Mutual Funds

Your Fund Portfolio

Parvatha Vardhini C | Updated on December 08, 2019 Published on December 08, 2019

I have been investing ₹3,000 per month each in the following funds for the last 15 months through the SIP route — Sundaram Mid Cap, Sundaram Rural and Consumption, ABSL Equity Advantage, ABSL Pure Value, HDFC Mid-Cap Opportunities and HDFC Hybrid Equity.

All are in direct-growth option. My investment period is for another five years. I can take medium to high risk. Kindly review my portfolio and advise whether I can continue the above SIPs.

SPR Kumar

You have mentioned a time horizon of five years. While five years is not too short, it is not too long either. If you don’t have any specific goal to be met five years down the line, you can continue investing for a longer time period towards goals such as retirement. You can also increase the SIP amount from your current ₹18,000 as and when your investible surplus increases.

Coming to your funds, not much thought seems to have gone behind the choices. You are investing in two mid-cap funds and one each in the large- and mid-cap (ABSL Equity Advantage) , aggressive hybrid (HDFC Hybrid Equity), value (ABSL Pure Value) and thematic (Sundaram Rural and Consumer) categories. Most of these funds are only average performers. Also, you have chosen to go with only three fund houses for the six funds that you are investing in. There is nothing wrong with this, but by diversifying, you can benefit from varied investment styles followed by different fund houses.

Stop SIPs in the above funds barring HDFC Mid-Cap Opportunites. Rejig your investments as follows: Invest ₹5,000 each in Axis Bluechip, a large-cap fund, and Mirae Asset Emerging Bluechip, a large- and mid-cap fund; ₹4,000 each can be invested in HDFC Mid-Cap Opportunities, a mid-cap fund, and Kotak Standard Multicap, a fund that invests in stocks across market capitalisation.

Barring Axis Bluechip, the rest of the funds cater to the medium-to-high risk appetite category that you have suggested.

For the same reason, you need not invest in aggressive hybrid funds, which are for investors with a lower risk appetite. Sectoral/thematic funds, too, require close monitoring and appropriate timing of entry and exit. Hence, they may not be appropriate vehicles for goal-based investing.

I am a 37-year-old professional working in the private sector. I have been investing through the SIP mode in the following mutual funds: a) ABSL Tax Relief ’96 — ₹12,500 — since April 2018, b) Franklin India Smaller Companies (Growth-Direct) — ₹2,000 — since December 2016, c) ICICI Pru Value Discovery (Growth-Direct) — ₹4,500 — since May 2016. Till now, my overall returns on investment have been lacklustre. I am a long-term investor and do not need the money in the near term. Should I continue the SIPs in the above mentioned funds or should I review/re-balance my portfolio and look for alternative funds? Kindly suggest.

U Satish Nayak

It is true that returns on your investments have not been great so far.

For the time period that you have invested in each of them, ABSL Tax Relief sports an SIP return of 5.86 per cent, while ICICI Prudential Value Discovery has returned a lower 3.11 per cent.

Your investments in Franklin Smaller Companies have so far given a negative return of 4.45 per cent. Apart from individual factors that could have impacted the fund performance, the lacklustre returns are a function of the market movements as well.

Barring the rally in 2017, markets have been volatile for the rest of the years during your investment period.

All three funds have a reasonably good long-term track record. Since you are investing for the long term and don’t need the money immediately, you can continue investing in these funds for another six months to a year and then take a call based on the performance of the funds.

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Published on December 08, 2019
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