Skip to main content

Diversification in a portfolio

Tax Saving Mutual Funds Online

Current open Infra Bond Application form

 

In today's uncertain markets, diversification is key to achieving investment success. It is proven that diversification not only reduces risk in your portfolio, but also allows it to perform under different market conditions.

Broadly speaking, you could achieve portfolio diversification (read: asset allocation) by investing in different asset classes, such as equities, debt and gold. But, still greater diversification could be achieved by investing in different securities within an asset class.

Mutual funds have emerged as an ideal option for investors to achieve diversification. Apart from being a diversified investment vehicle, these offer a variety of funds within an asset class. For example, for the equity portion of your portfolio, you have the option to choose from a variety of funds, such as large-cap, mid-cap, smallcap, multi-cap, index, sector, thematic, contra and opportunity funds. If you choose well, both in terms of type and number of funds, you can not only restrict the impact of volatility in your portfolio, but also get better returns over time.

Unfortunately, diversification is also an aspect of portfolio-building where a number of investors err. The common belief is more the number of funds one invests in, the more diversified the portfolio. It is a myth that investors have been believing in for years. Even while investing through systematic investment plans (SIPs), many invest in a number of funds. One often comes across portfolios where an amount as low as ~5,000 is invested through SIPs in five funds.

If your portfolio suffers from over-diversification, it would dilute your returns over time, as non-performing funds pull down overall returns. Moreover, having too many over-lapping funds would invariably make your portfolio quite complicated. It is always difficult to keep track of a complicated portfolio. On the other hand, a few carefully selected funds in the portfolio could provide you with a higher level of diversification and that too, without compromising on your returns.

Over-diversification can harm your portfolio in some other ways, too. For example, a quality mid-cap fund is a must for along-term portfolio, as it can help improve the overall portfolio returns. However, having too many mid-cap funds in your portfolio for the sake of higher diversification would invariably make you compromise on the quality of the portfolio, as stock picking and a sound investment process are major differentiators for these funds. Considering the midcap segment suffers from poor liquidity and limited coverage, it is always prudent to opt for a quality mid-cap fund that has an established performance track record.

While there is nothing like an optimal number of funds that you need to own to have a sufficiently diverse portfolio, factors like the size of your portfolio and your asset allocation can help you decide that number.

Another important aspect that requires attention is the level of risk you are willing to take to meet your returns expectations. Risk tolerance should also be addressed from two perspectives: Financial risk tolerance and emotional risk tolerance.

While investing in the right combination of funds and in the right number, would ensure a good beginning for the investment process, monitoring their progress too, remains key. The right way to analyse the performance of your funds is to compare these with the peer group, rather than the benchmark index alone. If required, don't hesitate to get rid of non-performing schemes. By doing so and re-investing in funds that have better quality portfolios and track record, you can enhance your portfolio returns. However, once you invest in a fund, give its fund manager sufficient time to perform 

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

 

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

 

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

 

These Application Forms can be used for buying regular mutual funds also

 

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. HDFC TaxSaver
  2. ICICI Prudential Tax Plan
  3. DSP BlackRock Tax Saver Fund
  4. Birla Sun Life Tax Relief '96
  5. Reliance Tax Saver (ELSS) Fund
  6. IDFC Tax Advantage (ELSS) Fund
  7. SBI Magnum Tax Gain Scheme 1993
  8. Sundaram Tax Saver

---------------------------------------------

Application form for Tax Saving Infrastructure Bond and more information

Current open Infra Bond Application form

 

Submit filled up application    Collection canter near you

 

 

 

------------------------------------------------
How to apply to REC Bonds?

Apply for REC Tax Free Bonds forms below

Download REC Tax Free Bond Application Forms

Submit the filled up form to Collection canter near you

Popular posts from this blog

Atal Pension Yojana contribution Tax Benefit for spouse

Contributions to Atal Pension Yojana (APY) are eligible for the same tax benefits as the NPS. This means that the contributions can be claimed under Section 80CCD (1B). The current limit for Section 80CCD (1B) is   Rs   50,000, over and above the   Rs   1.5 lakh limit under Section 80C. Section 80 CCD (1) is a different one, meant to cover employers' contribution towards NPS . You cannot get tax benefit by investing in the name of your spouse under Section 80 CCD . ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. IDFC Tax Advantage (ELSS) Fund 8. Birla Sun Life Tax Relief 96 9. ...

Avoid NFOs

  Don't get taken in by the flurry of new fund offers. You will be better off sticking to the tried and tested schemes.   For the past one year, to cash in on the bull run in equities, mutual fund houses have gone on a new fund offer (NFO) overdrive. But experts are unanimous in their advice: avoid NFOs . While past performance is not an indicator of how a fund will fare in the future, it does tell the investor how skilful the fund manager is. This crucial information is missing in an NFO. Not only is there no track record to judge an NFO by, many NFOs are similar to funds that already exist. If the new fund is similar to existing funds, you are better off investing in the latter. Around 67% of the new launches in 2014 were closed-end products. Investing in the NFO of a closed-end fund is doubly risky. In case the fund's performance is lacklustre, a closed-end fund does not allow you to exit. Even though closed-end funds are listed on the stock...

Know the loan-eligibility before buying a house

WHILE on a house-hunting spree, prospective buyers do a great amount of homework before identifying their dream home - the location, property rates in the vicinity, carpet area, developer's reputation, proximity to the railway station/bus stop and so on. Once these aspects score high on the satisfaction front, a decision is made. However, very rarely do the buyers evaluate their own eligibility for getting a loan before finalising the house. Often, the loan sanction is taken for granted. As a result, they get a shock when their loan request is rejected. Therefore, it is best to objectively assess your repayment capacity and take into account other factors before applying for a loan. Here are a few reasons why your loan request could be turned down: Inadequate Income: The bank or HFC may refuse a loan if your earnings fall short of the minimum desired income level prescribed by the lender. Irregular income streams, too, could play spoilsport. At your end, to eliminate this possibi...

Franklin India High Growth Companies Fund

Franklin India High Growth Companies Fund Online One of the key developments that the Street is keenly waiting for is a cut in interest rates by Reserve Bank of India . With demand rising gradually, a rate cut is expected to boost earnings growth for companies. In such a situation, schemes which invest in high growth companies are best suited, especially when seen from a long-term perspective. One such scheme is Franklin India High Growth Companies Fund. Fund managers Anand Radhakrishnan, Roshi Jain and Srikesh Nair strictly follow valuation parameters when it comes to choosing stocks.Valuation parameters, such as enterprise value, price-to-earnings growth ratio, forward price-to-sales ratio and discounted earnings per share, play a critical role in selecting companies for investments. Taking into account these parameters, the fund managers invest in companies which are poised for high growth in their respective sectors. This approach has been in favour of the scheme and it has perform...

L&T Income Opportunities Fund dividend

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 L&T Income Opportunities Fund declares L&T Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( R /unit) L&T Gilt Investment-DQ 0.3 L&T Gilt Investment Direct-DQ 0.3 L&T Income Opportunities Ret-DQ 0.31 L&T MIP-Wealth Builder-DQ 0.3 L&T MIP-Wealth Builder Direct-DQ 0.3 L&T MIP-DQ 0.3 L&T MIP Direct-DQ 0.3 L&T Short Term Opp-DQ 0.26 L&T Short Term Opp Di...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now