I am currently investing in Reliance Growth, via systematic investment plan (SIP) of Rs 2,000. I want to shift from this fund and start another SIP of Rs 1,000. Which fund should I choose?
-Avishek Takhi
You should have a plan when investing in mutual funds. Reliance Growth is a mid- and small-cap fund (rated four-star). It is good for the long-term. But, you should be aware of the risks posed by such funds. These need frequent evaluation to make any investment alterations.
If you are looking for a similar fund, consider from DSPBR Micro Cap, HDFC Mid-cap Opportunities, ICICI Prudential Discover or IDFC Premier Equity Plan A. All are five-star rated, with proven track record.
You can make additional investments in your existing portfolio for the additional SIP that you plan.
I wish to create a corpus of Rs 1 crore in 15 years from the following portfolio. Will I be able to achieve my target or will I need a makeover? How can I evaluate a fund for future portfolio management?
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-M Bora
Your desire to have Rs 1 crore in 15 yea through mutual fund investing is possible. Your investments of Rs 12,000 a month can reach this goal if it earns 18 per cent annually. Your portfolio is diversified, with some good funds and a few that need to be reconsider. It has 96 per cent equity exposure, with a large-cap growth-oriented style, with investments in 75 stocks.
We suggest you have about 60-70 per cent in large-cap and large- and mid-cap funds and the rest in mid- and small-cap funds. This will give a a strong foundation to the portfolio, with a few funds that give the spike.
Move out of Magnum Contra (multi-cap), to large-cap funds like Franklin India Bluechip or IDFC Imperial Equity Plan A. Track your portfolio performance frequently and make changes if needed.
I had invested Rs 25,000 in Sundaram Capex Opp Dividend Fund in March 2008. Its current value is below my invested value. Should I hold on to it or redeem?
-Sowmya K
This five-year-old fund aims to generate long-term returns by investing in equity or equity-related instruments in the capital goods sector. This is a special fund, which is risky for the kind of investment mandate it carries. It has been faring poorly over the past three yea. Holding to it and hoping for a turnaround, can only add to the opportunity loss for you.
Importantly, you should be aware that investing in special funds works only if there is a compelling case for it. Either invest in capital goods if it has less weightage in your portfolio and could work for you or if it has a strong outlook. Consider exiting this fund and look for investing through SIPs, than lump sums that can impact your investment adversely.
I am unable to decide if to invest in physical gold or a gold exchange-traded fund (ETF). I am looking at investing Rs 1 lakh.
-Anil Rai
Gold ETFs have made investments in physical gold easy. Currently, there are ten gold ETFs that are listed on major stock exchanges that one can buy and/or sell, just like you do with company shares. As these funds invest in physical gold, it is almost like investing in physical gold, without the risk of holding it.
Value Research