I have invested in UTI Infrastructure Advantage Fund - Series I Div. I also invested in Kotak Indo World Infrastructure Fund Gr through a new fund offer in 2008 for my mother aged 55 as a means of savings for her old age. I have seen that the net asset value (NAV) had gone down to Rs4. However, the NAV has risen back. I invested from the long-term point of view. However, the infrastructure fund of HDFC has performed better. Should I quit these funds and invest in some other funds for her or a monthly income plan (MIP) will be suitable considering her age? Please suggest.
A person should invest in sectoral funds such as infrastructure funds only to supplement a core portfolio that consists of diversified equity funds and bond funds. This rule applies more for people who are nearing retirement since the risk to the capital should be minimized with the diminishing future earning capacity. In your case, both your investments are under water at present. Although infrastructure funds are coming back in favour both in terms of performance and investor preference, it would be difficult for me to recommend that you hold on to these underperforming funds.
Looking ahead, my advice would be that you create a portfolio with two priorities—preservation of capital and stability of income. To achieve these, you should have a healthy debt portion in your portfolio. MIPs and income funds are good options in this regard. However, you should also have some equity exposure in the form of diversified multi-cap funds (HDFC Equity, Templeton India Gr are good options) to ensure that the overall portfolio returns keep up with inflation.
I have systematic investment plans (SIPs) in the following funds: Fidelity Equity (Rs3,000), HDFC Top 200 (Rs2,000), ICICI Pru Dynamic (Rs1,000), Reliance Gr (Rs1,000), Reliance Power (Rs1,000) and Franklin India Bluechip (Rs1,000). My goal is to reach Rs1 crore in 15 years for my retirement. Is my portfolio on the right track?
You have an aggressive portfolio with 100% equity allocation (except the dynamic fund where the equity allocation will fluctuate depending on market conditions) in top-rated schemes. You are currently investing Rs9,000 per month in this portfolio. In order to achieve your target of Rs1 crore in 15 years, you would need to invest about Rs16,000 per month (assuming a 15% long-term annual growth rate). So increase your monthly SIP commitment over a period of time to that level to progress towards your target. If you can achieve that and keep reviewing your portfolio once a year to ensure that you continue to have top-rated schemes, there is a very good chance that you will reach your goal.
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