Understanding mutual fund investments

I wish to invest in an MF scheme to avail of tax benefits and good returns. My investment horizon is five years. Shailesh Rakhonde







Investments in tax-saving mutual funds (referred to as equity-linked savings schemes – ELSS) are eligible for tax benefits under Section 80C of the I-T Act. Investments of up to Rs 1 lakh in each financial year are eligible for tax benefits. These investments are subject to a 3-year lock-in.







While it is good to see that you have an investment horizon of 5 years, you must also note that investments in tax-saving funds entail taking risk on account of their market-linked nature. In terms of funds — HDFC TaxSaver, Franklin India Taxshield, Sundaram BNP Paribas Tax Saver, Magnum TaxGain and ICICI Prudential Tax Plan are some of the funds from the ELSS category that have impressive long-term track records.







I have SIPs in the following mutual funds — HDFC Top 200, Birla Sunlife Frontline Equity, Reliance Regular Savings and UTI Opportunities, Canara Rebeco Equity Tax Saver, Sundaram Tax Saver and SBI Tax Advantage. I plan to stay invested for at least five years. I wish to invest Rs 4,000 more through the SIP route. Please advise. Dheeraj Lath







Your portfolio is skewed towards the large-cap segment. Also, you already have a number of funds in your portfolio. If you can take on the risk associated with a mid-cap fund, there might be a case for exiting from one of your existing investments and replacing it with a well-managed mid-cap fund.







Reliance Growth and Sundaram BNP Paribas Select Midcap are some that enjoy a 5-star rating from Morningstar (over a five-year period), indicating a superior risk-adjusted return delivered vis-à-vis peers.







Could you give your views on Sundaram BNP Paribas-PSU Opportunities Fund? Also, I wish to know whether Benchmark Nifty Bees is good bet for the long term. Can I hold it for at least 10 years? Dheeraj Lath







Thematic funds offer a high risk — high return investment proposition. This is on account of their homogeneous investments that deprive investors of benefits of diversification. Sundaram BNP Paribas-Select Thematic Funds PSU Opportunities with its predominant investments in stocks and fixed income securities from PSUs, is likely to offer a similar investment proposition. SOURCE;ET