Add debt for portfolio stability

I am investing Rs 2,000 via SIPs in ICICI Infrastructure, Reliance Regular Savings Equity and Reliance Diversified Power Sector fund for the past 18 months. I want to continue investing in them for the next 10 years. Are these schemes good for the long term? I intend to invest another Rs 5,000 through SIPs. Please suggest whether I should increase the amount in the existing schemes or go for HDFC Top 200 and IDFC Premier Equity Plan A. I can take reasonable risk.

- K V Reddy

ICICI Prudential Infrastructure and Reliance Regular Savings Equity are 5-star rated funds. ICICI Prudential Infrastructure and Reliance Diversified Power Sector Retail are thematic funds that invest in stocks of infrastructure and power companies, respectively. One can have a small allocation to thematic funds but they should not be the core holding. Reliance Regular Savings Equity is a fund that has showed quite a lot of promise. Since you are willing to bear the risk, do continue your investment in the above funds. For additional investments, look at debt funds like Fortis Flexi Debt or JM Money Manager Super. This will stabilise the volatility of your portfolio.

I am retired, interested in investing in hybrid debt funds. Also, my daughter wants to invest in equity diversified funds via SIPs. Please suggest some credible ones?

- Satish Dey

Hybrid debt funds invest a major corpus in debt and a smaller amount in equities.You may invest in monthly income plans (MIPs) like Birla Sun Life Monthly Income or HSBC MIP Regular. And, your daughter may look at equity diversified funds like HDFC Top 200, DSPBR Equity and Reliance Regular Savings Equity.

Please advise about the potentiality of Religare PSU Equity fund and whether it is worth investing in or not.

- D N Bhattacharyya
 
Religare PSU Equity is a new fund (October 2009). Though a unique offer, it lacks track record. It's always better to invest in funds that have been around and proven their worth.

I want to invest in a small/mid cap fund. Please suggest a few good ones. I would like to know about IDFC Small-and Mid-cap Equity fund. Is it good to invest in this fund?

- Shashi

Small-and mid-cap funds have the potential to earn attractive returns, but they might be riskier. IDFC Small and Midcap Equity primarily invest in CNX Midcap index’s small-and mid- cap stocks or stocks that have a market cap lower than the highest component of the CNX Midcap index. Avoid this fund as it is relatively new and invests in other mid-and small- cap schemes like IDFC Premier Equity, Sundaram BNP Paribas Select Midcap, Birla Sun Life Mid Cap.
Rating                                             1-Year                         Return (%)
Birla Sun Life Mid Cap                 4-star                          119.39
Sundaram BNP
Paribas Select Midcap                4 star                           118.95
IDFC Small and
Midcap Equity                                -                                   104.35
IDFC Premier Equity                    5-star                          102.47
As on December 24, 2009

I have invested Rs 3 lakh in three funds - HDFC Equity, Reliance Growth and Magnum Contra. Now I want to start SIPs of Rs 10,000 each in the same funds. Is my selection right?

- Mathew

All three funds in your portfolio are either 5-or 4-star rated equity diversified funds with a commendable history. Hence you may go ahead with your investment plan.
                                                                 Return (%)
Fund                                 5-year                3-year                   YTD
HDFC Equity                   29.02                 17.59                    104.16
Reliance Growth            30.76                 17.64                      94.80
Magnum Contra             31.40                 14.89                      89.01
As on December 24, 2009