For the last two years, I have been investing in SBI Bluechip Fund, which is currently giving me just five-six per cent returns. I find Axis Bluechip is performing much better. So, should I continue with my SBI Bluechip or shift my investments?
Also, what are ethical funds and can I invest in them as an individual investor?
- Uma Mahesh
SBI Bluechip Fund is not doing well lately. Having said that, the last two years have not been very performance-driven or the performance has not been aspiring for any fund in the category. But do not switch based on short-term performance. SBI Bluechip remains a good large-cap fund and worth continuing your investments in.
When investing in equity, one should always keep a time horizon of five years or more in mind. Such a time frame, coupled with regular investments, will help reduce your risk and average your investments better.
Coming to your second question, ethical funds are interesting but they haven't yet taken off in India in a big way. By and large, ethical funds avoid investing in industries such as alcohol, tobacco, and other unethical businesses. These funds are also Shariah-compliant, in the sense that they do not invest in interest-generating businesses or businesses that are heavy on borrowing. So, they keep away from banks.
The number of companies which they avoid investing in is not too many. Also, avoiding the banking industry has turned out to be good for these funds, as the last seven-eight years have been disappointing for the industry.
Two of such actively-managed funds are available to Indians. One is from Tata Mutual Fund and other from Taurus Mutual Fund house, which has turned out to be well-performing funds. However, having said that, it's better to keep off such trendy things. So, don't be constrained and choose a good multi-cap fund.
This article was originally published on August 27, 2019.
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