I am aware of the benefits of SIPs to overcome market volatility. However, I would like to know whether investing lump-sum in HDFC Prudence, Birla Sun Life India GenNext or DSPBR Micro Cap Fund is advisable? As I have access to lump sum funds, I would like to invest Rs 50,000 lump sum in one fund, and start a 12-month SIP in another. My mutual fund portfolio is otherwise tilted towards large caps and diversified equity funds. Given the market is currently at two-month lows, will it be advisable to invest in both these funds on a lump-basis today itself ?
— Abhay Agarwal
You say that the market is at a two-month low. It could go to another low in the next few months. Will you then be disappointed that you had not waited? It could move in any direction. Do not try and time the market. Stick to a systematic investment plan (SIP).
Your fund selection seems strange. HDFC Prudence is a balanced fund which invests in equity and debt. Birla Sun Life India GenNext is a thematic fund which invests in companies that are expected to benefit from the rising consumption patterns fuelled by the high disposable incomes. DSPBR Micro Cap invests in companies that are not amongst the top 300 companies by market capitalization, in other words, small caps. What has been the thought process behind this fund selection? You say that your portfolio is large-cap oriented. If you had listed the funds, we would have been able to give you a more comprehensive view.
This article was originally published on May 18, 2012.
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