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| Start with balanced funds |
| BS Reporter / Mumbai Nov 15, 2009, 00:46 IST |
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I want to start a Systematic Investment Plan (SIP). I wish to start by investing Rs 2,500-3,000 a month for the next 20 years and I am open to equity funds, too. Please advice about some good schemes I should invest in and how I should balance my portfolio by investing in more than one scheme.
-Nitin Parikh
Since you are investing for the long-term, equity should be your chosen instrument. For a start, you invest in well-rated balanced funds like HDFC Prudence or FT India Balanced. A balanced fund with a 65-35 equity-debt ratio would automatically keep your portfolio balanced. Later on, as you increase the quantum of investment, you may add a pure equity diversified fund and debt funds to your portfolio.
Is now a good time to invest in the ICICI Prudential Income Opportunities Retail-G fund?
-Sundareswaran Krishnamoorthy
There is no good time or bad time. Please do not time the market. ICICI Prudential Income Opportunities Retail-G is a new debt fund, launched in August 2008, that primarily invests in debt securities with a maturity profile of more than three years. The fund has done well by generating 22.02 per cent return since its launch by investing in longer maturity papers.
But its strategy can backfire if interest rates start to go up. Being a new fund, it hasn't quite got the opportunity to show its prowess in the rising interest rate scenario. It would be prudent at this point to invest in some other well-rated medium-term fund.
I have been investing Rs 10,000 monthly for the past one year in the following three funds: Reliance Growth (G), DSP Black rock TOP 100 and Birla Sun Life Frontier (shouldn't this be Frontline?) Equity. What is your opinion on these funds.
-Joe John
Reliance Growth is a 4-star rated equity diversified fund. Well known for its consistent performance, this fund has been able to beat its category average since 2004. While DSPBR Top 100 Equity Reg is a 5-star rated actively managed fund that has protected its investor against the downside risk. Birla Sun Life Frontier Equity is a 4-star rated fund and has done well in falling as well as rising markets. Your funds selection is impressive; you may remain invested in these.
Is it worth maintaining JM Emerging Leaders and JM Basic (both in the growth option) now? Any chance of them improving in the near future?
-Pradiptamohan Basu
Predicting the future is a tough job. However, you can judge a fund based upon its past performance. Except in 2007, this fund has underperformed its category. Since its inception in July 2005, this fund has given a return of minus 6.82 per cent.
During the downturn in 2008, JM Basic could not beat its category average. Both these JM Financials' funds are in bad shape. If these are part of your core holding, then you may consider better alternatives in the same category like HDFC Top 200 or DSPBR Equity.
I have been investing in ICICI Prudential Infrastructure Fund (G) since last year. The fund recently declared a bonus of 10 per cent. How will this impact my investments? Will we also get dividend in the form of extra units?
-Rajneesh Vohra
The fund, on October 25, 2009, has announced a dividend of 10 per cent. The record date for the same is October 30, 2009. Since you have invested in the growth plan, you wouldn't be entitled.
Value Research
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