I hold one banking fund (SBI Banking and Financial Services fund) and one IT fund (Tata Digital India fund). My returns are currently skyrocketing, but is it really worth continuing SIPs as they may not hold their value in absolute value in the long term? My plan was to do an SIP for five years.
- Akshay
Good till the rally of your funds lasts. But I would say that you are taking a risk in terms of concentrating your portfolio. I suggest investors invest in mutual funds because these funds help you diversify your portfolio. While you have been lucky with these two sectoral funds, I still hold the view that some of these funds may do better over a five-year period than a diversified fund. However, these funds tend to fall more than diversified equity funds when the markets observe a correction. I would suggest that you go to Value Research Online and look at the fund pages of these two funds. You would be able to see the worst periods and the corresponding returns that these funds have delivered in their lifetime up till date. This will give you a sense of the worst-case scenario and if you are okay with such declines when the market falls, you can keep investing in these funds. Otherwise, if you're sitting on massive gains, you may take your money out, say thank you to these two funds and invest in diversified equity funds.
This article was originally published on December 10, 2020.
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