Your fund portfolio

I have surplus money available. Can I invest in equity mutual funds in chunks of, say, ₹50,000? I do not have a regular income. Please advise.

Viney Mehra

Investing lumpsum in funds is not advisable as it would expose your entire corpus to market vagaries. If you split it into chunks of ₹50,000, then there would still be an element of timing the market. You can consider putting the money in every market dip of around 5 per cent. This would require a considerable level of discipline.

But without a regular source of income, protection of capital should be your priority. Investing in mutual funds would expose your savings to market risks. Look at your liquidity, expenses and emergency requirements before putting money into mutual funds.

I work for a private company. I recently started investing ₹5,000 in mutual funds through the SIP mode, as advised by an investment advisor. My son is in class two. I want to make some investment towards funding his higher education costs after 10 years. I plan to invest another ₹4,000-5,000 every month for the same goal. Which schemes should I invest in?

Suresh

By starting early you have given yourself ample time to save for your child's education. You have not stated in which schemes you have recently invested, as instructed by your advisor. It is assumed that the investment is in a scheme with a sound long-term track record.

Since education is a non-negotiable goal, taking heavy risks may not be advisable.

Invest ₹3,000 in UTI Equity, a quality large-cap fund with a proven track record. Park the balance ₹2,000 in Franklin India Flexi-cap, which is a multi-cap scheme, but with a relatively lower risk profile.

But if your current investment of ₹5,000 is in proven large-cap schemes or funds that invest predominantly in blue-chip stocks, then you could possibly add a mid-cap fund. If so, opt for Franklin India Smaller Companies instead of Franklin India Flexi-cap and park ₹2,000 in it. If you reach your target corpus ahead of time, book profits or sell units and move the proceeds to safer debt options. In any case, getting out of the schemes a year or so before the goal is advisable. Periodic review of schemes, say, once every year, is also a must.

I have been investing ₹3,000 each in Franklin India Bluechip, HDFC Equity and HDFC Prudence for the past 30 months through the SIP route. I am a conservative investor while my husband has SIPs running in mid-cap funds. I see that Franklin India Bluechip has not been performing well for quite some time. Should I continue to remain invested in this fund if it holds promise in the next 18 months? Please give your views. We are planning long-term goals for our daughter and ourselves.

Mansi

You have invested in two predominantly large-cap funds and a balanced scheme. This indicates a relatively moderate risk appetite, which is fine given the fact that your husband has been investing in mid-cap funds. The only concern would be whether he has chosen the right mid-cap schemes with proven track record across cycles and not ones that have run up recently.

Your observation about Franklin India Bluechip is quite right as the scheme has been lagging top peers significantly over the past couple of years.

Stop further investments in the scheme. For a predominantly large-cap substitute, invest ₹3,000 in Mirae Asset India Opportunities, a fund that has delivered top-quartile returns consistently over the past few years.

Retain HDFC Equity, given the excellent revival in its performance in recent times.

For long-term goals, investing in balanced schemes may be an extremely conservative approach, though HDFC Prudence does have an excellent long-term record.

Consider investing in a multi-cap scheme with a large-cap bias. ICICI Pru Dynamic is one such fund that has delivered well over the long term while taking low risks in its portfolio. Invest ₹3,000 in it.

Review the performance of the schemes in your portfolio once every year to exit any prolonged underperformers and to rebalance.

Send your queries to >mf@thehindu.co.in

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