Do Not Become Fund Collector

- Shaishav Shah, On Email

A. All you have to do is add 3 more funds to your portfolio, and you will have one for every year of your life! On a more serious note, please do not aim to become a fund collector – being an investor is hard enough. Most of the funds in your current SIP list are fit to be weeded out, in my view. Another observation is that there are just too many mid cap  oriented funds in the list of current funds. You see, not only are they more volatile (meaning, unpredictable large swings), in the current environment they have become fundamen-tally more risky. Smaller companies, in general, have a lesser strength to withstand this downturn. Large companies, due to their size, have greater resources to go through the down-turn. Hence one may see more small and medium sized companies suffering from the lack of credit and contraction in turnover. The tax saver funds take advantage of their lock in clauses and include more mid cap stocks, because over a longer period their share value could jump more than a large established company. So in any case you have a large dose of mid caps. Of your list of 15, I would retain only Fidelity Equity, Sundaram Select Mid Cap, Pru Infrastructure and the Power Sector Fund.  Birla Sunlife Dividend Yield Plan is a low return – low volatility scheme. Compared to other equity funds, this has had a lower standard deviation. HDFC Growth is a reasonable fund, with large cap orientation. Kotak 30 has also been doing reasonably well. Funds I would like to have are DSP Blackrock Top 100, Sundaram Select Focus, Franklin Prima Plus and IDFC Equity. I do hope that you are also saving money in income funds and bank deposits apart from equity funds!