Financial Guidance - 3 Best Mutual Funds

Q I am a subscriber of DSIJ for more than 10 years. My NRI son has given Rs 1 lakh to invest in various mutual funds with an outlook of 5 years. Based on your advice, I have selected the following six funds. Please comment on their suitability and recommend three out of them for investment of Rs 1 lakh with weightage, if any.
1.  Birla Sunlife Dividend Yield Plus (G)
2.  DSP BlackRock Top 100 Equity Fund (G)
3.  HDFC Growth Fund (G)
4.  Franklin India Blue Chip Fund (G)
5.  Reliance Growth Fund (G)
6.  Sundaram BNP Paribas Select Focus Fund (G)
I request you to add any other better mutual funds over these six funds and recommend three out of the lot.
                                        M. A. Raheman, on email.

A Birla Sun Life Dividend Yield has not been convincing in its long term performance. As a concept, the dividend yield basis has not helped much. The dividend yield as an average on the Sensex has never really gone beyond 1.5 per cent to 2 per cent, which is not much. The fund, however, has a dividend yield currently at 3.4 per cent due to its selection and concentration of stocks. The sustainability of dividend payout of the stocks in the portfolio is not clear. The fund has lost lesser than its peer group and in the general category of diversified equity funds over the last 12 months at -38 per cent, but its three year performance has much to be desired as growth funds have delivered higher risk adjusted returns. The fund philosophy would work in falling market, but underperform in a rising market. Eventually, this is a low volatility product. Reliance Growth Fund is a mid cap-oriented growth fund, which has been a good performer, as compared to its peer group. Mid cap has had more than its share of volatility, but that is the nature of the segment.

The others are all large cap-oriented funds, and except for Bluechip, have medium and long term performance records. Bluechip has not been performing as well in the recent past, though its long term CAGR is reasonable and above the index. Sundaram Select Focus has been a good manager, but the philosophy does result in higher volatility due to concentrated holdings. But I would place it well in an aggressive portfolio and also in moderate portfolios.

Three funds for you would be DSP Blackrock Top 100, HDFC Growth and Select Focus!