Query corner: Mutual fund

Our MF expert Takes you Through the Labyrinth of MF investments In This Weekly Column. Email to etquerymf @indiatimes.com

I want to invest in an ELSS fund through SIP from April 2010. At present, I am investing in SBI Magnum Tax Gain (D) through the SIP mode. Please let me know if Canara Robeco Equity Tax Saver is a good option.
Rajeev Navlur

Investing in equity funds through SIP is an ideal mode of investment. However, it is important to note that ELSS has a lock-in period of 3 years, and therefore, each SIP instalment would be locked in for 3 years from the date of investment. Similarly, dividend reinvestments would have a lock-in period of 3 years as well, and therefore, you can consider dividend payout or growth options, depending on your investment need. You can consider Fidelity Tax Advantage Fund, Franklin India Tax Shield and Sundaram BNP Paribas Tax Saver, which have performed well over long term on quantitative parameters.

I am a senior citizen, aged 72. I have purchased some MF units (all of them equity) in the past 8 years. I plan to rectify this mistake by selling all the funds, except two (DSPBR Top100 and Reliance Regular Saver). Next, I plan to purchase some short-term bond. I already have FDs, ULIP as well as pension. Which funds do you advise?
BK Bhatia

Looking at your current portfolio, it is not clear whether you have invested in Post Office Monthly Income Scheme and the Senior Citizens Savings Scheme, which offer assured returns. While the former provides monthly income, the latter offers quarterly income, in addition to the safety of capital. You could consider investing some part of your surplus in monthly income plans in a diversified manner. These schemes invest 80-85% of their corpus in debt instruments and the rest in equity shares. Looking at interest rate scenario, you can consider ultra short-term income funds and fixed maturity plans (FMPs). The FMPs are close ended in nature with a fixed maturity period (like FDs) and you can choose a plan based on your investment horizon.

I am 37 years old and wish to invest to create a corpus for my children’s education. Which mutual fund do you suggest for the purpose? My investment horizon is around 15-20 years.
Sreekumar Menon

Given your investment horizon, investing in diversified equity funds through systematic investment plan can be considered. The SIP route helps to reduce cost of investments due to equity market volatility and can boost investment returns over the long term. In diversified equity funds, you could consider DSPBR Top 100 Equity, HDFC Top 200, Fidelity Equity and Birla Sun Life Frontline Equity.

(The author is senior research analyst, Morningstar India)