Today,

After 1 year (5 th May 2007) of my intial investment,
i have Reshuffeled and Trim My Portfolio.

Old Portfolio -

1) DSPML Opportunities Fund
2) Franklin India Prima Plus
3) HDFC Equity
4) Reliance Vision

5) SBI Magnum Global Fund
6) Reliance Growth Fund
7) Sundaram BNP Paribas Select Mid Cap Fund.

i have Reshuffeled & Trimmed my portfolio bcoz of 2 reasons.

1) Out of these, the first 4 r Large-cap orineted funds while last 3 r Mid Cap Funds.
At the Time of Investment (5th May 2007) all of them were 5-star rated.

Today Only Reliance Growth is 5-star rated while others loose 1 star and become 4-star rated funds except Reliance Vision Fund which loose 2 stars in last 1 year and become a 3 star fund only

(NB- All the star ratings r according to www.valueresearchonline.com )

So being an Investor, i have decided to Reshuffle my Portfolio.

2) Second important reson is that, i need to trim my portfolio.it means i need to reduce number of funds from my portfolio.

Do u know y?...
Bcoz My portfolio was suffering from "Problem of Plenty" or "Over-DIversification"

u will be surprised by knowing that only a 7 funds portfolio is Over-Diversified?..

Yes ....This is true.

Optimal MF Portfolio should have 2 or perhaps 3 Mutual Funds to achieve Optimal Diversification.

y so?...
welll... see...
One Mutual Fund Contains anywhere between 30 to 100 stocks portfolio. sometimes much higher than this.
So buying a Fund and buying a stock r not the same thing.
if u buy 1 mutual fund than it mean u r investing in 30-100 stocks portfolio.
and buying a stock means u r investing in that particular one company only.

So to acheive Optimal Diversification, u need 2 or perhaps 3 Equity Diversified Mutual Funds in your Portfolio.

Remember,

More than 3 Funds means each stock in the stock market is in your Portfolio...

95% people's portfolio is suffering from Ove-divrsification.
i have seen people who have as high as 50 Funds in their portfolio...

No need to do this.
So i have trimmed my portfolio to 4 funds...

The reason for waiting 1 year was ,

a) to avoid any Exit Loads and
b) to avoid any Short-term Capital Gain Tax (less than 1 year)

so i have to wait for 1 year to reshuffle and tream my Portfolio.

New Trimmed & Reshuffeled Portfolio -

1) DSPML T.I.G.E.R. Fund
2) SBI Magnum Umbrella Contra Fund
3) HDFC Top 200 Fund

4) Reliance Growth

Out of these, first 3 r large cap fund while the Reliance Growth is a MidCap Fund.
All of them r 5-star rated funds.

4 Mutual Funds Portfolio is still a "Borderline Overdiversified" Portfolio.

but i need to wait still 1 more year to tream it further bcoz in old portfolio, HDFC Equity Fund had high allocation of my total money. so shifting it to same Fund Family's HDFC Top 200 doesn't require any extra loads or charges.
so i have to bear with 4 funds for further 1 year.

After 1 year i will trim 1 more fund and reshuffle it again if necessary.

i want only 3 Equity Funds in My Portfolio to achieve Optimal Diversification of my Money.

But having Investment Time Horizon of 50 years i m not afraid.

when i have started investing in MFs.. i was new.
so i have emotionally taken decision and put my money into 7 Equity Funds.

That was my wrong decision and for that my portfolio is still suffering from problem of Over-Diversification.

In taking Investment Decisions, u have to think with your Brain only and not with your HEart...

Anyway...bye 4 now....