I invest Rs 1,000 each per month in HDFC Top 200, DSP BlackRock Top 100, Quantum Long Term Equity, Reliance Gold Saving and Birla Sun Life Frontline Equity. Is my choice of schemes fine? I want to add more funds to my mutual fund (MF) portfolio. Please suggest a few.
You have a good portfolio of MF schemes. Other than the Reliance fund, all the other funds find place in the Mint50 list of chosen schemes that are ideal for retail investors.
Gold MFs, such as the Reliance fund you have chosen, are good for systematic gold investments for investors with relatively small sums of money. Broadly speaking, you are investing 20% in gold, 20% in a pure large-cap fund and the remaining 60% in funds that cover larger segments of the market, including the mid-cap space.
If you would like to add more funds to your portfolio, you can consider two other segments of the MF spectrum—funds that invest in the small- and mid-cap space in a focused manner, and funds that participate in the debt market in addition to the equity market. For the first category, you can go with DSP BlackRock Small and Midcap fund and for the second, you can choose Birla Sun Life 95.
After adding these two funds, if you want to increase your monthly investment amount, you would do well to not add more funds but enhance your contribution to the existing funds in the portfolio. Having too many funds in the portfolio would make it difficult for you to monitor and manage.
Please suggest me some tax-saving funds that give high returns or any other tax-saving instrument that gives good returns.
Tax-saving MFs are broadly diversified funds that invest in all segments of the equity market in the country. Investments in these funds are subject to a strict lock-in of three years before which no withdrawals are allowed for any reason.
Among the avenues for saving taxes available to individual investors, these tax-saving funds represent the best choice since they offer the twin benefits of lowest lock-in period and full participation in the equity market. Other tax-saving options either have longer (typically five-year) lock-in periods or invest only partially or optionally in the equity markets.
Unfortunately, the direct taxes code is likely to take away such a sweet deal for equity investors, whenever it comes into force (probably by April 2012 if the legislation gets passed in time).
There are many good tax-saving mutual funds available for investments as of now—Fidelity Tax Advantage Fund, HDFC Tax Saver Fund and Religare Tax Plan are some of the top schemes in this category.
Srikanth Meenakshi is founder and director, FundsIndia.com
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