How many Funds to invest in?

#1
Hi,

I am 29, over a period of 3 years invested around Rs6 lakhs in mutual fund, mostly equity based fund.
All my investment is for my retirment, say 25 years from now. As per my MF agent suggestion i have invested this money across 45 funds.

Here is my question.

1) Is it a good idea to invest in so many funds or should i restrict the number of funds?
2) I plan to invest mostly in equity based fund until i turn 35, then split my investment with a combination of equity & debt fund along with some Fixed deposit. Is my plan the right one?


Thanks
Suresh
 
#2
As per my MF agent suggestion i have invested this money across 45 funds.
45????? That's at least 40 too many. I hope that's a typo. If it is not, I would advise you to dump your MF agent and look at consolidating your portfolio into a much smaller number. Your investments are heavily fragmented and over-diversified and may not grow at the rate you expect.

2) I plan to invest mostly in equity based fund until i turn 35, then split my investment with a combination of equity & debt fund along with some Fixed deposit. Is my plan the right one?
That depends entirely on your risk taking capacity.
There are two points that I would like to harp on.
1. Portfolio rebalancing - Look at maintaining a ratio between equity and debt investments, like 75-25. Any FD you make will also be included in your debt ratio.
2. As you are looking at a long term investment and retirement, look to invest the bulk of your equity investments in MFs that concentrate on large caps. At least 60-70% of your equity based MF investments should be concentrated on large caps.

Lastly, dont always go on the advise of your MF adviser. Start doing some leg work yourself. www.valueresearchonline.com has a fantastic "ASK" section, reading through all the questions raised by others would be a great start.
 
#3
Thank you for your advice. Sadly its not a typo. I work abroad and my parents invest my money suggested by my agent. I am planning to invest Rs35,000/month for the next two years and thats why i raised this question.

Once again thanks for the advice. I will do the research and try to consolidate the number of mutual funds invested.

My risk taking capacity is high, means i can wait for a longer time(say 20-5 yrs) and thats why i am willing to invest in equity based mutual funds for the next two year.

I am planning to invest in sundaram select focus (G) ,HDFC top 200 fund(G) and IDFC Small&Midcap Eqty(G) for the next next two years. Is this the right fund to invest. I did a bit research and came up with this list. Let me know if I have chosen the correct one.

Thanks
Suresh
 
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#4
Don't know much about your selections as I have been investing only in ELSS schemes to save on taxes.

Have a look at this list,
http://www.valueresearchonline.com/toprated.asp

They are all 5 star rated at Value Research. As such all the funds in this list have been around for 5 years or more, therefore you should be able to look at their past performances.

Regarding Mid Cap/Small cap funds, one thing to you should know is that these type of funds historically do better that their peers when there an upswing in the market and perform a lot worse when the markets are down in the dumps. I would'nt be surprised if this fund reflects that.