CorporateSmall allocation to sector funds
I have invested Rs 1 lakh in Reliance Diversified Power Sector Fund. Its value has come down to Rs 74,000. What is the future outlook of this fund? Should I stay invested or redeem?
-Sanjay Pant
Jindal Steel brightens on acquisition buzz
Reliance Diversified Power Fund invests in power stocks and has spread into other energy sectors as well. It has been performing well in the past, but note that it is a sector fund. It will do well only when the sector outperforms. Hence, it is a risky offering. It is not suitable to be a core holding of one’s portfolio. One should have only a small allocation to such a fund. The fund still holds promise, but do not get overloaded.
Please tell me how daily dividend payment is arrived at for funds that offer such an option.
-Aariff
Daily dividends are arrived at by subtracting the face value of a fund’s units from their appreciated value. So the capital appreciation, over and above the face value of the fund’s unit, is paid as dividend on a daily basis.
I want to invest in four large-cap funds via SIPs for the long-term i.e. 10 to 15 years. Kindly suggest a few large-cap funds which will give high returns at a low risk.
-Vivek Tyagi
It is indeed a wise decision to invest in large-cap equity funds for the long-term. Equity as an asset class is most suitable for such a long time frame. You must invest in diversified equity funds that are well-rated and have displayed consistency in performance over the years. You can choose from funds like Birla Sun Life Frontline Equity, DSPBR Top 100 Equity, HDFC Top 200, HSBC Equity, Franklin India Prima Plus and DSPBR Equity.
I want to invest Rs 10,000 per month for five years, at the end of which I seek to accumulate Rs 10 lakh. I can take risks since I am 34 years old, have my own house and all liabilities have been taken care of. Please suggest some aggressive funds.
-Riteesh Mathur
To accumulate Rs 10 lakh at the end of five years by investing Rs 10,000 every month, you need to earn an annualised return of over 20 per cent on your investment. This is a high expectation. However, our advice is that you should choose from aggressive funds that have proved themselves over the past. You can choose from Kotak Opportunities, Sundaram BNP Paribas Select Focus, DWS Investment Opportunity and Reliance Regular Savings Equity.
I am planning to start investing in an ELSS through the SIP route. The time for which I would like to remain invested is at least five years. Please suggest some good ELSS funds I could consider.
-Saugata Banerjee
Choose from well-rated tax saving funds like Sundaram BNP Paribas Tax Saver, Magnum Taxgain, Canara Robeco Equity Tax Saver and Franklin India Taxshield.
I invested Rs 21,000 in JM Contra Fund and I am facing huge losses. Please advise me if I should opt out of the fund or remain invested.
-Anand Malgatti
This fund has the mandate to invest in out-of-favour stocks and tilts towards mid-caps. It has been one of the worst performers in its category. It shed 70.67 per cent during the market crash in 2008. Even during the market recovery this year, it lags its peers. For instance, UTI Contra has delivered eight per cent, while JM Contra has fallen by almost 50 per cent (1-year return as on June 14, 2009). It would be better to move out of this fund and deploy your money in a more lucrative investment.
Value Research