| Sr. NO | QUERY | ANSWER |
| 1 | Mr. A has been investing through the systematic investment plan (SIP) route in the following schemes:
Tata Infrastructure fund, SBI Magnum Tax Gain 1993, Reliance Regular Saving Equity (growth), BNP Paribas Select Focus (dividend reinvestment) fund, SBI Magnum sector Fund Umbrella-Contra fund and Birla Sunlife Frontline Equity Fund Plan-A (growth). Now he wishes to make fresh investments in mutual fund schemes. Keeping his current age which is 51 what could be the suggestion for investments. |
Mr. A’s current portfolio consists of well performing funds. Assuming that the portfolio has a maximum allocation to fixed avenues (fixed deposits, post office instruments, bonds, etc) and since Mr. A has been building corpus for the purpose of retirement, which is still seven years away, the rest of the funds can be invested in DSPBR Equity Fund, HDFC Top 200 and ICICI Prudential Dynamic Fund.
The expert further wants to emphasise here that Mr. A should keep maximum portion of investments, say 70-80%, in fixed avenues and the rest in equities through mutual funds.
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| 2 | Mr. B has started two systematic investment plans (SIP) – one in Kotak 30 Growth (Rs 1,200 per month) and another in Kotak Tax Saver Growth (Rs 1,000 monthly) since the last one year. What could be the composition of his portfolio? What is the list of top five equity diversified funds for a five-year investment horizon, which could yield good returns? | During the five-year period through December 2009, the Kotak 30 posted a 24.2% return, as compared to its peers’ average of 22.4%. However, in short-term, the fund has been an underperformer. Kotak Tax Saver had been an underperformer vis- a-vis its peers. Mr. B can switch from Kotak Tax Saver to Fidelity Tax Advantage and Sundaram BNP Paribas Tax Saver. For any additional investments, he can consider investing in DSPBR Top 100, Birla Sun Life Frontline Equity, HDFC Top 200, UTI Dividend Yield and ICICI Prudential Dynamic Fund in equal instalments through the SIP route. |
| 3 | Mr. C started a monthly SIP in Fidelity Tax Advantage fund in April 2006 for a period of three years. Can he redeem all the accumulated units at one go or should he do it in phases?
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Since Mr. C has invested in a tax-saving fund which has a lock-in period of three years, each monthly installment gets locked for the next three-year period. Therefore, Mr. C can only redeem investments made till December 2006. If he has opted for the dividend reinvestment option, then all the dividends reinvested are locked in for the next three years from the date of dividend reinvestment. He can call Fidelity Mutual Fund and check how many units can be redeemed.
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