I have been investing in HDFC Mid Cap Opportunities, HDFC Equity and HDFC Top 200 for the past 2 years. I want to invest in another fund via the SIP route. I have read recently that some funds offer insurance on the SIPs we carry out in them. I want to know if such products are viable, or should I add to my current investments? Also tell me if I should invest in only 1 fund house or more.
-Raunaq
Firstly, there is a great overlap in the three funds that you're currently investing in. If you are a venturesome investor, you can do well by investing only in HDFC Mid Cap Opportunities. But if you are a passive investor who seeks full diversification, then invest only in HDFC Equity. On the other hand, invest only in HDFC Top 200 if you are a conservative investor seeking stability. You don’t need all the three funds; pick one of them as per your investment profile.
Investing in only one fund family isn't a wise thing to do because if something happens to that fund house, all your investments will get affected. Hence, it is important to diversify across AMCs as well.
To answer your query about insurance-linked SIPs, we believe they can be very useful. By the virtue of committing a regular investment, you get high-quality group term cover for free. The other advantage of getting such term cover is that it will motivate you to continue investing in a disciplined manner, even through periods of huge declines or gains. From that standpoint, insurance-linked SIPs are very meaningful.
This article was originally published on June 01, 2012.
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