I want to save for my one-month-old daughter. I can invest up to Rs 10,000 per month for the next 10-15 years. Suggest me funds and debt equity allocation.
-Devendra Mishra
With this time frame, you can be an aggressive investor and consider an 80:20 equity-debt allocation. You could invest Rs 10,000 across two-three funds that have a large- and mid-cap exposure such as HDFC Top 200, DSP BlackRock Top 100, IDFC Premier Equity and Birla Sun Life Mid Cap.
I have an systematic investment plan (SIP) in Magnum Contra (growth) since November 2007. The fund does not have a three-star rating. Should I continue investing for another two years?
-Anoop
This is an impressive multi-cap fund that boasts of a good long-term record. However, it is no more true to its calling in taking a contrarian position. Investment in such a fund goes through phases when the fund would underperform the category average simply because of its stock picks. This has been reflected in the fall in its ratings. There are better performing funds in the category and you should consider switching to those.
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I have started investing Rs 1,000 a month each in Reliance Growth, Sundaram Select Midcap, Sundaram Select Focus, Birla Sun Life Frontline Equity and HDFC Prudence since October 2009. I want to invest for 19 years and am thinking of one more large-cap fund. Can you suggest one?
-Manish Patel
Your selection of funds has a mid-cap bias. This may be because of your aggressive stand and would works well in the early phase of a 20-year investment plan. Your unrealised gain on an investment of Rs 65,000 in the past year is Rs 14,300, which is good.
Funds | 3-year return (%) |
Reliance growth | 12.5 |
Sundaram Select Midcap | 13.27 |
Sundaram Select Focus | 2.38 |
BSL Frontline equity | 10.68 |
HDFC Prudence | 15.72 |
Returns on 26, October 2010 |
Consider moving from Sundaram Select to some other large-cap fund such as DSPBR Top 100. You need not look for another fund to start an SIP at this moment. You will be better off increasing your contribution to some of the existing funds in your portfolio.
I am investing Rs 2,000 a month in SBI Magnum Global Fund (G), SBI Magnum Comma Fund (G) and SBI Blue Chip Fund (G) since 2008. I now want to increase my investment by Rs 10,000 a month. Please suggest.
–Suresh
You have a portfolio bias towards SBI Mutual Fund. This is not good. Despite such a move, the power of SIP and compounding has done its job. Your investment of Rs 1.5 lakh in the past two years has had an unrealised gain of Rs 87,290. Had you selected the better funds in the category, you could have had a far higher gain.
With the additional surplus of Rs 10,000 you wish to invest; look for funds with a large cap and large- and mid-cap focus, such as DSPBR Top 100, HDFC Top 200, IDFC Premier Equity and Birla Sun Life Midcap funds to invest in. This way, you will earn more than what you have managed in your current portfolio.
I am 32 and want to invest Rs 20,000 per month in mutual funds via SIPs for long-term. My plan is to invest Rs 4,000 across five funds; Fidelity Equity, HDFC Top 200, BSL Frontline Equity, Sundaram Midcap and DSPBR Small and Midcap. Please advise.
—Baiju MP
As a 32-year-old, you are entering investing in equity MFs a bit late in the day. However, you have made a good selection of funds. These have a large and mid-cap balance, which over the long term will help you get both the stability and the necessary fillip in your portfolio. Sticking to these funds for a five to seven year time frame will add value to your investment growth.