Mutual Funds

Your Fund Portfolio

Parvatha Vardhini C | Updated on: Sep 11, 2016
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In 2008 I invested ₹10,000 each in Sundaram SMILE, Sundaram Select Focus and Sundaram Equity Multiplier funds. Should I withdraw or still wait?

V Chandrasekara Rao

Since you have not given the date of investment, it is difficult to calculate how much exactly you have earned till date. However, the markets have moved much higher than the lows of 2008-09. Assuming you have made gains in all these funds, you can withdraw your investments.

Sundaram Equity Multiplier and Sundaram Select Focus funds are consistently among the mid to lower quartile performers over the last one, three and five years among diversified funds; their five-year returns either trail the benchmark or just about manage to match it in this period.

Sundaram SMILE, like all other small-cap funds, has delivered well over the last five years. But with small-cap valuations soaring, it may be a good idea to book profits here, too. Downside risks remain high in the near to medium term.

I have been investing ₹5,000 in Birla Sun Life Tax Relief ‘96 and ₹3,000 in HDFC Long Term Advantage over the past four months. I would like to know how much money I’ll get if I redeem after seven and 10 years.

Tharun Kothari

Market movements cannot be predicted and hence there is no way to know how much you will get after 7-10 years. Assuming the funds can earn a reasonable return (compounded) of 12 per cent every year, you are likely to end up with a corpus of ₹10.5-18.5 lakh after 7-10 years if you invest ₹8,000 per month during this entire period.

Going by history, HDFC Long Term Advantage has earned 12.7 per cent returns in the last 10 years as well, while Birla Sun Life Tax Relief ’96 does not have a 10-year record.

Since both funds are tax-saving schemes, keep in mind that you cannot withdraw the entire contribution at one go. Every SIP in a tax-saving fund will be locked in for three years.

I work in a PSU and have a surplus of ₹25,000 per month. I am already investing ₹1.5 lakh per annum in PPF, ₹50,000 per annum in NPS, and ₹10,000 per month for 10 years in a recurring deposit. I invest ₹4,000 every month in SBI Magnum Balanced Fund. I have taken care of my house, my child’s education and insurance as well. Please suggest some MF scheme where I can invest the surplus for at least 15 years.

Ratan Kumar

You have been quite meticulous in providing for your housing, insurance needs and child’s education and at the same time making long-term investments in instruments such as PPF and NPS to meet your retirement goals.

But if your savings are heavily tilted towards debt, there is a good chance that your final corpus could fall short of your financial needs several years down the line. Hence, you are right in choosing mutual funds to put in your surplus as equity is among the few asset classes that has the potential to beat inflation over the long term.

Since you have a 15-year horizon and you are already investing in an equity-oriented balanced fund, you can invest your monthly surplus in diversified funds. Split the ₹25,000 as follows: Invest ₹5,000 each in Birla Sun Life Frontline Equity, Kotak Select Focus and Quantum Long-Term Equity, three solid large-cap funds. Put in ₹3,500 each in Franklin Prima Plus and ICICI Pru Value Discovery, which are funds that invest across market capitalisations.

The remaining ₹3,000 can be invested in Mirae Asset Emerging Bluechip , a mid-cap fund. This portfolio gives a good blend of growth and value-focused funds.

We have also suggested a moderate risk portfolio with 60 per cent of your monthly surplus going into the less volatile large-cap funds.

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Published on March 10, 2018

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