Dhirendra Kumar reviews a portfolio and highlights the importance of diversification of different kinds
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My current portfolio consists of HDFC Small Cap Fund, HDFC Index Fund Nifty 50, HDFC Capital Builder Value Fund, HDFC Flexi Cap Fund and HDFC Mid-Cap Opportunities Fund. What are your views about these funds? What changes should I make in my portfolio?
- Uttam Kumar
When you diversify your portfolio, then diversification can be of different types. First is diversification based on asset classes such as equity, debt, etc. Second is diversification based on market capitalisation - large-cap companies, mid-cap companies and small-cap companies. So your portfolio is diversified in this aspect. However, your entire portfolio is invested in HDFC funds. Many a time it has been observed that one AMC has a similar performance across its funds as it reflects a similar theme. The index fund that you hold needs no advice as it shall perform in a similar manner to the underlying index and in the past few days, the performance of the index has been great.
My advice to you would be, for a convenient and low maintenance portfolio, invest your entire portfolio in two-three good flexi-cap funds (erstwhile multi-cap funds) of different AMCs. When you invest in flexi-cap funds, then a part of your investment is invested in large-cap companies, some is invested in mid-cap companies and some in small-cap companies. Hence, you will not have to worry about diversification. This will help you achieve diversification of each kind.