The Hindu Business Line : Fund Talk

I am interested in investing around Rs 2000 per month in a diversified equity fund through systematic investment plan. Can you suggest a good fund? Is this the right time to invest one-off in some growth fund?

Biswajit Majumder

From your queries, we assume that you are looking to invest only a portion of your total savings in equity funds and are willing to assume some risks on this investment. All equity fund investments are subject to downside risks and returns may swing substantially from year to year, with the possibility of a negative return as well.

If you would still like to invest in equity mutual funds, diversified equity funds with an established track record over a five-year period are the best option for first-time investors. We have suggested a few funds at the end of this column.

While investing, it may be best to avoid one-time investments and take the Systematic Investment Plan(SIP) route. SIPs allow you to put in a fixed amount in an equity funds/funds of your choice on a monthly basis. If the investment is for the long term, it may be best to spread it out over a three- or five-year period, so that you can reduce the risk of putting a large lumpsum in the equity markets when the markets are overheated.

Based on the consistency of their performance over a five-year period, we think funds such as HDFC Top 200 Fund, Franklin India Bluechip Fund, and Templeton India Growth Fund may be good choices for you. Diversifying across two or three funds may help reduce risks associated with slippages in fund performance, and manager or ownership changes.

But if you plan to invest a small portion of your portfolio in equity funds, you may invest even in just one of these funds. Do look up the status of your investments on a periodic basis, say once in a quarter or half-year, to keep track of any changes in investment objectives or fund manager.

Queries may be e-mailed to mf@thehindu.co.in, or sent by post to Business Line, 859/860 Anna Salai, Chennai 600002.

Aarati Krishnan

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