I wish to hold my investments for a year or so. Should I make any changes to my portfolio? I also want to make some new investments. Please suggest me suitable funds to invest in with a one-year investment horizon.
N. C. Dhankar
When considered in isolation, your portfolio is a good one. The funds are mostly category-leaders with good risk-adjusted performance. However, it isn't appropriate for your short time horizon. Let's examine the portfolio in some detail. Entering your data in the Portfolio Manager at www.valueresearchonline.com tells us that about 45 per cent of your investments are in equity and the rest in bonds or cash. Almost half of the equity is invested in mid- and small-cap stocks.
Such an equity allocation really has no business in a portfolio that is supposed to be for just one year. One year can hardly ever be an adequate time period for an equity investment to generate adequate returns. We aren't saying that such a thing cannot happen-after all, investors who entered equity in mid-2003 doubled their money in just about an year's time. But you cannot actually plan for such bonanzas. If you are such a lucky investor then you could disinvest happily and walk away from your gains after a year. If not, then you will have to wait for a little longer for your investments to give good returns.
However, if you are in a situation where you compulsorily have to redeem after an year then the correct choice would be to reduce your equity exposure by shifting some of your investments from Tata Equity and Franklin Prima Plus to a monthly income plan like Birla MIP or Templeton India Income. This will reduce your equity exposure and also make your portfolio less dependent on mid-cap companies.
If you'd like to invest in new funds, you could choose any good MIP or debt fund.