Diversify your Portfolio

Have funds that broaden your investments across styles, sectors and market capitalisation

I have a monthly SIP of 1,000 in Sundaram Select Midcap, Magnum Global, Reliance Vision and HDFC Equity. Is it a good selection?
Abhay Goel

Some of the funds that you have are not as good as they were when you bought them. You have two funds with overlapping investment themes. Having two mid- and small-cap funds — Sundaram Select Midcap and Magnum Global — in the portfolio does not amount to diversification. Diversification across funds works when planned for and when the funds have different objectives. A good selection of a few funds should work equally well if you are seeking long-term wealth creation. You should look towards building a portfolio that follows a core and satellite approach in fund selection so that you will have funds such as large-cap and large- and mid-cap funds that account for 60-70% of your allocation. Next, you should have slightly risky funds such as multi-cap, sector funds and mid- and small-cap funds that will offer you the tactical advantage of providing a boost to your portfolio returns. Instead of Magnum Global, consider investing in HDFC Mid-Cap Opportunities or DSPBR Micro-Cap Fund. And in place of Reliance Vision, consider investing in Birla Sun Life Frontline Equity or HDFC Top 200.

Schemes  Category  Rating  3-yrs ret (%)  5-yrs ret (%)
HDFC Equity Multi Cap **** 12.05 17.68
Sundaram Select Midcap Mid & Small Cap **** 5.75 16.04
Magnum Global Mid & Small Cap *** -1.27 10.37
Reliance Vision Large & Mid Cap *** 1.28 12.48
Returns as on February 24, 2011 Ratings as on January 31, 2011

comments powered by Disqus
  • EmailEmail
  • TweetTweet
  • Share on Google+Google+
  • LinkedinLinkedin
  • FacebookShare