I am holding DSP mutual Fund for the last 5 years.It has not been doing well .Pl advise me should I hold or sell

Ans: Hello Pawan. Reliance Diversify Fund has been replaced with Nippon India Power & Infra Fund. Construction and energy sectors have been among the fund's most significant investments. Furthermore, this fund has an aggressive risk appetite and a time horizon of more than 8 years. Taking all of these factors into account, decide on the appropriate action based on your requirements.

Ans: You can hold as it's a long term fund

Ans: When you invest, try making a portfolio which is diversified. In the scheme that you have mentioned you are only taking exposure to Value style of investing. Have a more broader portfolio which also has growth style of investing + has exposure to mid and small caps as well. You may consider the below,

- ICICI Large & Mid
- Kotak Emerging
- PPFAS Flexicap
- SBI Small Cap

Ans: Hi Shree,
When did you brought it? If you check the holding of this fund, there major allocation is to Infy ~20% and TCS ~18% and all other in major IT companies. IT as a sector is not doing good since last 1year as we are the mojor supplier of services to countries like US and EU, these countries are in problem and hence impacted the sector. You need to hold this fund for atleast 5yrs to see the real benefits.

Disclaimer: Investments in securities are subject to market RISKS. Read all the related documents carefully before investing. Please consult your appointed/paid financial adviser before taking any decision. The securities quoted are for illustration only and are not recommendatory. Registration granted by SEBI, membership of BASL and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Ans: Your mutual fund investments are currently losing value.

Understanding whether to exit or hold is crucial.

Let us assess the situation comprehensively.

Factors to Evaluate Before Exiting
Investment Time Horizon
Review your financial goals and investment duration.

Equity funds need at least 5–7 years to deliver results.

Fund Performance
Compare the performance of your funds to their benchmark index.

Check the 1-year, 3-year, and 5-year returns.

Poor short-term performance is not always a concern.

Market Conditions
Mutual fund performance depends on market cycles.

Temporary declines may reverse with market recovery.

Fund Category and Risk
PSU funds are sector-specific and carry higher risk.

Evaluate if the sector aligns with your goals.

Diversified equity funds are less volatile.

Reasons for Current Decline
Sector-Specific Risks
PSU and sector funds are impacted by policy changes or economic shifts.

These funds may recover when the sector performs well.

Broader Market Trends
Market corrections affect all equity mutual funds.

Short-term dips are common in volatile markets.

Fund-Specific Issues
Poor fund management can impact returns.

Check the fund manager’s track record and strategy.

Alternatives to Exiting
Hold and Reassess
Staying invested during market dips often helps in the long term.

Exit only if the fund consistently underperforms for 3–5 years.

Portfolio Diversification
Avoid overexposure to sector-specific funds.

Add diversified funds to reduce risk.

Switching Funds
Consider switching to better-performing funds.

Choose funds with consistent returns over time.

Tax Implications of Exiting
Equity Mutual Funds
Long-term gains above Rs. 1.25 lakh are taxed at 12.5%.

Short-term gains are taxed at 20%.

Exit Load
Exiting before the minimum holding period attracts exit loads.

Check your fund’s terms before redeeming.

Action Plan for Your Situation
Retain the Funds
Hold if the funds match your risk appetite and goals.

Monitor performance quarterly for any significant changes.

Reallocate Gradually
Shift a portion of funds to diversified equity funds.

Opt for actively managed funds for better risk management.

Regular Portfolio Review
Assess your portfolio with a Certified Financial Planner.

Review fund categories, performance, and alignment with goals.

Finally
Mutual funds require patience to yield returns.

Exit only after detailed evaluation of performance and goals.

Monitor your portfolio regularly and consult a Certified Financial Planner for guidance.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment