Mutual Funds

Your fund portfolio

K Venkatasubramanian | Updated on August 03, 2014

I have been investing ₹1,500 every month through the SIP (systematic investment plan) route in Birla Sun Life Frontline Equity. I am planning to invest another ₹1,500. My investment horizon is 15-20 years. I want good returns and can take risk. Should I go for large-cap funds or mid- and small-caps?

- Siddharth Mishra

Your monthly investments are not high. For the ₹3,000 (including the additional ₹1,500), one scheme would suffice.

But if you are very keen to add another scheme, you can take exposure to a mid-cap fund. Typically, mid-cap schemes generate high returns for a commensurately higher risk compared with large- or multi-cap schemes. For long-term investments such as the one that you have, mid-cap funds would offer a better bet. Continue investments in Birla Sun Life Frontline Equity. Invest the additional ₹1,500 in HDFC Mid-cap Opportunities. Since you have a long horizon, step up the amount you save as your surplus grows. Equity is a good tool to build wealth with long investment horizons.

I am 25 and have started investing in mutual funds through SIPs. My investment horizon is 10-15 years. My goal is capital appreciation. I'm investing ₹3,000 in Axis Long Term Equity and ₹2,000 in Axis Mid Cap. I plan to increase my investment by another ₹3,000. I wish to have a stable portfolio of diversified equity funds.

- Ankit

You have invested in two schemes from the same fund house, which denies you the opportunity to gain from the styles of different fund managers. Also, you have invested in Axis Long Term Equity, a tax-planning fund. Though it has delivered well, for long-term goals, regular diversified funds are better. Stop further SIPs in the scheme.

Split the ₹8,000 (including the additional ₹3,000) as follows: Continue SIPs in Axis Midcap and park ₹2,000 in it. Invest ₹3,000 each in Birla Sun Life Top 100 and Franklin India Flexicap, which have large-cap and multi-cap orientation, respectively. Both these schemes have a reasonably good record. As you desire stability, instead of a high-risk portfolio with heavy mid-cap exposure, a multi-cap scheme has been advised as your time horizon is fairly long.

It's also better if you had a target corpus in mind or are able to direct these investments to specific goals. Given your age and time horizon, more risk can be taken. Over the long term, create a balanced portfolio with investments in debt (FDs, PPF, NSC and RDs), gold and later on real estate. Take a medical cover and a term cover as soon as possible.

Published on August 03, 2014

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