I am 28 years old. For the past 1.5 year, I have been investing via SIPs of Rs 1,000 each in HDFC Top 200, HDFC Equity, HDFC Midcap Opportunities and Birla Sun Life Dividend Yield Plus. Is my portfolio good?
— Satyam Sharma
You might be under the assumption that you hold 4 different kinds of funds, but in reality, you hold only 2 different funds, because there is a substantial amount of similarity in the portfolios of the three HDFC funds that you're investing in. There is a nearly 70 per cent overlap in the portfolios of HDFC Top 200 and HDFC Equity, and a modest overlap in the portfolios of HDFC Equity and HDFC Midcap Opportunities. All 3 funds are managed by the same fund company and they will all get impacted if something happens to the AMC. An investor achieves true diversification by investing across AMCs as well, in funds managed by different people. From that standpoint, you should look to change your fund holdings to achieve useful diversification.
This article was originally published on January 08, 2013.
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