I am currently investing Rs 12,500 every month in mutual fund through SIP; Rs 5,000 goes into HDFC Top 200 and Reliance Gold Savings and Rs 2,500 in BSL Frontline Equity. Please comment if my fund selection is right?
Sixty per cent of your investment goes into two large- and mid-cap funds with the rest in a gold fund, which does not amount to diversification. One starts investing in gold, once the portfolio is well diversified and there is value by hedging with gold investment. However, we feel investments in gold should be at best restricted to 5-10 per cent of your investment portfolio. A 40 per cent allocation to gold is high and you will be better if you reduce this and diversify your portfolio with other fund categories. Consider adding mid- and small-cap funds such as IDFC Premier Equity or HDFC Mid-cap Opportunities that are highly rated and have a proven performance track record.