Exiting ELSS Funds
Exit underperforming tax-saving funds after the mandatory three-year lock-in period is over…
By Research Desk | May 25, 2011
I am investing Rs 2,500 in BSL Tax Relief 96 and Principal Personal Tax Saver. Both the funds are performing badly. I have also selected HDFC Top 200, DSPBR Top 100 Equity, BSL Frontline Equity, IDFC Premier Equity and Reliance Regular Saving Equity. Is it the right approach?
Your observation about both the tax planning funds is correct. They are not performing well and you should cut your losses and exit them if the mandatory three-year lock-in in these two funds is over. The other five funds that you have selected provide you diversity in style and number and are good. Collectively, these five funds provide a core and satellite approach to your portfolio which offers stability as well as scope for higher returns. All you need to do is to invest regularly in these funds, track the performance of these funds at least once a year to check its progress and carry any changes to fund holdings if a fund starts to underperform regularly.