Financial Guidance - Diversify Your Portfolio

Q.Given below are the details of mutual funds I am holding. Please guide me whether to continue holding those funds or redeem the same.

A. Ramesh, this portfolio of funds is very off-beat. There are no mainstream funds, but only sector-specific and an ‘opportunities’ fund. If this is the whole portfolio, then it desperately needs diversification and improvement in quality of funds held. If one were to consider the four funds by themselves then I can comment further.I would consider an exit from JM Basic and Kotak Opportunities for reasons of performance and quality. Though the concept of a go-anywhere opportunities fund sounds good, these funds as a category have not been able to beat the mainstream diversified equity funds.

So I would any day replace this with a mainstream diversified equity fund. The gap in performance between this and, say, HDFC Equity fund is large. Now to consider the other two funds – Infrastructure as a theme is acceptable due to its large scope in India. But within this sector, fund performances have differed vastly. The recent performance of DSP TIGER has been better than the others in the pack, while ICICI Pru Infra has performed better in the 3-year time frame. I Pru Infra has been taking more concentrated calls in its fund which has been affecting its recent performance. If they work out, it could likely outperform the others. If you prefer a diversified approach, retain TIGER; else keep both.