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| Don't fret too soon |
| BS Reporter / Mumbai Jun 20, 2010, 00:52 IST |
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I have long-term systematic investment plans (SIPs) in two equity linked savings schemes (ELSS), HDFC Taxsaver and BSL Tax Relief 96-D. The latter has not performed well in the past six months. Should I stay invested or would it be better to switch to any other ELSS fund, such as Canara Robeco Equity Tax Saver?
-Mohammed Saalim
Both HDFC Taxsaver and Canara Robeco Equity Tax Saver are good funds in the tax-saving category. They are well-diversified and have a good mix of large- and mid-cap stocks. The two funds have performed well, both in rising markets (2009) and falling markets (2008) as compared to their category average. These funds are safe bets, typically for conservative investors.
| Fund |
Return (%)
|
| 6-mnth |
2007 |
2008 |
2009 |
| HDFC Taxsaver |
9.70 |
39.44 |
-51.55 |
99.07 |
| BSL Tax Relief 96-D |
3.24 |
76.07 |
-62.67 |
102.77 |
Canara Robeco
Equity Tax Saver |
12.82 |
65.21 |
-46.85 |
89.40 |
“Category Average
(ELSS)” |
4.94 |
59.25 |
-55.56 |
81.79 |
On the other hand, Birla Sun Life Tax Relief 96-D, due to its wrong investment calls, had a disappointing 2008, but it bounced back in 2009. Although the fund has not performed well in the past six months, it is not at all a bad choice. Stopping SIPs on the basis of a few months' poor performance is not a wise decision. Evaluate an equity fund over a long period before making a decision. If the fund's performance deteriorates further, switch to a better performing fund like Canara Robeco Equity Tax Saver.
Please give your recommendations regarding BSL Mid Cap Plan A, Sundaram BNP Paribas S.M.I.L.E. Reg and ICICI Pru Emerging STAR. I understand that mid-cap and small-cap funds are riskier than pure diversified funds and should comprise a limited percentage of my investments. Nonetheless, I want to know how good these funds are.
-Vinay H
Under the mid-cap and small-cap categories, BSL Mid Cap Plan A (4-star) and Sundaram BNP Paribas S.M.I.L.E. Reg (5-star) are good funds, suitable to act as supporting funds in your portfolio. By supporting funds, we mean funds other than core holdings (large-cap). These funds provide a boost to your overall returns in the rising markets. Restrict your exposure to around 20-30 per cent of your portfolio. Remember these funds would have a higher fall as against the benchmark. If required, go for these two funds.
| Fund |
Return (%)
|
| 1-year |
3-year |
5-year |
| BSL Mid Cap Plan A |
39.48 |
14.24 |
24.78 |
Sundaram BNP
Paribas SMILE Reg |
35.24 |
18.25 |
22.70 |
ICICI Pru Emerging
STAR |
50.80 |
2.24 |
19.00 |
Category Average
(Mid- & small-cap) |
38.40
|
7.39 |
18.60 |
I want to invest in Canara Robeco InDiGo Fund. Will it be a good decision to invest in this fund?
-Subha
This new fund offer (NFO) was made open on May 19 and closed on June 10. The scheme will invest in debt and gold. It will invest 65-90 per cent in debt and money market instruments. Its allocation to gold ETFs will range between 10-35 per cent.There will be no need to have a demat account, as required to buy a gold ETF. A similar scheme-UTI Wealth Builder Fund Series II -- invests in gold and a different asset class (equity). This fund seems to be an interesting offer for investors who fear equity investments.
However, we always ask investors to stay away from NFOs/new funds. A better move is to go for proven funds with good credentials.
Value Research
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