I have invested in the following funds through systematic transfer plan (STP) from June 2007 to August 2008. My portfolio is already 55% down. I can hold it for another two-three years:
ICICI Prudential Emerging Star (G); ICICI Prudential Infrastructure Fund (G); Reliance Diversified Power Sector (G); Reliance Equity Opp (G); SBI Magnum Tax Gain 93; Sundaram-BNP Paribas Select Midcap; ICICI Service Industries Fund (G); Reliance Equity Advantage Fund(G); Reliance Growth Fund (G); Birla SL tax relief Fund (D); Tata Indo Global Infrastructure Fund (Rs1 lakh lump sum invested); HDFC Long Term Advantage Fund
My questions are:
a) Should I liquidate/transfer my investments? Is my portfolio diversified enough?
b) A lot of experts are advising investors to hold on to mutual funds; what do you suggest?
By when do you think I would be able to get a 15-20% return on my investments?
c) Do you think I should hold any specific funds from the above list for more than two-three years?
Your portfolio has a lot of diversified funds.
Other than Reliance Diversified, power sector funds and tax-saving schemes, all the other schemes are diversified schemes.
It would be better if you invest in some financial services and energy-oriented funds.
Out of the current portfolio, you may change ICICI Prudential Emerging STAR to UTI Banking Sector fund.
Also, you may change ICICI Prudential Services Industries scheme to Reliance Natural Resources Fund.
The rest of the schemes you should carry on with right now.
Regarding the time frame, I think a period of around two-three years would be desirable to give you decent returns.
This assumption is not arbitrary but based on the logic that the storm in the economy, which started this year, would take several months to stabilize and depending on the acumen of the fund manager, some time would be required for investments to generate returns.
So roughly a time period of two-three years would be most desirable.
Regarding holding funds for a longer period, I would advise you to not take any decision in this regard now.
You should review your investments at least once every year.
Please suggest some tax-saving mutual funds with the best net asset value so far.
Some of the good tax-saving schemes are Franklin India Index Tax, Franklin India Taxshield, HDFC Taxsaver, Magnum Taxgain, Principal Personal Tax Saver, Principal Tax Savings and Sundaram BNP Paribas Tax Saver.
The schemes are arranged in alphabetical order and not in order of returns.
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