Reduce Mid-Cap Funds

Q. I am in government service and have been investing Rs 1,000 per month in each of the following MFs through SIP till date. Please advise and guide me for any modification and alteration about my MF portfolio
01. Tata Pure Equity Fund-D from August 2005
02. Reliance Growth Fund-Retail Plan-D from July 2005
03. Fidelity Equity Fund–Dividend from August 2005
04. SBI Magnum Emerging Business Fund-G from August 2005
05. Birla Sunlife Basic Indus Fund-G from December 2005
06. HDFC Top 200 Fund-D from July 2005
07. HDFC Equity Fund–G from August 2005
08. Franklin India Prima Fund from July 2005
09. Franklin India Bluechip Fund from July 2005
10. Franklin India Flexicap Fund-G January 2006
11. Prudential ICICI Emerging STAR-G from May 2006
12. Kotak Opportunities from May 2006
13. Sundaram Select Midcap Appreciation from May 2006
14. SBI Magnum Global-G from May 2006
15. SBI Magnum Contra-G from May 2006
16. DSP Merrill Lynch India Tiger Fund-Regular-G from January 2006

Smt M R Momin, on email

A. I am happy that you have been continuing your SIP since 2005. I am sure that you have seen the benefits of doing so. Though the current behaviour of the stock markets has pained many, continuing the SIP and buying through the lows of the market will multiply your gains in a few years. However, your portfolio has an excess of mid-cap funds and I recommend that you reduce the proportion. You could eliminate Magnum Emerging Business, Prima, Emerging Star, Magnum Global and Flexicap from your current portfolio. HDFC Equity is currently having a portfolio weighted in mid-cap stocks though historically it had more of large stocks. But given its history of good performance, you must continue.

You have two opportunities funds viz. Kotak and Flexicap. I am not much in favour of such funds as I find that for the risk they assume, their performance is nothing to write home about. One might as well invest in any diversified fund.

Prima and Flexicap come from good stables, but have not delivered the goods. In general, do not have so many funds – keep to about six or seven good ones. Do also invest in bond funds regularly to balance the risk in your wealth.