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POSTED BY ON January 10, 2011 2:27 pm COMMENTS (3)
Hi,
I have an SIP of Rs.4000 towards HDFC Tax Saver and of Rs.2000 towards HDFC Top 200 Fund. I want to invest Rs.3000 more as an SIP for 2 years into 2 more funds. I intend on investing in 1 equity diversified(Rs.1000 SIP) and 1 banking/pharma fund(Rs.2000 SIP). Please suggest me appropriate funds to invest in or alternatively suggest any other kind of fund if my investment strategy is flawed. Thanks in advance!
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As a principle, there is no necessity to have a mid-small cap fund. Just have a diversified equity fund. I would advise you to just put more money in the same fund.
sectoral fund: just because a sector has been been good for 5 years is not a sufficient cause of investing in it.
As a value-investing purpose, it is better to put money in those sectors which are available at a better value. Banking funds are “current” fads in my view. Stay away from them. Anyways, HDFC top 200 is already 25% in financials (how much more you want).
When should you use a sectoral fund? If you have the capability of taking macro calls on the market. After viewing your overall equity portfolio (all funds and stocks), if you think you are less exposed (=underweight) on a particular sector which you think is going to be better in the future. use a sectoral fund to increase the weightage or buy 1 / 2 stocks in that sector to play out that sector.
If you do not know how to do this, or cannot take macro calls on sectors, stay away from sectoral funds. period.
Ramesh
Why add more funds? And why to add that sectoral fund?
What is the time frame you are looking at?
Ramesh
My estimated time frame is about 2-3 years. I’m looking to add into my portfolio since I haven’t invested in any small & Midcap funds. I thought of the banking/pharma fund since it has performed well for quite a period even during bearish times and has had high returns since launch. So I’m looking to divide Rs.3000 as a SIP into 1 small & midcap fund and 1 sectoral (banking/pharma) fund.