Query Corner: Mutual Funds

I am 28 years old and intend to invest in MFs, with a long-term perspective. I have started an SIP of Rs 1,500 p.m in HDFC Tax Saver - Growth. Please advise on this fund and also suggest other schemes.
—Gurpreet Singh

HDFC TaxSaver enjoys a three-star rating from Morningstar over 3-year timeframe; over the five and 10-year periods, it has a four-star rating. This indicates that the fund has delivered a competent showing over longer timeframes, on the risk-adjusted return front vis-à-vis peers. You have not mentioned your risk appetite. Assuming that you are a risk-taking investor who wishes to invest for the long haul, diversified equity funds can be apt choices. Funds like HDFC Top 200 and Fidelity Equity boast of impressive track records over the risk and return parameters across market phases and longer time periods.

My investment spans 13 funds and majority of them are equity diversified schemes. I have invested in funds like Franklin Flexi-cap, Fidelity equity, DSPML Tiger, Reliance Equity Opportunities, etc. Most of the investments were made in 2007 and 2008. My investment portfolio is worth around Rs 5 lakh. What should be my future course of action?
–Aloke Mookerjee

Your predetermined investment objectives should dictate your future course of action. For instance, if you have already achieved the goals (targeted returns), now is the right time to book profits. If not, you should consider staying invested. Also, now would be a good time to evaluate your portfolio holdings. If you believe that any of the funds aren’t right for you, now would be a good time to exit them at a profit.

I am a 55-year-old retiree without any pension income. I have invested in some equity-based MFs, including Reliance RSF Equity, HDFC Top 200, HDFC Equity and DSPBR Equity. What should be the ratio of bank/post office fixed deposits, equity MF and gold to my total tangible assets?
–Rajeev Goel

Investment decisions regarding asset allocation and choice of investment avenues need to be personalised, depending on the needs of each investor. In other words, a ‘one-size-fits-all’ approach cannot be adopted. You should compute the sum of money that will be adequate to cover your monthly expenses; also, provisions need to be made for contingencies. Ideally, the component of your portfolio invested in assured return schemes should generate income to meet your regular expenses. While constructing your post-retirement investment portfolio, it is important for you to take into account your risk appetite, investment horizon and existing investments.

By Vicky Mehta, Senior Research Analyst Morningstar India.
(Our MF expert Takes you Through the Labyrinth of MF investments In This Weekly Column. Email to etquerymf@indiatimes.com)