Q&A: Mutual Funds

By Value Research

Have a 5-year View

I am 30, and for the past four months have been investing through SIPs. I plan to invest in HDFC Short Term Opportunities and SBI Dynamic Bond Fund for a year; and Birla Sun Life MNC, UTI MNC and Reliance Equity Opportunities for three years. Please comment on my fund selection and suggest few debt or equity and tax-saver funds.

- Anup Mahindrakar

Your portfolio of five funds is made of some good and risky funds as well. For instance, both BSL MNC and UTI MNC are risky funds with narrow investment mandate. If you understand the risk associated with these two funds, you should continue investing; else consider investing in a broad diversified equity scheme to de-risk your portfolio. The time period for which you have selected these funds, should be fine, especially the debt funds. However, with the equity funds, keep at least a five-year time frame in mind when investing. To invest on other equity, debt and tax saving funds, you can visit the fund select feature on our website and select funds in the category of funds that suits your investment criteria.

Insurance or Investment

I am 24 and earn Rs 30,000 every month. Recently, I started investing Rs 500 in HDFC Top 200, Rs 2,000 in HDFC Balanced and UTI Opportunities through monthly SIPs for the long term. I am continuing two LIC Jeevan Saral policies and will pay Rs 12,010 premium every year for the next 11 years. What is your view on my investments.

- Gopal Chandra Saha

Jeevan Saral plan that you have mentioned is an endowment plan, which is a mix of savings and insurance. This plans does not provide for adequate life cover unlike term insurance plans, which provide high value cover at much lower premium. If you have been paying premiums on this policy for some years now, check the surrender value with your agent to consider terminating the policy or continuing it. As for the three funds that form your investment portfolio, they are made of highly-rated funds with proven track record and performance history. You should continue investing in these funds with regular performance review.