Go for funds with track record

I would like to know which of the two new fund offers (NFOs) - Fidelity India Value Fund and Sundaram PSU Opportunities Fund - look good for 2-3 years.

-ST Deepak

Both fund houses have impressive credentials, but, that does not mean their NFOS will be good, too. Let these funds prove their mettle. Only then can one judge them. Instead you can opt go for funds with a proven record.

I want to invest Rs 40,000 in tax saving schemes, before March 2010. I thought of Magnum Taxgain, Canara Robeco Equity Tax Saver. Should I invest the entire amount or go for systematic investment plan (SIP)? With SIP, can I reduce its value after March, after fully investing?

-Sukhendu Chowdhury

Both funds chosen are impressive. Invest via SIP because it ensures regular investing and results in rupee-cost averaging. For the time being, spread your investment in three installments and post March, start a monthly SIP in a fund of your choice.

I would like to invest in debt funds for 1-3 years. Given the low interest rates and rising inflation, kindly suggest which debt fund to invest in and what returns to expect.

-Rakesh

Considering the current rate scenario, go for a short-term fund (liquid plus) like JM Money Manager Super. In the last five years, this category has given around 6.7 per cent (as on December 21).

I am investing in HDFC Top 200, DSPBR Top100 and Magnum Contra for last one year. I want to add one mid-cap fund. Which one to choose - Birla Sun Life Mid Cap or Sundaram BNP Paribas Select Mid Cap?

-Joginder Verma

Both the funds you mentioned are 4-star rated, good funds. You may pick either of them. But, remember these funds are far more volatile than the funds you are holding. So, be more patient. Here are performances of both the funds: 

Fund	YTD (%)	3-Year (%)
BSL Mid-Cap	110.69	17.34
Sund BNP Par Sel Mid-Cap	106.39	13.48

Which index fund would you recommend? How about Banking BeES & Nifty Junior BeES?

-VR Mallik

Index funds are a passive way of investing in markets. It invests in underlying stocks of a market index, according to their respective weightage in that index. And, return are in line with the index movement.

Both the funds mentioned are exchange traded funds (ETFs). Banking BeES tracks CNX Banks and Nifty Junior BeES tracks the Nifty Junior or the 100 most liquid stocks outside Nifty. One can have exposure to sector funds, but it is not meant for core holding. You can look at, ICICI Prudential Spice/UTI Nifty Index Fund/Nifty Benchmark ETS as core holdings.

I have been investing Rs 10,000 per month for one year in growth option of: DSPBR Top 100, Reliance Growth, Birla Sun Life Frontline Equity. Returns are in excess of 40 per cent. Should I exit now and re-enter when the markets fall?

- Varun Sood

If your goal is fulfiled, redeem your investments. If not, remain invested and continue investing, the way you have been doing. A debt fund would have helped you lock gains. Choose an equity-debt ratio like 80:20 and add a debt fund. Rebalance the portfolio annually by buying more into debt and selling equity or vice-versa and maintain the ratio.

Value Research