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Should I Shift to MIP?

At the present market what should we do -- whether we hold HDFC Top 200 fund, book the profit or transfer to HDFC MIP Long-term plan?

At the present market what should we do -- whether we hold HDFC Top 200 fund, book the profit or transfer to HDFC MIP Long-term plan?
Abhay Shah

Today, there are few investors who aren't facing this kind of anxiety. With the Indian equity markets hip hopping to an all time high, its good for every investor to reconsiders his investment portfolio. But, if you have a long-term investment horizon of say, over three years, you shouldn't be bothered about the daily ups and downs in the markets. Equities have always proved to the best bet in the long-term and HDFC Top 200 is no exception.

HDFC Top 200 fund has been among the top performing funds in category. In its 7-year existence, the fund has given an annualised return of 24 per cent, as on February 6, 2004. Moreover, in the past three calendar years, it has been ranked among the top quartile funds in the category. Thus, we would advise you to stay with this fund if you don't need this money in 3-5 years.



HDFC Top 200: Calandar Year Returns
2003 2002 2001 2000 1999
HDFC Top 200 134.47 26.13 -10.13 -25.47 85.17
Quartile Q1 Q1 Q1 Q3 Q3
Category Average 112.01 19.7 -19.04 -26.5 134.04


On the other hand, if you think your objective is achieved and don't want to take higher risk, you can consider an equity-oriented hybrid fund. These funds maintain a 60-40 equity-debt allocation and could be a good bet under the current market scenario. And since the top performing hybrid fund—HDFC Prudence— belongs to the same AMC as that of your Top 200 fund, its better to switch to HDFC Prudence.

This will save you from paying an additional entry load. HDFC charges a difference in entry load for switches between its equity and balanced funds. In this case, as both HDFC Top 200 and HDFC Prudence charge a similar entry load of 2 per cent, you won't have to pay any additional load here.

However, if you want to maintain a conservative or cautious approach then shifting to MIP would not be a bad idea. MIPs, generally invest 75-90 per cent of its assets in bonds and the remaining in equities. HDFC MIP Long-term is a new fund in the category, whose equity exposure can go up 25 per cent of the portfolio. MIPs make an ideal investment for investors who want to invest well with an absolute minimum of involvement in their investments. Thus, consider HDFC MIP if your investment horizon is over a year of so.

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