I am 20 and in State Bank of India as a clerk. My monthly income is around Rs 7,000. I can easily save Rs 2,000 a month. I want to buy a bike (around Rs 70,000) as soon as possible. I can go for a moderate risk equity diversified fund. What fund should I choose? How should I apply for it?
-Dinesh
Since you seem to be starting to invest, our suggestion is balanced funds, which, as you state, are moderate risk funds. Invest your savings via SIP in the following funds: DSPBR Balanced, HDFC Prudence, FT India Balanced.
As for the second part, you can either go to the website or the offices of any of the fund houses mentioned above, and get the application form, fill and send it back or approach a mutual fund distributor.
I am 25 and want to know some good funds which come with 80C benefits. I already have Magnum Tax Gain and HDFC Tax Saver. I am ready to invest in open-ended funds as well.
-Raj
Since you have not mentioned the quantum of your investment, we cannot gauge the extent of your need. Your portfolio already has two good tax saving funds. We believe two funds are enough. If you still need to diversify, look at Canara Robeco Equity Tax Saver and Fidelity Tax Advantage.
Could you suggest which Gold ETF is best for investors with a horizon of about three years? How do the schemes work and what are the expected returns?
- V S B Sarma
Gold ETFs are funds that invest directly into gold and are listed on stock exchanges. These funds are passively managed and therefore its prices are a reflection of the actual price of gold in the open market. While choosing, one may look at the tracking error of the funds and go for the ETF with the smallest one.
There is no lock-in period for these funds. We cannot give any expected returns as it is not possible to predict the future price of any commodity.
Fund YTD
Return (%)
Gold Benchmark ETF 24.51
UTI Gold ETF 24.12
Kotak Gold ETF 24.09
Quantum Gold 23.98
Reliance Gold ETF 23.77
SBI Gold ETS -
As on December 14, 2009.
I have been investing through SIP in Sundaram BNP Paribas Select Focus Fund since Jan 2008. However, I see this fund has become a laggard amongst its peers, as well as against its benchmark. Having been downgraded from a 5-star rating at the beginning of this year to a 3-star rated fund at the end of Oct 2009, does the fund still remain an investment- grade one? Should one continue investing in it?
- A Malhotra
Star rating reflects risk-adjusted return over the long run. One can use these as a guiding factor for investment decisions and alter the investment based on the changes in the star rating. But before doing that, one should observe the change over a long period of time and only if there is a consistent downgrade or upgrade in the star rating should one alter investment accordingly.
Sundaram BNP Paribas Select Focus is, by its mandate, an opportunistic fund that will invest in sectors or themes it believes to be most promising. Since July 2007, its rating has gone below 4-star to 3-star on only three occasions. It was rated 3-star in June 2009 but it again became 4-star in the next month. Its rating again came down to 3-star in October 2009. If the fund is not able to regain a higher rating or gets further downgraded over the coming months, then one can review an investment in it.
