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Mixing SIPs

Reliance AMC is facilitating investors pre-defined asset allocation options with a combination of funds…

Investing through SIPs in a fund is a passe. Reliance AMC is tapping the potential of offering investors the choice of investing in a portfolio of funds from its stable. The offering comes with the option of allowing investors to choose from asset-allocation model created by the AMC (see table: Portfolio choice) or create their own allocation model. For the sake of simplicity, the available portfolios have a mix of equity, fixed income and gold, which one can select using the flexible asset selection tool available on the AMC's website.

This facility comes with a minimum monthly portfolio SIP of Rs 6,000 or a quarterly SIP of Rs 16,000. The convenience of investing proportionately into a portfolio is unquestionable. However, where such a facility fails is the flexibility it offers. For instance, it is possible for Reliance AMC to not have the best performing fund in any of the asset class, leaving investors with little room to manoeuvre. Likewise, investors opting for any of the portfolios will be forced to take exposure in gold, which restricts portfolio diversification. One is also challenged when investing through a demat account because there is no provision to extend this facility if one invests through their demat account. The idea also limits the principle of diversification across AMCs, which should be avoided.

As an idea, using SIPs to invest in a portfolio is desirable, however, investors will be better managing the allocation themselves and selecting the most suitable funds than being pushed to select from a limited universe.