I have a Rs2,500 monthly SIP in HDFC Top 200 and Birla Sunlife Dividend each. I have Rs42,000 in DSP Opportunities Fund and Rs19,000 in Reliance Equity Opportunities Fund. I also have Rs40,000 in Reliance Equity that I wish to sell. Is my fund selection all right? Where should I reallocate funds?
Many a times, when investors come with an all-equity portfolio such as the one that you have, our first instinct is to enquire if they have sufficient exposure to debt instruments as well. Often, the investor’s debt portion is taken care of in the form of provident fund, post office deposits or other bank fixed deposits and they are looking at mutual funds (MFs) only for the equity portion.
I am assuming that your investment in equity is only through mutual funds. In an all-equity portfolio, the important balance to strike is between different kinds of equity funds in terms of market capitalization. In your portfolio, the running SIP investments are evenly split between large-cap and small/mid-cap funds. However, the lump sum investments are a bit skewed towards small-cap investment. Hence, we would advise you to redeem from Reliance Equity Fund and invest in a large-cap fund such as Fidelity Equity Growth or HDFC Equity Growth.
Suggest two funds where I can put Rs1,000 per month through a systematic investment plan (SIP) for the next five-six years. I need money after six years.
You can go with stable large-cap funds such as Birla Sunlife Frontline Equity Growth and Reliance Regular Savings—Equity Growth for your SIP. Since you have obligations to meet after six years, you would need to manage your investment timeline carefully.As you get closer to the time when you need the money, you should reduce your exposure to risky instruments such as all-equity funds. Therefore, in your case, after four years of investment, move about 50% of your investment into relatively safe instruments such as short-term debt funds. After five years of investment, move the rest as well. Keep the SIP going till the end and start withdrawing from the debt fund to fulfil your funding needs.
Suggest some gold funds that have consistently performed well. Should I go for exchange-traded funds (ETFs) or MFs?
At this time, there is no MF that offers an open-ended MF scheme that invests 100% in gold. There are mixed-asset MF schemes that also invest in gold and there are schemes that invest in gold mining companies. If your interest is in investing in the metal itself, going through ETFs would be the way to go. Benchmark, Quantum and other fund houses offer such ETFs on the stock exchanges. Please note that you will need a demat account to invest in ETFs.
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