I am an aggressive investor with a time horizon of five years. I want to start an SIP of ₹ 5,000 per month in two funds. I am confused among the below mentioned funds—Invesco India Contra Fund, HDFC Small Cap Fund, ICICI Prudential Bluechip Fund and SBI Bluechip Fund. I can invest only in two funds (total ₹ 10,000 per month). Could you please help me pick the right ones?
Of the four funds in your list, two are large-cap funds, one is a small-cap fund, and the Invesco fund is a broad market fund with a value/contra style.
For your portfolio, ideally, you would need one of the two large-cap funds and another fund from the remaining two to complement it. You can go with either of the two large-cap funds since they are both good, well-rated funds with good track record.
For the second fund, you can go with one of the two funds given in your list based on your risk tolerance level. The HDFC Small Cap fund is the more volatile of the two funds but holds the promise of higher return if you can hold on through periods of turbulence.
So, go with this fund only if you have higher risk appetite. Otherwise, you can go with the Invesco Contrarian fund.
I have an SIP of ₹ 4000 each in Aditya Birla Sun Life Tax Relief 96 and Axis Long term Equity Fund, both equity-linked savings schemes (ELSS). I am planning to continue this investment for the next five years. Also, I wish to diversify my portfolio by investing in equity funds. Please suggest what kind of schemes should I consider?
Both the tax-saving funds you have are worth holding. If you would like to add to your portfolio, you can do so by taking more focussed approach with the rest of the portfolio. The ELSS funds are broadly diversified that take a wide exposure in the market. You can consider adding two or all three of these types of funds in your portfolio depending on the sum you are planning to invest. You can add a pure large-cap fund such as ICICI Prudential Blue Chip, or add a mid-cap fund such as L&T Midcap Fund, or add an equity-oriented hybrid fund such as HDFC Hybrid Equity fund. These funds will add more variety to your portfolio both in terms of market coverage (with the HDFC fund adding debt as well) and investment styles.
Srikanth Meenakshi is co-founder and COO, FundsIndia.com. Queries and views at firstname.lastname@example.org