I have been investing ₹10,000 every month in Franklin India Prima (direct, growth) since August 2019. I have chosen this fund for generating a retirement corpus which is away by 15 years or so. bl.portfolio Star Track rating for this fund is 1-star. Please advise whether I should make a switch even though my goal is several years away.

Senthil Kumar T

Franklin India Prima is a mid-cap fund and as you rightly observed, is rated 1-star by bl.portfolio. You can stop SIPs in Franklin India Prima and move to any of our 5- or 4-star rated mid-cap funds. We are recommending moving to another mid-cap fund, assuming you have a high risk appetite and a long-term horizon of at least 15 years from now.

That said, it is not a good idea to put all your eggs in one basket. You need to have a combination of funds across categories to build a retirement portfolio for optimal risk-return prospects. In this context, you can move the corpus accumulated so far in Franklin India Prima to large-cap index funds and flexi-cap funds. in stages, to minimise capital gains tax outgo.

We assume you also have other investments towards your retirement. ₹10,000 a month for 18 years (August 2019 till 15 years from today), assuming a reasonable 12 per cent CAGR return will fetch a corpus of just ₹71 lakh. To supplement your post-retirement needs, you can step up your monthly SIPs as your income and investible surplus increases.

I’ve just retired and I’m looking at investing in mutual funds. I can invest around ₹3,000 a month. I have a moderate risk appetite and a five-year time horizon. I’m looking to start a SIP of ₹1,500 each in UTI Nifty 50 index fund and SBI Aggressive Hybrid. Kindly advise on the funds selected.

Manilal H Vankar, Bhuj, Gujarat

As a senior citizen, we hope you have enough savings and investments for your regular needs every month as well as for health and other emergencies. You should invest in mutual funds only if you have surplus after setting aside sums for the above. Even then, for your moderate risk appetite and a five-year time horizon, equity and equity-oriented funds may be quite risky. Markets have moved from a bull phase since the March 2020 Covid-lows to a more volatile phase now. While economic prospects for India appear bright, globally the news is not so good.  No one can predict which way the market will go. While a five-year time-frame is not too low, it is not very comfortable either.

To cushion downside, you can choose from among our 5- or 4-star balanced advantage funds alongside SBI Equity hybrid, instead of pure equity funds. Alternately, instead of SIPs in equity/equity-oriented funds, you can lock lump-sums into target maturity funds (debt funds) which invest in G-Secs/State Development Loans having around the same five-year investment horizon. Yields on these funds are 7 per cent plus, thanks to rising interest rates and it is near-zero risk.

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