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Seeking returns safely

Balanced or debt funds can ensure the safety of short-term investments and protect them from a sharp decline...

I am currently investing in HDFC Top 200, HDFC Prudence, Reliance Banking, IDFC Premier Equity, SBI FMCG, SBI Pharma and SBI Dynamic Bond. I will need the money from these funds after 3 years. Please give me your opinion about my portfolio.

Your portfolio is way too risky for a 3-year tenure. You should have balanced or debt funds like HDFC Prudence and SBI Dynamic Bond, in your portfolio. Such a conservative stance will ensure that you don’t see a major decline in the value of your assets when you need it.

Also, we are concerned about the three sectoral funds that you hold -- SBI Pharma, SBI FMCG and Reliance Banking. These funds have done extremely well in the past couple of years, but they can be just as disappointing. Sectoral funds tend to be extremely volatile and they don’t serve the basic purpose of investing in a mutual fund, which is to diversify. These funds concentrate on a specific sector or theme, and can go wrong when an investor least expects it.

Apart from this, you should anyway get out of all the equity funds that you're investing in. Since you will need the money in 3 years.

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