Mutual Funds

Your fund portfolio

K Venkatasubramanian | Updated on June 08, 2014


I am 36 and a Central government employee with GPF (general provident fund) benefits. I have also built an emergency fund and have a health insurance policy. I am an aggressive investor and my objective is to create wealth over the long term (15 years or more) through SIPs (systematic investment plan) in mutual funds. My current portfolio, where I invest every month, is: ICICI Pru Focused Bluechip - ₹3,000; UTI Opportunities - ₹2,000; ICICI Pru Value Discovery - ₹2,000 and SBI Emerging Businesses - ₹1,000. Is my portfolio balanced?

I wish to invest another ₹2,000. Where should I park this sum? I will be taking an online term insurance this month. Being a government employee, I am eligible for pension benefits after 20 years of service. I am now in my 12th year in office. Should I take the term cover up to maximum possible age or for just about another 10 years, till such time as I start getting my pension?



Debangshu Ball

You have stated that you are an aggressive investor. However, your portfolio tilt towards large-caps suggests that your appetite for risk is reasonable but not very high.

Also, for the ₹8,000 that you are investing every month, three funds would suffice as otherwise your portfolio would be too diffused with duplication in holdings.

Split ₹10,000 (including your additional amount) as follows: ₹3,500 each in ICICI Pru Focused Bluechip and UTI Opportunities and ₹3,000 in ICICI Pru Value Discovery. You can exit SBI Emerging Businesses as you already have another quality mid-cap in ICICI Pru Value Discovery. Though investing in multiple funds from the same house is generally not recommended, an exception can be made here, given the spectacular track record of both these schemes over the years. Try also to invest in debt instruments (PPF, RDs, FDs, NSC and tax-free bonds), gold and real estate as and when your surplus improves, so that you have a balanced portfolio.

Coming to the second question, you need to take a term insurance policy till such time as you retire or till your liabilities (such as a home loan) and investment commitments are done with, whichever is later.

So, take a term cover for at least another 15-20 years. If your health insurance policy is given by your employer, augment it by buying a health cover from an insurer as soon as possible.

I am 29 and work for a private sector bank. I have two daughters aged three and one. To meet their higher education and marriage expenses, I have been making monthly SIPs (systematic investment plan) totalling ₹8,500 in the following funds: Birla Sun Life Frontline Equity - ₹2,000, IDFC Premier Equity - ₹2,000, HDFC Top 200 – ₹2,500 and SBI Magnum Equity – ₹2,000. Does my portfolio need modification? My investment horizon is at least10 years.

- K Palaniappan

By starting early to save for your daughters’ education and marriage expenses, you have given yourself sufficient time to accumulate the requisite corpus. You have indicated an investment horizon of a ‘minimum’ of 10 years. Given that your daughters’ education and marriage are at least 15-20 years away, you must ideally invest for close to such a timeframe. Over a period of time, increase your investments and also get into other avenues such as debt, gold and real estate.

Now, coming to your portfolio, you can restrict your investment to three funds. Some modification can also be made to your portfolio. HDFC Top 200 and Birla Sun Life Frontline Equity have excellent long-term track records and would give you adequate large-cap exposure. Hence, you can exit SBI Magnum Equity. So, invest ₹3,250 each in Birla Sun Life Frontline Equity and HDFC Top 200.

IDFC Premier Equity is a quality mid-cap fund. But it has fallen behind top peers over the past one year. Hence, switch from the scheme to ICICI Pru Value Discovery, a mid-cap fund with a proven long-term track record. Take a term cover and a health insurance policy, if you have already not done so. Monitor the schemes in your portfolio once every year and take corrective action, if necessary. You must have a target corpus in mind and book profits or move to safer debt investments if you reach your target ahead of time.

Published on June 08, 2014

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