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Diversifying Correctly

An ideal mutual fund portfolio should consist of five well-performing schemes with proven track records…

I am 28 and investing Rs 13,500 through SIPs every month. I invest Rs 2,000 in BSL Dividend Yield Plus, BSL Frontline Equity, DSPBT Top 100 Equity, HDFC Top 200, ICICI Prudential Focused Bluechip and Kotak Gold ETF. I also invest Rs 1,500 in Quantum Long Term Equity. I am moderately aggressive and plan to invest in these funds for the next ten years, are these funds right to invest?- Jayaramakrishnan

Fund Scheme  Category  Rating  3-yrs ret (%)  5-yrs ret (%)
BSL Dividend Yield Plus Mid & Small Cap ***** 23.14 16.19
BSL Frontline Equity Large & Mid Cap **** 12.03 13.93
DSPBT Top 100 Equity Large Cap **** 10.91 14.55
HDFC Top 200 Large & Mid Cap ***** 14.4 15.23
Kotak Gold ETF Gold Fund Not Rated NA NA
ICICI Prudential Focused Bluechip Large Cap ***** 16.18 NA
Quantum Long Term Equity Multi Cap **** 16.39 13.78
Return as on August 23, 2011, Rating as on July, 2011

Seven funds in a portfolio is diversification in number and not style. You should consider reducing your holdings to five funds which can be achieved by reducing the holding in large- and large- and mid-cap funds to one each instead of two. You can invest Rs 4,000 each in these two categories and continue investing in other funds as allocated. However, ten years is a long time and fund performance can go up and down in this period and hence you should monitor the investments in these funds and review their performance at least once a year for any changes if necessary.



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