Mutual Funds

Your fund portfolio

K Venkatasubramanian | Updated on March 02, 2014

I am 26 and want to invest in mutual funds through the SIP (systematic investment plan) mode.

My investment horizon is 15-25 years. Over this period, I want to accumulate ₹50 lakh.

I can take high risk on my investments. Initially, I want to invest ₹2,000 per month and increase the amount over the years.

I have chosen Reliance Equity Opportunities and wish to invest ₹1,000 per month in it.

I would like to know which among the following should be the second fund — ICICI Pru Focused Bluechip, Birla Sun Life Frontline Equity, IDFC Premier Equity, or Quantum Long Term Equity.

- SS Mishra

While it is good that you have a specific target amount and also a long investment horizon to achieve your intended corpus, the goal must be realistic.

If you invest ₹2,000 every month and are able to generate 12 per cent annual returns over a period of 15 years, you will be able to barely accumulate ₹10 lakh.

Even over 25 years, you can accumulate only ₹37 lakh if you invest only ₹2,000 every month. Of course, you do intend to increase investments over the years. But this needs to be quite substantial.

You would need to double your investments every five years to reach your goals in 15-25 years. Given that you can take high risks and also that your time frame is quite long, you can take exposure to mid- and multi-cap funds to reach your goals.

Reliance Equity Opportunities is a good multi-cap choice. You can invest the additional ₹1,000 in IDFC Premier Equity. The other funds that you have mentioned are all predominantly large-cap schemes.

As your surplus increases, add more mid-cap funds such as HDFC Mid-Cap Opportunities and ICICI Pru Discovery.

I am 46 and have started investing in mutual funds over the past year. I am investing in IDFC Premier Equity – ₹7,500; HDFC Mid-Cap Opportunities – ₹7,500, and Reliance Equity Opportunities – ₹2,500. I can invest another ₹12,500 every month.

Please advise which funds I should invest in and whether I should also go for gold funds/gold ETFs.

My target is ₹1.5 crore over the next 15 years. I make contributions to PF as well as to VPF.


If you invest ₹30,000 every month for a period of 15 years and if the annual returns are 12 per cent, you will be able to accumulate ₹1.5 crore comfortably.

The ₹30,000 is arrived at including the additional ₹12,500 that you intend to invest along with the ₹17,500 that you are investing now.

For the sum that you will be investing, you can look at five-six funds to park your money. Gold funds or ETFs too can be considered. But remember, gold is to be used only as a hedge against inflation and should not account for more than 10 per cent of your portfolio.

Coming to your portfolio, it does appear quite aggressive since you have chosen two mid-cap and one multi-cap fund.

Given your return expectations, you need not take huge risks.

So, you can tone down the proportion of such funds in your portfolio. A lower risk portfolio with a large-cap tilt will suffice to reach the goal.

Split ₹30,000 as follows: park ₹5,000 each in large-cap funds such as ICICI Pru Top 100, Axis Equity and Birla Sun Life Frontline Equity. Park ₹2,500 each in Reliance Equity Opportunities and UTI Opportunities. All these have proven track records.

Invest ₹4,000 each in IDFC Premier Equity and HDFC Midcap Opportunities, two high-quality funds with top-quartile long-term performance records. The balance ₹2,000 can be parked in Reliance Gold Saving or Goldman Sachs Gold BeES.

Monitor the schemes in your portfolio carefully and take corrective action. Also, rebalance and weed out underperformers.

If you reach your target ahead of 15 years, book profits or sell units and move the proceeds to safer debt avenues.

Your investments in PF and voluntary provident fund (VPF) are assumed to be substantial. Although it is a tad late, you can still consider opening a PPF account and park some money in it every year to strengthen your debt portfolio.

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Published on March 02, 2014

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