Your fund portfolio

I am 40 and would like to start making systematic investments every month to the tune of ₹20,000 in different mutual funds for a period of 10 years.

Please suggest a portfolio of six-seven schemes which would help me get good returns. I would like to create a corpus of about ₹30 lakh in 10 years through this investment.

Utkarsh

If you invest ₹20,000 every month for a period of 10 years, you will need to generate annual returns of less than 5 per cent to be able to accumulate ₹30 lakh. That is indeed a very low return expectation after putting your money in equity funds, which are expected to beat inflation rates convincingly over the longer term.

For the returns that you expect, you can invest in a bank recurring deposit to achieve a corpus of ₹30 lakh. But assuming that you are looking for better returns and a suitably higher financial target, you can look at relatively lower risk mutual funds from the large-cap pack or from stable performers from the multi-cap variety.

You could split ₹20,000 as follows. Invest ₹5,000 each in UTI Equity and ICICI Pru Top 100. These are large-cap funds with a proven long-term record. Park ₹3,500 each in Mirae Asset India Opportunities and Franklin India Flexi Cap. These two are multi-cap funds, but have a large-cap bias and hence do not carry high risks. If you can take some risks, invest the balance ₹3,000 in HDFC Midcap Opportunities or Reliance Equity Opportunities.

But for a safer bet you can consider investing in BNP Paribas Dividend Yield.

Review the performance of the schemes in your portfolio once every year and take corrective action, if necessary.

Try to build a balanced portfolio with investments in debt, gold and real estate.

I want to invest in ELSS (equity linked savings scheme) funds. Please suggest some good options.

Kavindra Salunke

Axis Long Term Equity and Franklin India Taxshield are schemes with proven records. If you can take a bit more risk, Reliance Tax Saver is a good option. Please note that each instalment is locked in for a period of three years for tax purposes.

I have been investing in HDFC Top 200, Reliance Banking, Sundaram Select Mid Cap and IDFC Premier Equity for the last four years. The total investment every month is ₹7,000.

Apart from this, I had also invested in Reliance Diversified Power as well as Fidelity (now L&T) Tax Advantage seven-eight years ago and earlier in the NFO of Morgan Stanley’s fund. But I never bothered to switch/redeem units of these schemes. I’m 48 now and want to build a corpus for my retirement. Please comment on all my investments.

Vishwanathan R

If you are an equity fund investor, you must always review funds regularly, at least once every year, and weed out prolonged underperformers. You can redeem your investments in Reliance Diversified Power, Morgan Stanley’s fund and L&T Tax Advantage.

Deploy the proceeds as systematic investments in a fresh set of schemes.

Coming to your SIP investments, you have not reviewed your portfolio for four years, when you should have been doing it annually. Also, for long-term goals, sector funds are not good choices as they require an element of timing during entry and exit, which would be difficult for retail investors, apart from the fact that such schemes are inherently risky.

After redeeming the units of your earlier investments, your surplus is expected to be ₹8,000. Split this as follows: Invest ₹3,000 each in Birla Sun Life Top 100 and HDFC Top 200. Park the balance ₹2,000 in ICICI Pru Value Discovery. Stop SIPs in Sundaram Select Midcap and IDFC Premier Equity and exit Reliance Banking.

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