emerging Bluechip fund. You can consider investing in HDFC Mid-Cap opportunities or IDFC Premier Equity fund which are highly rated in this category and also have a proven track record. You can consider investing in gold ETF, but make sure the investments are within five per cent of your investments. The additional sums that you have can be invested in some if the funds that you currently hold and the new funds suggested.



Post Your Query