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Currently, I have 5 SIPs as below :
ICICI Pru Bluechip Equity
SBI Large & Midcap
Kotak Equity Opportunities
ICICI Pru Value Discovery
HDFC Retirement Savings - Equity
Is the above set of funds suitable for long-term wealth creation? Also, would it be advisable to start a SIP in a pure mid-cap fund ?
Srinivas A.R.
Out of your current SIPs, both the ICICI Pru funds are rated 5-star by bl.portfolio Star Track MF Ratings. Both funds are suitable to be part of your core portfolio for long-term goals. As of now, the large-cap fund – ICICI Pru Bluechip has held its ground against the onslaught of passive funds, surpassing the returns of the benchmark and its category average over short and long time periods. However, do keep a watch on its ability to generate alpha (returns above the benchmark) and move to a passive fund if necessary, in future. ICICI Pru Value Discovery follows value style of investing which has been in vogue in the last one-two years. However, keep in mind that while value funds tend to contain losses better than growth-styled funds during downturns, they may underperform during prolonged bull runs where investors are less concerned about valuations. Besides, value picks of fund managers may sometimes take a long time to re-rate or fail to re-rate. Hence, you may need high conviction as well as longer holding periods for this style of investing.
Coming to the other funds, while both the SBI and Kotak funds are 4-star rated, they belong to the same category – large- and mid-cap. It is enough if you retain your holdings in one of them. You could instead redirect the investments of one of them, into Parag Parikh Flexicap fund.
Retirement Savings funds are unrated by us. These funds, falling in the ‘solution-oriented’ funds category, generally have a five-year lock-in, which differentiates it from other categories. But do note that if you are eyeing savings for retirement, it is not necessary to invest only in this category. You could consider other categories as well.
Mid- and small-cap stocks have had a strong run, outperforming the Nifty index by a wide margin over the last year and since the June 2022 market lows. It is prudent to exercise some caution in mid-cap investing at this juncture. You will already have enough mid-cap exposure through the other fund cateogries such as large- and mid-cap and flexi-cap funds. Invest in a pure mid-cap fund only if you have a high risk appetite, don’t mind a correction in the initial phase and have at least a seven-year horizon.
Send your queries to mf@thehindu.co.in
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