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

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Am you Required to E-file Tax Return?

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   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

Merger of Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund

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 Merger of Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund Tata Mutual Fund has decided to merge Tata Indo-Global Infrastructure Fund with Tata Equity Opportunities Fund, with effect from January 16, 2015.   Investors of Tata Indo-Global Infrastructure Fund can redeem/ switch out units from December 13, 2014 to January 12, 2015 without paying any exit load. For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call Leave a missed Call on 94 8300 8300 Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest Mutual Funds Online Invest Any Mutual Fund Online Download Mutual Fund Application Forms from all AMCs Download Mutual Any Fund A...
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