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    Some mutual funds are not performing well. Should I sell them?

    Synopsis

    If you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

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    I am investing in a mix of mutual fund schemes.
    Aditya Birla Sun Life Manufacturing Equity Fund
    SBI Magnum Multicap Fund
    Axis Multicap Fund
    IDFC Sterling Value Fund
    HDFC Small Cap Fund
    Aditya Birla Sun Life Pure Value Fund

    Some of the schemes are performing well and some are not. Which schemes should I sell?
    -Saurav Bhattacharya


    Ashish Modani, Founder, SLA Financial Solutions, responds:

    Things You should consider
    • Annualized Return
      for 3 year: -9.64%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: 2.8 Years
    Things You should consider
    • Annualized Return
      for 3 year: -2.3%
    • Suggested Investment
      Horizon: >3 years
    • Time taken to double
      money: 3.11 Years
    First of all, get used to the reality that some schemes in your portfolio will always be underperform. Its just not possible that all the batsmen you chose will score a century all the time. The secret of wealth creation is to choose simple plain vanilla funds and keep investing for years and decades for compounding to take place. Each fund goes through phases of underperformance and outperformance.

    I would ask you to stop investing in Aditya Birla Sun Life Manufacturing Equity Fund. It is a thematic fund. Instead, invest in a large and mid cap fund. Also, focus on asset allocation and not on fund’s performance. You can also give some space to debt mutual funds.

    When it comes to investment, it is important to identify why you are investing. Why stands for your dreams. Returns are not 'why' of your investments; its just a byproduct of the journey towards your goals. You have not mentioned your goals and that’s missing badly here.
    (If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)

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    1 Comment on this Story

    Dr. Praveen Pillai387 days ago
    I am 43, NRI and open for moderate to high risk. I have Principal Hybrid Equity Fund as SIP since last year and the fund is down by 1%. Should I consider switching to Principal Emerging Bluechip Equity fund or should total redeem and come out of Principal AMC.
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