My brother wants to invest in mutual funds for his daughter who is 3-4 months old. He wants to invest Rs 1,000 every month for a period of 20 years. Please suggest a well-performing equity diversified fund for this purpose. Please also tell me if the Direct Tax Code (DTC) will get implemented this year. Also, in the past 2.5 to 3 years, I have invested nearly Rs 90,000 in Reliance Growth. Should I stay invested in it for the next 10 years?
-Rajkumar
Choosing a well-performing equity diversified fund is not tough, but for a period of 20 years, you can't afford to pick one fund and then forget about it. You should review the fund’s performance periodically and make changes if required. You can begin investing in HDFC Equity, DSP BlackRock Equity or UTI Equity.
To answer your second question, there is very little chance of the DTC getting implemented this year. We’ll come to know about this in the next 10-15 days.
Reliance Growth was a good fund, but its performance has slipped in the past 4 years. It has turned into a mediocre fund. We would recommend that you consider exiting this fund on a gradual basis if its performance remains average in the next 2-3 months.
This article was originally published on March 13, 2012.
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