Portfolio Makeover - Review Needed

#1
Hi,

Till now I had invested in the below ELSS funds just for tax saving purpose based on pure recommendations and have got a consolidated 30% returns from this portfolio.

Reliance Tax Saver Fund
DSP Blackrock Tax Saver
IDFC Tax Saver ELSS
SBI Magnum Tax Gain
Principal Personal Tax Saver
Sundaram Tax Saver

I am thinking of giving a make over to my portfolio of assets by redeeming units of all the above except principal as it is still in negative.

From my net income of 50K I am deciding to allocate in the below fashion
70% Equities via SIP in MF's
10% Debt via GSIP launched by ICICI
5% Gold ETF
5% PPF

The MF's which I have decided to SIP's are as per the April 2011 recommendations of ICICIDirect which are :

Fidelity Equity (Large & Mid Cap) - 8K
ICICI Prudential Dynamic Plan (Mid Cap) - 8K
HDFC Top 200 (Large & Mid Cap) - 8K
HDFC Equity (Mid Cap) - 5K
Sundaram Select Mid Cap Fund (Mid & Small Cap) - 5K

This would be first time foray in large amounts for SIP's. Before jumping aboard I would like to know if my overall portfolio is good for a start or should I start with small amounts?

Your help is very much appreciated. Thanks
 
#2
Hi Nitin,

First of all, I would like to commend you on taking the plunge to revamp the portfolio. From an investment perspective, the amount is your choice. If you feel you can afford to put a certain amount for investing, then it should be fine. Always remember that early birds reap a rich harvest. If you do put in large amounts now, over a prolonged period it should return some fantastic returns.

Prior to analyzing your portfolio, I want to ask a question. Is 50K your income or surplus for investment after taking care of needs? Even if you don't have to support your family or have any other obligation, I would recommend you to keep atleast 10-20% of your income in cash to build a contingency corpus. You can consider putting these in a FD linked to your Savings account. BTW, FDs are also giving some fundoo returns which you can consider.

Coming to your portfolio, few corrections and suggestions:
- ICICI Pru Dynamic is a Large and Midcap fund, not a complete mid-cap fund
- HDFC Equity is a Multi-cap fund
- Sundaram Select Mid-Cap - AVOID. I would suggest a small revamp of your portfolio as shown below

Multi-cap: HDFC Equity (5K)
Large & Mid-cap: Fidelity Equity (8k)
Large & Mid-cap: DSPBR Top 100 (8k)
Large & Mid-cap: HDFC Top 200 (8k)
Mid & Small-cap: ICICI Pru Discovery (5K)

As I wanted to suggest ICICI Pru Discovery, I have swapped ICICI Pru Dynamic with DSPBR Top 100. If you feel otherwise, it is also fine to have both funds. In Mid and Small-cap space, apart from IDFC Premier Equity fund, I would definitely suggest ICICI Pru Discovery fund as the automatic choice.

Happy Investing !!
 
#3
Hi Asterix,

Thanks a ton for your quick response. Also, thanks for the corrections...

Ok, first of all I think i made an error in telling that 50k is my net income. What I wanted to say was out of my net income, 50k is my surplus which I would like to invest.

FD or savings account these days are more or the less giving similar returns i.e 4-5 % except only if you invest for a large period like a year, 5 years or so. For contingency I think keeping liquidity in savings will suffice. Dont you think so?

For SIP allocations, I chose the recommendations by ICICI direct from here


But now i am concerned as you mentioned to avoid Sundaram SIP. So I guess I should not follow the recommendations. I only was following it since I did not know which would be a better combinations of funds from the large amount of 4 star or 5 star funds.

What do you say about Debt allocation? ICICI Direct manager asked me to invest in their new product GSIP which would give me a guaranteed 10% dividend every year over a total amount which I would have to invest for 7 years through SIP. Do you know about this?

As a last advice, could you also tell me which Gold ETF can I invest in? Will 5% of a Gold ETF in portfolio be good?
 
#4
Hi Nitin,

I am happy about you clarifying on certain fronts. Coming to FD, I am not sure if you have been informed appropriately. FDs give a 9.5-10% interest even for a shorter period. Please have a look around at different banks and their interest rates.

For MF investments, please dont take anyone's words (including mine) to be the last statement etched on rock. Do your due diligence and then take an informed decision. We share what we think is right, but ultimately it's you who has to walk through the door :)

I am not aware of GSIP from ICICI Direct Manager. However, I would suggest that you can either consider a MIP (HDFC long term MIP, Reliance MIP) or go for FDs. My personal preference in the current scenario is for the latter.

All Gold ETFs be it BEES, Reliance, UTI etc are all same. They track the price volatility of 1gm pure gold. You can consider anyone of them. BEES is the more preferred one and you may go in for it. 5% is a decent number. I am sure that you have put in some thought into converging onto 5%.

Welcome to investing community.

Happy Investing !!
 
#5
Hi Nitin,

I can see from your selection there is some diversification. Diversification helps reduce risk especially when market is volatile. I would suggest these 2 funds for your portfolio, pls review whether they meet your investment objectives.

ICICI Prudential Focused Bluechip Eqty* fund (Purely large cap) - This fund has given high returns consistently for the past 3 yrs. It also has the added advantage of investing almost in large cap companies. So, your risk is greatly reduced compared to other equity MF's.

HDFC Mid-Cap Opportunities (Small and mid cap fund) - This fund has given much higher returns than sundaram select mid cap both in short and long term.

I have selected funds with good returns consistently as main factor. But, i would suggest to get to know your selections in detail in websites on indian mutual funds such as value research online, morningstar india, etc.

Hope i was some help.:)
 

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