I had invested in Franklin India Flexi Cap and Reliance Growth, but seeing the market condition, I opted for redemption. I want to park the money in liquid funds for two to three months. I hope to re-enter the markets again in April-May. Suggest some good funds.
-Pankaj Gupta
Timing the market is a futile exercise and we advise you against it. Neither a fall nor a rise can be predicted with accuracy. If the markets continue to rise now, not only will you miss possible gains, you might also find it difficult to enter the market again.
We, instead, suggest you focus on maintaining an asset allocation based on your risk appetite and investment time frame and move proportionate money to debt or liquid funds. If, however, you had been investing to accumulate a target corpus which this market rally has already helped you achieve, go ahead with your redemption plans.
While Reliance Growth remains a good pick, Franklin India Flexi Cap is an average fund. If you choose to exit the latter, other diversified equity funds such as HDFC Top 200 and DSPBR Top 100 can be suitable replacements. If you, however, choose to stay out of the equity markets, Sahara Liquid Variable Pricing, Reliance Short Term and UTI Money Market Mutual Fund are good liquid/debt funds to opt for.
I want to start a Systematic Investment Plan (SIP) of Rs 2,000-3,000 per month. Which is the best fund to start?
-Vinay Rao
It is best to invest in a good 4/5-star rated diversified equity fund like HDFC Top 200 or DSPBR Top 100 Equity.
I had purchased 118 units of Reliance Pharma (G) at the rate of Rs 39. It has grown to just Rs 42, while Reliance Growth (G) has given 10 per cent returns. Should I hold on or transfer my units to Reliance Growth?
-Noel DSouza
Healthy evaluation of equity funds cannot be made in a very short span of time. Reliance Pharma moved from Rs 39 to Rs 42 in less than a month (end-November 2009 to mid-December 2009). Moreover, the two funds, Reliance Pharma and Reliance Growth, are entirely different and will serve different purposes in a portfolio. While the former will be beneficial when taking an additional exposure to the pharmaceuticals sector, the latter is an aggressive diversified equity fund.
Thematic/sector funds benefit when you deliberately want to take additional exposure to a sector. If you do not wish to have a separate fund for the pharma sector, switch to Reliance Growth.
We suggest you do not let thematic and aggressive funds together command more than 20-30 per cent of the total investment value.
I plan to invest Rs 15 lakh in equity mutual funds. Could you suggest some funds? How much should I put in each?
-Mohammad Nahid Siddiqui
You may invest your savings via SIP in some good quality diversified equity funds. These are meant to provide attractive returns over the long term.
We suggest you keep a certain percentage of your portfolio in debt funds. This is mainly to provide stability to the portfolio. Maintain a 20:80 debt-equity asset allocation. Limit your portfolio to five-six funds. Below is our choice:
Diversified Equity funds: HDFC Top 200, DSPBR Equity, Magnum Contra, Birla Sun Life Frontline Equity
Aggressive funds: Sundaram BNP Paribas Select Focus, Kotak Opportunities, Sundaram BNP Paribas Select Midcap
Debt funds: Fortis Flexi Debt, Canara Robeco Income
