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Restart SIPs, save entry load

BS Research 

I have invested in an SIP of HDFC Top 200 since 2005. Do I need to stop and start afresh , so that it does not attract entry load. Kindly advise. 

-Rashmi

With effect from August 1, there is no entry load on any of the funds.Though entry load has been abolished, all the SIPs that had been registered before August 1 will continue to attract the loads. So, it would be a wise decision if you stop your earlier SIPs and start afresh to take advantage of the new Sebi norms.

I invested about Rs 55,000 in JM Contra–Growth in late 2007. The current fund value is some Rs 38,000. Fund performance has been pathetic. Should I exit the fund to gain from the opportunity outside or remain invested to cover the loss at least?

-Sushil Parashar

When you invested in 2007, this equity-diversified fund had no track record. Since launch (August 2007), the fund has given a minus 22.98 per cent annualised return. The fund's mandate is to invest more than 50 per cent of its corpus in mid-cap stocks, which makes it more volatile than other plain vanilla equity fund. Considering its consistent under-performance, you may consider exiting this fund in favour of 4- or 5-star rated funds.

Two years earlier, I had invested Rs 30,000 in Reliance Natural Resources (G). Now its NAV is Rs 9.99. Should I sell this fund or hold on to it?

-Milind Bajaj

Reliance Natural Resources was launched in January 2008. You had invested in a fund without a proven track record. At Value Research, we always suggest that one should avoid investing in an NFO or in funds without proven track records. After the fund was launched, the equity went for a prolonged downturn; hence, there is no surprise in the fund's performance. Redeem your investments and invest in 5- or 4-star rated funds, if the fund continues with its under-performance.

I want to invest Rs 1,000 per month for three to five years in a systematic investment plan (SIP). Please suggest a good mutual fund which will give me attractive returns on maturity.

-Vilas L Joshte

For long-term investment, it is better to go with equity. If this is going to be your only investment, then go for a balanced fund like Birla Sun Life '95, DSPBR Balanced, HDFC Prudence or else choose a well-rated equity diversified fund like HDFC Top 200, DSPBR Top 100 Equity, Magnum Contra or Kotak 30.

I'm 31 years old, married and plan to invest in some good equity diversified funds. I have shortlisted these funds based on their portfolio and performance.
* Equity diversified: HDFC Top 200, Magnum Contra, Reliance Regular Savings Equity and UTI Opportunities. 
* Balanced: HDFC Prudence and Reliance Regular Savings Balanced. 

* Tax saver: HDFC Tax Saver and Sundaram BNP Paribas Taxsaver.
I plan to invest via SIPs about Rs 1.5-2 lakh in these funds. Are these funds ideal over a long term of three to five years? Are these funds diversified enough over a long term? 
What is the ideal proportion that I should invest in these funds? Should I invest in some debt funds, too? Could you also suggest some short-term debt/liquid funds?

-Rohit

The funds you have selected can be considered for a long-term investment. If you require tax-saving funds, make them the core of your portfolio. But limit your portfolio to just four to five funds. Decide on a equity-debt allocation before investing. For debt funds, you can consider either Birla Sun Life Dynamic Bond or Fortis Flexi Debt Reg.

First Published: Sun, November 08 2009. 00:33 IST
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