One does not need to invest in too many funds to achieve a diversified portfolio
14-Feb-2013 •Research Desk
I have invested in DSPBR Top 100, Franklin India Blue Chip, HDFC Equity, HDFC Top 200, ICICI Pru Discovery, ICICI Prudential Focused Bluechip Equity, IDFC Premier Equity Plan A, Reliance Gold Savings, Reliance Regular Savings Equity, UTI Opportunities and UTI Dividend Yield through SIPs for a period of ten years. Please advise on the viability of these investments?
— Arup Kumar Roy
You have chosen good funds. All of them are highly rated with a proven performance and track record. The portfolio has a large-cap growth tilt with 95 per cent equity exposure and has exposure to 226 stocks. It is well-diversified across stocks and sectors, which is beneficial when investing for the long-term. However, having a portfolio of 11 fund schemes is not necessarily the way to achieve diversification. You can achieve diversification with fewer funds, which will be easy for you to manage and also track. For instance, there are 3 large-cap, 4 large- and mid-cap and 2 mid- and small-cap funds in this portfolio, which could be pruned. You can reduce the exposure to large-cap funds, given your investment time frame of over ten year, especially when the same will be achieved through the large- and mid-cap funds. You should continue investing through SIPs, for their convenience, and consider your investment in gold, unless you are investing to meet a future need for physical gold.