Mutual Funds

Your fund portfolio

K Venkatasubramanian | Updated on March 10, 2018


I am investing in three mutual fund schemes through the systematic investment plan (SIP) route. But these schemes seem to be underperforming in recent times.

Please let me know whether I should continue investing in these funds or move to other schemes. The funds are: HDFC Prudence, IDFC Premier Equity and Franklin India Bluechip.

Jithesh

You have rightly pointed out that IDFC Premier Equity and Franklin India Bluechip have been underperforming top peers over the past couple of years.

HDFC Prudence tends to be a bit volatile, even as it delivers well over the long term. So, you can stop further SIPs in all these schemes.

Invest in Franklin India Smaller Companies, a high-quality mid-cap fund, instead of IDFC Premier Equity. Consider investing in L&T Equity, a large-cap scheme instead of Franklin India Bluechip as the former has been a proven performer over the last four-five years.

Switch from HDFC Prudence to HDFC Balanced as the latter has been more consistent across market cycles.

I have been investing ₹3,000 a month in Birla Sun Life Frontline Equity and ₹2,500 in ICICI Pru Focused Bluechip, for the last one year. I am planning to invest another ₹2,000 a month.

Please suggest a suitable scheme and also review my portfolio. With my current investments will I be able to accumulate ₹15 lakh in the next 10 years?

Ashish

By investing for the long term and choosing safe and quality schemes, you are well on the path to achieving your financial goal.

If you invest ₹7,500 every month for 10 years and earn a conservative 12 per cent annually, you will be able to accumulate over ₹17 lakh.

So, you are quite likely to exceed your target of ₹15 lakh ahead of time. But if this is a specific amount that you need, you must book profits or sell units if the goal is reached ahead of time.

Now, coming to your portfolio, you can continue investing in ICICI Pru Focused Bluechip and Birla Sun Life Frontline Equity.

These are proven large-cap names and offer above-average returns by taking modest risks.

Now for the additional ₹2,000, you can consider Franklin India Prima Plus, a multi-cap scheme. If you can take more risks, which you may be willing to, given your long investment horizon, you can invest in Mirae Asset Emerging Bluechip instead, a quality mid-cap scheme.

I am 32 and have no savings still now. My salary is ₹20,000 a month. My son is in kindergarten. Please suggest any two mutual funds for the long term. One would be for my son’s education while the other for my retirement. I can invest a total of ₹2,000 every month.

Akshara Babu

Before going on to invest in mutual funds, you must do certain basic things to shore up your savings.

First of all, try to save and accumulate at least six months’ expenses, so that an emergency corpus exists. Next, take a term cover and a health insurance policy with a family floater option, as soon as possible.

After putting these critical aspects in place, you can start investing in mutual funds. Normally, for ₹2,000, a single scheme may suffice.

However, since you are saving for two different goals, an exception can be made.

Invest ₹1,000 in Franklin India Prima Plus for your retirement. Park ₹1,000 in HDFC Children’s Gift Fund – Investment Plan, a quality balanced scheme.

A conservative portfolio is being suggested as you have just started out on mutual fund investments and also due to the fact that your financial status needs to improve considerably.

As your surplus increases, you can enhance contribution to these schemes. You must also try to open a PPF account as and when your cash flow improves.

Published on March 22, 2015

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