Mutual Funds

Your Fund Portfolio

Parvatha Vardhini C | Updated on March 10, 2018


I am 36 years old. I want to start a new portfolio in mutual funds with the goal of generating ₹1.2-1.5 crore in 13-15 years’ time. This is to create a corpus for my four-year-old child's higher education.

I would like to take an aggressive approach, to start with, for the next 3-5 years, to maximise returns, and would like to moderate the risk thereafter. I can start SIPs for about ₹25,000 right away to support this. Please suggest a suitable portfolio for me. How often should I review it?

Soundarya Vishwanath

If you invest ₹25,000 per month for 15 years and your investments earn about 12 per cent each year, you will end up with a corpus of about ₹1.25 crore. As your income increases over the years, you may be able to spare more for investments every month; returns may also be higher than the 12 per cent we have assumed. So, you look reasonably comfortably placed to reach your goal.

Given that your goal is 13-15 years away, you can afford to take higher risks as you have rightly mentioned. Invest ₹25,000 as follows: Put in ₹5,000 each in Franklin Prima Plus and SBI Bluechip, two large-cap oriented funds. ₹4,000 each can be invested in L&T Value and Birla Sun Life Equity, which are multi-cap funds. ₹3,500 each can be invested in Franklin Smaller Companies and Canara Robeco Emerging Equities, which are mid-cap funds.

This will leave you with an allocation of 40 per cent of your monthly SIP amount towards less risky large-cap funds and 60 per cent towards higher risk multi-cap/mid-cap funds. All these funds are among the top performers in their respective categories currently. You can continue to invest in this proportion for the next five years at least. Beyond that, to moderate risks a bit, you can increase the proportion of large-cap funds in your portfolio. You can also bring in equity-oriented balanced funds.

Closer to your goal, if you find that you have accumulated enough for your needs, you can even move your corpus to safer fixed deposits so that it does not get impacted by market fall.

You can review your portfolio once a year. If you find that any of the funds that you are investing in are trailing theirbenchmark for two years, it may be better to replace them with better performers.

I am 30 and recently started investing ₹1,000 each every month in Franklin Prima Plus and Franklin High Growth Companies fund. I would like to invest another ₹2,000-4,000 through the SIP mode. My goal is long-term capital appreciation for retirement and other needs, which are mostly after 10 years. Please suggest suitable funds.

Jibin

Both the funds you are investing in currently boast of a solid track record. But for the sake of diversification, you can probably stick to only one fund from the Franklin stable.

While Franklin Prima Plus is a large-cap oriented fund, Franklin High Growth is a multi-cap fund that takes a large-cap or a mid and small-cap slant, depending on what is in vogue in the market in a particular season. Thanks to its multi-cap flavour, Franklin High Growth sports higher returns (both SIP and lumpsum) over the last five years, in comparison with Franklin Prima Plus. Considering that you are young and have a long-term investment horizon, you can switch from Franklin Prima Plus to Franklin High Growth. Assuming you can invest ₹5,000 overall every month, invest ₹2,500 in Franklin High Growth from now on.

For the remaining ₹2,500, you can choose Birla Sun Life Frontline Equity. This large-cap oriented fund too is a reliable performer across market cycles.

Send your queries to mf@thehindu.co.in

Published on April 09, 2017

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