I have monthly SIPs of HDFC Tax Saver (₹2,500; current value: ₹4,06,620) and HDFC Top 100 Fund (₹3,000; current value: ₹54,098). I am planning to increase the contribution to ₹5,000 each for the above funds. Is it advisable to invest in HDFC Equity scheme?
—Name withheld on request
Both these funds have been middle-of-the-road performers in recent years. The tax-saver fund is ranked 18th among 30 funds and 17th among 29 funds in three- and five-year performances respectively. The Top 100 fund has a better record of being 19th out of 70 funds and 7th out of 62 funds in the same time periods. However, both these funds’ short-term performances have been in the lower half in their respective category rankings. You should continue your SIPs, but to add to your portfolio, you may want to choose different funds. It would also help you diversify across different fund houses rather than be tied to a single AMC. If you want another tax-saver fund, you can consider ICICI Prudential Long-Term Equity fund. For an equity fund, Franklin India Equity fund would be a good choice.
I invest in MFs and for long-term debt allocation (more than 10 years), I have invested in UTI Dynamic Bond Fund and Birla Dynamic Bond Fund (10% allocation to each). Should I continue with these funds, given the recent changes in schemes?
—Vishal
Dynamic bond funds, as a category, has taken a beating in the past year as the funds have slowly adjusted to the rising interest rate scenario. The two funds in your portfolio are no exceptions. These funds are rebuilding their portfolios by lowering the duration of their holdings. It would take some time for them to start delivering good returns again. Considering that you are holding these for the long term, you can continue holding them. But if you would like to move to a different category of funds, you should go to ultra-short or short-term bond funds, thereby lowering the risk in your portfolio.
I have monthly SIPs of ₹4,000 each in Aditya Birla Sun Life Tax Relief 96 and Axis Long term Equity Fund. I am planning to invest for the next five years. Also, I wish to invest in equity funds. Please advise.
—Chaitanya
Both the tax-saving funds you have are worth holding. If you would like to add to your portfolio, you can do so by taking a more focussed approach. The ELSS funds are broadly diversified funds that take a wide exposure in the market. You can consider adding two or all three of these types of funds depending on the sum you want to invest. You can add a pure large-cap fund such as ICICI Prudential Blue Chip, or add a mid-cap fund such as L&T Midcap fund, or add a equity-oriented hybrid fund such as HDFC Hybrid Equity fund. All these funds will add more variety to your portfolio both in terms of market coverage (with the HDFC fund adding debt as well) and investment styles.
Srikanth Meenakshi is co-founder and COO, FundsIndia.com. Queries and views at mintmoney@livemint.com