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Slowing down on change

A reader shuffles his portfolio at the start of the financial year. But if you have invested smartly, there's no need to do so. Exit only from sustained underperformers and avoid chasing NFOs

I am investing Rs 1,000 per month each in 15 schemes through the SIP mode. I am long- term investor with a five-year horizon. The funds selected by me are: Reliance Growth, Reliance Vision, Reliance Tax Saver, HDFC Equity, HDFC Top 200, HDFC Tax Saver, HDFC Long Term Advantage, Magnum Taxgain, Magnum Contra, Magnum Global, Franklin India Bluechip, Franklin India Prima, Fidelity Equity, Fidelity Tax Advantage, Sundaram Paribas Select Midcap. I would like your feedback on the above fund selection. Normally I shuffle my portfolio at the start of financial year.
- Hiro Rahandomal Gangwani
The basic premise of investing through mutual fund rests on its utility as an effective diversifier. So when you diversify your holding between mutual funds; you are effectively fragmenting these holdings. Although at 15, the number of funds in your portfolio is not alarming, it would have been desirable to have lesser funds. But having said that, the good thing is that you have chosen some of the best available funds. Therefore, there is little to worry.

But we would like to point out one thing for your future investments. Avoid investing in so many equity-linked savings schemes. You currently have five of them, two of which are relatively new. Going forward, you can restrict your tax-saving investments to two funds- Magnum Taxgain and any one out of HDFC Taxsaver or HDFC Long Term Advantage. Your policy of reviewing your portfolio once every year is also appropriate. A holding period of at least one year for an equity fund ensures that you don't have to pay any capital gains tax upon redemption. But avoid making too many changes to your portfolio in pursuit of hot performers or new funds. Exit from a fund only if it has been a laggard on a sustained basis, or there is a material change (like change in the investment objective or fund manager).



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