need help in portfolio rebalancing

POSTED BY Amit ON June 28, 2012 9:56 am COMMENTS (11)

Given below is my mutual fund portfolio:

Axis Equity Fund – One time investment – 10000
HDFC TOP 200 FUND – Active SIP – 2000
HDFC Mid Cap Opportunities Fund – Active SIP – 1000
ICICI Prudential Discovery Fund – Active SIP – 2000
ICICI Prudential Dynamic Plan – One time investment – 50000
Sundaram Select Midcap – One time investment – 50000

Out of these funds, RELIANCE DIVERSIFIED POWER SECTOR FUND and Sundaram Select Midcap are not performing well and current value is down by 30 %. Shall I sell them & invest in some other fund or shall I wait for recovery?

Also, is it good to invest in Sector Specific Mutual Fund i.e. Pharma & Healthcare, FMCG, Technology?

Need expert help in rebalancing my portfolio.

11 replies on this article “need help in portfolio rebalancing”

  1. Amit says:

    Thanks Ashal.
    I m going to redeem them & do lump sum investment in these 3 funds. Then will increase my SIP as possible.

    1. Dear Amit, you have to just re arrange your SIP from exit funds to holdings funds.

      If you are able to increase the SIP amount that ‘ll be Icing on the Cake.



  2. Amit says:

    I got it now… Thanks a lot…

    1. Dear Amit, although a lot has been discussed by dear Ramesh but I’m giving you the under current of Ramesh’s suggestions.

      Your active funds ‘ll be –
      HDFC Top 200 – A large cap fund
      IPru Dynamic – A Multicap fund
      Sundaram Select Midcap – A Midcap fund

      Now onwards you ‘ll be investing in 3 different kind funds with 3 different AMCs. That’s the diversification. Regarding the consolidation of all other MFs in the opted 3, My taker ‘ll be to go for lump sum investment from the redemption amount.

      For the increased SIP amount in these 3 funds, you may also go for Debt fund – STP – Eq. fund route.



  3. Amit says:

    Thanks Ramesh…
    I didn’t understand the redemption charges explain by you…

    1. Ramesh says:

      If you sell / switch away to anything (equity/debt fund, etc), the AMC will charge STT which is 0.25% of total amount. So, if you switch a fund of value 50k, Rs.125 will get deducted (goes to SEBI, not to anyone else).

      So, calculate accordingly for total switching + redemption etc. And choose which way you will be better off, and keeping a decent portfolio (because there is nothing like best).

  4. Amit says:

    Thanks Ramesh…
    I will shift my investment to HDFC Top 200…
    can you please explain me… why shift from ICICI discovery to Dynamic fund?

    1. Ramesh says:

      By rearranging as I mentioned, you have a large-mid cap fund, a dynamic (multi) fund and a small cap fund.
      ICICI discovery (is a good fund, but then you have that facility in the form of sundaram midcap and the fund management of ICICI with S Naren in ICICI Dynamic). So it is kind of superfluous.

      Also this way, you get the minimum hit of redemption charges (0.25% of total amount on all equity redemptions).

      If you really really want to have ICICI discovery, even then it is ok. You can set them to HDFC Top 200 and ICICI Discovery. Works well, but with slightly more redemption (though the effect is small). These two funds (if you have confidence in them, I do) are sufficient. Keep them in a reasonable ratio like 80:20 or 70:30 of total portfolio.

  5. Ramesh says:

    Consolidate everything into:
    HDFC Top 200: All other HDFC funds into that. Make a single SIP or multiple SIPs into this fund.

    Then shift from ICICI discovery to Dynamic fund. stop in former and keep in latter.

    Keep Sundaram Select Midcap (a quite reasonable fund).

    Reliance Banking and Power sector fund > Shift to HDFC Top 200.

    Now you will have:
    1. HDFC Top 200 with a major amount, and a good sized running SIP.
    2. ICICI Dynamic, with a good amount, and a running SIP.
    3. Sundaram Midcap, with a good amount. You could start the SIP of UTI Opportunities fund into this.
    4. Reliance Gold. – I will not comment on that.

    Waiting for recovery does not usually help, since you will never know, when is the proper time to get out. The best time is NOW.

    Go for a sector specific fund, only if you have made a reasonable study of the current and future parameters (as opposed to past data alone) and do have a rapport with the lady-luck. 😉


  6. Amit says:

    Yes, I have gone through other threads on same topic & from that I understand that its not good to have so many funds…

    I also want to reduce number of fund… can you please suggest me, which funds I should carry on with?

    also, shall I sell the fund in negative value or wait for recovery?

  7. Ramesh says:

    I think you want to ask for Portfolio consolidation rather than rebalancing. The latter means across asset classes, but barring one fund all others are equity or equity oriented funds.

    First, we need your Own thought process in getting so many funds. If you do not have any, please go through other threads in which such suggestions have been made. Try and understand those, the basic ideas behind that and then we can go forward from that.

    Unless you do this exercise, you will get into another mess some time down later.


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