Mutual Funds

Your fund portfolio

K Venkatasubramanian | Updated on February 16, 2014


I am 24 and have just started investing in mutual funds through the SIP (systematic investment plan) route. I am investing ₹1,000 every month in Edelweiss EDGE Top 100. I want to invest ₹3,000 more. Please suggest some good funds.

My risk appetite is high and I have some investments in FDs and PPF.

My investment horizon is 10 years. I wish to accumulate ₹10 lakh. The investment amount will increase 20 per cent every year.

I have shortlisted the following funds: FT Feeder - Franklin US Opportunities, Quantum Long Term Equity, and IDFC Premier Equity. Are these suitable?

- Abhishek

You are well placed to reach your target within your 10-year time horizon. If you invest ₹4,000 every month for the next 10 years, you will be able to accumulate ₹10 lakh, if the returns are a little over 13 per cent annually.

You have indicated that you have a high risk appetite. Also, given that you are young, you can take exposure to mid-cap funds.

Edelweiss EDGE Top 100 has been around from May 2009 and has done reasonably well over the past few years.

It is a fund that has exposure to large- and mid-cap stocks. But if you want a more established scheme with a similar mandate and a superior track record, you can invest in Quantum Long Term Equity. Given that you can invest ₹4,000 currently, you should not spread it across more than two schemes.

An international fund is not needed at the moment as, domestically, you would get sufficient diversification.

As your surplus increases substantially and after you exhaust other options, you can consider FT Feeder – Franklin US Opportunities.

Now, invest ₹2,000 each in Quantum Long Term Equity and IDFC Premier Equity. This is suggested so that you get the right grounding in investing in mutual funds as well as some stability initially.

After your surplus increases by ₹1,000-1,500, consider adding HDFC Mid-Cap Opportunities.

Since you have already invested in FDs and PPF, it is assumed that you have reasonable exposure to debt instruments.

Monitor the schemes and take corrective action after reviewing them once a year. In case you reach the targeted corpus ahead of time, book profits or sell the units and move over to safer debt options. Over the long term, try to add gold and real estate to your investment portfolio.

I am 42 and work for a government company. I want to invest ₹16,000 every month through the SIP mode with a time horizon of 10-12 years. Please suggest some schemes with moderate risk.

Saroj Bala

You have not stated the goal towards which you are saving. The amount that you wish to accumulate over 10-12 years too has not been given. Since you can take only moderate risks and also since you are just starting on investing in mutual funds, it would be better to stick to large-cap and balanced schemes.

Split ₹16,000 thus: ₹4,500 each in ICICI Pru Focused Bluechip, Birla Sun Life Frontline Equity and Franklin India Prima Plus. These funds are focused on large-cap stocks. Park the balance ₹2,500 in HDFC Balanced.

All these funds have an excellent long-term record of delivering returns across market cycles. Review the performance of the schemes periodically, take corrective action and rebalance. It is assumed that you have sufficient allocations to debt instruments (FDs, RDs, PPF and NSC, among others).

I recently started a monthly SIP in Axis Equity for ₹1,500. My investment horizon is 10 years. I wish to accumulate ₹4 lakh. Would that be possible by this investment?

- Prodyut Pal

If you want to accumulate ₹4 lakh over a period of 10 years with monthly investments of ₹1,500, the annual returns must be over 14 per cent.It may not be that easy to garner such returns, though it is not too ambitious either.

Axis Equity is a quality large-cap fund that has delivered well over the past three-four years. You can continue investing in the scheme. Over the long term build a portfolio with a bouquet of funds to gain from the investment style of different fund managers. As your surplus increases, invest in more schemes and across asset classes.

Published on February 16, 2014

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor