Ask Mint | On investments

Ask Mint | On investments

I have been investing Rs3,000 a month under systematic investment plans (SIPs) in Franklin India Flexi CAP Fund (Growth, or G), Tata Infrastructure Fund (G), HSBC Advantage India Fund (G), HSBC India Opportunities Fund (G), HDFC Growth Fund (G) and HDFC Equity Fund (G) since December 2006. The current market value of my investments is in the negative. Should I continue investing in these funds or switch over to other funds? Is SIP a better option than lump-sum investment? Also, should I withdraw from SIPs and invest the lump sum in other funds?

— A.K. Mishra

In my opinion, you should continue your SIPs in these funds as this would give you the advantage of acquiring more units at lower prices, which would average out your investment. Between SIP and lump sum, SIP is a far better and safer option.

However, there could be a ratio between SIP and lump sum to get the optimum mix. You should not withdraw from SIPs even though a further downtrend is not ruled out in the short term. You should remain invested as the long-term outlook of the market is quite good. Moreover, you should keep some money with you for bottom fishing.

I have paper certificates of 270 Orkay Silk Mills Ltd shares. I am aware that the company had changed its name to Orkay Industries and closed down in 1999. Does this mean the shares I possess have no value? Also, I have 40 non-convertible debentures (NCD), part B, of Ceat Ltd. What should be done with these?

— Ralph Fernandes

Consider your investment in Orkay Industries dead for all practical reasons. However, you should file a complaint and claim with the Securities and Exchange Board of India. Regarding NCD, please provide details such as the series, options, coupon rate and maturity.

Please advise on the prospects of ICICI Prudential Equities and Derivates Wealth Optimiser (G) and Kotak Indo World Infrastructure (G), where I have invested through new fund offers (NFO). Also, should I continue invested in Reliance Tax Saver, Kotak Tax Saver, Franklin India Tax Shield and Fidelity Tax Advantage (all growth)?

— S.K. Chopra

ICICI Prudential Equities and Derivates Wealth Optimiser (G) is a good scheme with its major investment in Spice Communications Ltd, Reliance Industries Ltd, Power Finance Corp. Ltd, Oil and Natural Gas Corp. Ltd, Bharti Airtel Ltd, etc. It has 21.87% exposure in technology sector, 16.12% in energy and 10.17% in financial services. Since its portfolio is well diversified, it has limited downward potential and fairly good chances of appreciation, which may outperform its benchmark.

Kotak Indo World Infrastructure Fund (G) is also a good scheme with its top investment in construction sector and high weightage in energy and metals. However, since construction sector is under pressure due to high rates of interest rates, its performance may remained strained despite an excellent portfolio. You should hold on to the tax schemes mentioned.

I am a professional keen to trade in stocks and commodities, but can’t afford to track the markets every hour. Could you suggest a company which could help me? Also, is this the right time for trading?

— Yogesh Vashishth

First of all, you must understand the risks involved in short-term trading in equities. It is lucrative, but carries huge risk as well. You must be an expert yourself or take the guidance of an expert. All broking houses offer services and extend facilities for trading. However, none has the credential of being very successful.

As far as the timing is concerned, short-term trading is more risky in volatile conditions and less risky in steady markets.

I make monthly investments of Rs5,000 each in DSP ML T.I.G.E.R., Reliance Diversified Power Sector Fund, Sundaram Capex Opportunity, HDFC Equity, Tata Infrastructure, JP Emerging Leaders, DSP ML Top 100, DSP World Gold Fund, Fidelity Equity and Rs2,000 each in HDFC Prudence and Birla Sunlife Equity. Also, I make some investments in liquid funds. Is this portfolio alright? I am looking at long term, say five years, for returns of 15-18 % annually.

— Ajay

Your portfolio is very diversified and has some very good funds, such as DSP ML Top 100, DSP ML T.I.G.E.R., Reliance Diversified Power, HDFC Equity, HDFC Prudence, etc. But, at the same time, you have too many diversified funds. In my opinion, you may add some balance funds such as DSP ML Balanced Fund and a mid-cap fund, Sundaram BNP Paribas Select Midcap, since you have a long-term outlook of your portfolio. I would also recommend you to review the portfolio in six months and then add some balanced and thematic funds.

Answers are based on a technical analysis of the markets and individual stocks. The views expressed on this page are not the newspaper’s opinion and are provided for information purposes by Vipul Verma. Readers are requested to do their own research before participating in the stock markets. Neither the paper nor the information provider will be responsible for any outcome based on information provided here.