I am new to mutual funds and have just started investing in Franklin India Bluechip and HDFC Prudence Fund. I plan to stay invested for the next 15-20 years. But is there a possibility of my funds going bust? Can there be a situation where I lose all my investments? Also, guide me as to whether I have chosen the right funds or not
-Rakesh Chandra
Mutual funds are not guaranteed-return products. Going strictly by the book, there might be a possibility of a fund performing exceptionally poor to dwindle all your savings. But over the long term, the possibility of such an extreme thing happening is almost negligible. If the historical performance is to go by, then there is no diversified equity fund which has delivered negative returns over the last 10 years if one would have invested through the SIP. That leaves little to worry about. Mutual funds are a very convenient vehicle for individual investors to participate in the capital markets.
Coming on to your next query, out of your two funds Franklin India Bluechip is a diversified equity fund while HDFC Prudence is a hybrid equity-oriented one. The former is an all-equity fund while the latter invests partly in equity and partly in debt instruments. Both of them are good funds and figure among the best ones in their respective categories. There is no problem with the choice of funds.
This article was originally published on September 01, 2006.
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