I have been regularly investing in DWS Alpha Equity Regular-Growth through a systematic investment plan (SIP) since December 2008. However, the fund has since been downgraded from 5-star to 3-star. Does it remain an attractive option for investment? Also, advise a better fund if I am to exit this one.
- M Muraleedharan
DWS Alpha Equity Regular is a large-cap equity diversified fund. Despite an average start, the fund flourished in the year 2006 and 2007. It managed the 2008 downside well, due to its large-cap bias. However, in 2009, the fund took some conservative moves and failed to beat the category average, which got reflected in its ratings.
| Returns (%) | 2009 | 2008 | 2007 | 2006 |
| DWS Alpha Equity Regular | 65.17 | -48.3 | 67.15 | 49.01 |
| Category Average | 84.44 | -55.27 | 59.56 | 34.93 |
Declining ratings does not mean you exit a fund immediately. It's a signal that you should closely monitor the performance of this fund. If it continues to underperform, then you may switch to a better fund, such as HDFC Top 200 or DSPBR Top 100 Equity.
I am a new mutual fund investor looking for long-term investments, including tax savings funds. I am investing Rs 1,000 a month SIP in each of the following funds since November 2009: HDFC Top 200, HDFC Tax Saver and Birla Sun Life Mid Cap.
I can invest another Rs 3,000 per month. Should I invest this amount in some new fund or should I increase investment in the current SIPs? How is my fund selection?
- Lovejit
Your fund selection is impressive. All the three are good 4/5-star rated. While HDCF Top 200 has a large-cap bias, Birla Sun Life Mid Cap is mid-cap oriented. Though it is a good fund, you should limit your exposure to around 20 per cent. HDFC Tax Saver is a decent fund. Stay invested in these funds and add stability to your portfolio by investing in a debt fund, such as Fortis Flexi Debt or Canara Robeco Income.
| Our suggested rupee allocation: | |
| Fund | Allocation (Rs) |
| HDFC Top 200 | 2,000 |
| HDFC Tax Saver | 2,000 |
| Birla Sun Life Mid Cap | 1,000 |
| Fortis Flexi Debt/ Canara Robeco Income | 1,000 |
I am looking to invest Rs 2,000 a month for around five to 10 years via SIP in various mutual funds. I am looking at capital appreciation, can take a downturn and will stay invested, but not if there's a capital loss. This is primary to build a corpus for my family. Could you suggest which funds I should invest in to achieve these aims?
- Mitesh Vora
Investing systematically into equities for the long term will help you in accumulating capital.
Also, the intermittent volatility of equities will be nullified to a large extent. But, investments in MFs do not come without undertaking risk. MFs do not guarantee returns and may even lead to capital loss. For equity funds, you may choose to invest in any one of these: HDFC Top 200, DSPBR Equity and BSL Frontline Equity. However, if you cannot undertake the risk of capital erosion, you should look for other investment avenues such as bank fixed deposits. FDs provide guaranteed returns and ensure capital protection.
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