Money matters3 min read . Updated: 28 Sep 2008, 09:52 PM IST
I have invested in SBI Magnum Tax Gain’s SIP every month since December. Should I continue or invest in other ELSS? What about gold exchange-traded funds?
SBI Magnum Tax Gain (SMTG) has been one of the best performing equity-linked saving scheme (ELSS). However, a bulging corpus and changes in fund management have slowed this fund, as it now invests significantly in large-cap companies. However, being an ELSS scheme, SMTG comes with a three-year lock-in. You cannot exit the scheme if your investments in it have not yet completed three years. However, if your investments have completed three years in SMTG, we suggest you exit and shift to better options such as Birla Sun Life Tax Saver and Principal Tax Savings Fund. Gold exchange traded funds (ETFs), such as Benchmark Gold ETFs, are passive funds and passively track the gold prices. This is just like investing in physical gold, but a gold ETF absolves you of the need to stash physical gold bars in your house or bank lockers. Gold ETFs can be bought or sold only on the Internet and you need to have a demat account for such transactions.
I made a minimum investment of Rs5,000 in Franklin Templeton Asian equity funds in January, and I have been investing Rs1,000 per month through SIP, but I am not satisfied with the NAV of this fund. Recently, I made a request to terminate those SIP instalments. Now, I have started SIP for Sundaram BNP Paribas Select Focus and Tata Infrastructure Fund. Do I need to restructure my portfolio?
—SRI HARI KRISHNA
As per the information you have given us, you seem to have only two funds in your mutual funds portfolio. If it is right, then you need to build your portfolio significantly. Since you already have Sundaram BNP Paribas Select Focus (SSF), a large-cap oriented fund, try adding diversified and mid-cap funds. Kotak Opportunities, DSP ML Opportunities and Birla Sun Life Equity Fund are good options in the diversified space. IDFC Premier Equity Fund and Birla Midcap Fund are good mid-cap fund options. Retain your investments in SSF and Tata Infrastructure Fund. Birla Cash Plus-Retail, UTI Money Market and IDFC Liquidity Manager-Plus are some of the good liquid fund options.
How can I invest in mutual funds online, and save the entry load that is charged when I invest through a broker or an agent. Is there any risk involved?
If you want to save up on the entry load and invest online, you should do so only from your mutual fund’s websites. However, you need to open an account with your MF and for this you need to be an existing investor.
In other words, if you are investing in your MF for the first time, you need to fill out a physical investment form and submit it at your MF’s or your registrar’s office. Once you are invested, apply for an Internet pin and open an online account on your fund’s website. Thereafter, start investing from your MF’s website.
I have the following mutual fund investments: DSP ML Top 100 (SIP), Reliance Growth (SIP), HDFC Equity (SIP), HDFC Prudence (SIP), SBI Magnum Contra (SIP), Reliance RSF-Equity (SIP), SBI Magnum Global Fund 94, DSP ML Tiger Fund, HSBC MIP-Savings, TATA Floater, Kotak Floater Short-Term, Birla Sun Life Index Fund. Are these funds doing well? Do I need to restructure my portfolio?
Keeping aside the general market conditions, most of the schemes in your portfolio have done well. However, we suggest you exit SBI Magnum Global Fund 94 (SMGF). This is a mid-cap fund with a size of Rs1,186.64 crore. On account of its large size, SMGF is over-diversified and has 64 stocks as per its July-end portfolio, with no scrip accounting for more than 3.5%. Too many stocks in a portfolio also limit its chances for a significant upside as a large chunk of its scrips need to rise for that to happen. A huge size also forces a mid-cap fund manager to diversify into large-cap scrips. We suggest you shift to IDFC Premier Equity Fund or Birla Midcap Fund.
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