Q&A: Mutual Funds

By: Value Research

Go for Diversification

I have monthly SIPs for Rs 3,000 in DSPBR Top 100 and HDFC Top 200 each, besides Rs 2,000 SIPs in HDFC Equity and ICICI Pru Discovery. Please let me know whether I should continue my SIPs in these funds or I make changes?

Sudheer Kumar

All the four funds that you are investing in are highly rated and have a proven track records and performance history. The combination of the funds offers diversification which augurs well when investing for the long term. You can continue investing in all these funds through SIPs.

Rs 30 Lakh in 5 Years

I am 49 and investing Rs 10,000 every month through SIPs in ICICI Prudential Discovery Fund, IDFC Premier Equity and HDFC Top 200 for the past one year. My investment horizon is 5 years and I want a corpus of Rs 30 lakh. Should I exit from any of the above funds or continue investing ?

Rakesh

You are investing Rs 30,000 each month. If this sum earns an annualised 12% return, after five years it will add up to Rs 24.74 lakh or Rs 26.9 lakh if the investment earns an annualised 15% return.

This sum is less than your target to build Rs30 lakh. The funds that you are investing have been consistent performers with good track records and are highly rated. You should keep investing and increase your investments over time in these funds to reach your target.

Investing in Volatile Market

I have been investing Rs3,000 through monthly SIPs in HDFC Balanced, DSPBR Equity, HDFC Equity, BSL Frontline Equity, IDFC Premier Equity and ICICI Prudential Discovery since March 2010. I have so far earned only 6% annualised returns. Should I continue investing in these funds?

Sundeep Bhatt

One can understand your disappointment, especially with the portfolio returns, despite your regular and disciplined SIP investments in some of the best funds. You should not give up on the investments that you have made so far with any rash decision to exit these investments.

The period has been bad for the markets. In the long run, the cyclical nature of stock markets should see a spurt which will impact your investments in a positive way. You should be patient with your investments and continue investing in these funds.