Mutual Funds

Your Fund Portfolio

Dhuraivel Gunasekaran | Updated on April 12, 2020

I am a 30-year-old investor working as an associate in a global firm. Every month, I currently invest ₹10,000 each in the following mutual funds: Axis Bluechip, Mirae Asset Emerging Bluechip, SBI Focused Equity, Kotak Standard Multicap and Canara Robeco Equity Diversified. Kindly advise me on these funds — whether to hold or switch, to achieve my goal of wealth accumulation in the long run (time horizon of 10-15 years).

Ramachandran

It is good that you have started investing at a young age. You have a well-diversified portfolio in your SIP kitty, as each scheme belongs to a different equity MF category.

Your portfolio, though, requires some rejiging. We have attempted to calculate the composition of your investment in these five schemes. Of the investments in these schemes, 66 per cent, 18 per cent and 7 per cent of assets are in large-, mid- and small-cap stocks, respectively (based on the Association of Mutual Funds in India’s (AMFI) market-cap classification). The remaining 9 per cent is kept as cash equivalents.

Further, your investment has been spread across 114 stocks. The top holdings are: HDFC Bank (6.5 per cent), Reliance Industries (5.8 per cent), ICICI Bank (5.7 per cent), Infosys (3.9 per cent) and Axis Bank (3.3 per cent). At the sector level, higher allocation has been made in banking (21 per cent), followed by consumer non-durables (10.5 per cent), finance (9.1 per cent), software (8.2 per cent) and petroleum products (6.9 per cent).

Axis Bluechip belongs to the large-cap category and has delivered category-beating returns over the long run.

The scheme has been rated five-star by BusinessLine Portfolio Star Track MF Ratings. You can continue to hold the scheme.

Mirae Asset Emerging Bluechip invests a minimum of 35 per cent each in large- and mid-cap stocks. The scheme has been a top-performing fund since its launch.

It has been rated five-star by BusinessLine Portfolio Star Track MF Ratings. You can continue with the SIP in this fund.

The other three schemes you invest in — SBI Focused Equity, Kotak Standard Multicap and Canara Robeco Equity Diversified — follow the multi-cap approach of picking stocks across market capitalisation.

However, each scheme follows a different investment strategy. You can reduce the allocation to this category.

Kotak Standard Multicap follows the strategy of selecting better-performing sectors and then picking stocks within these sectors. It is one of the consistent performers in the category. You can continue to hold this fund.

SBI Focused Equity currently follows a focussed approach of allocating to up to 30 stocks. Both the above schemes have been rated five-star by BusinessLine Portfolio Star Track MF Ratings.

Canara Robeco Equity Diversified focusses on large-caps, along with a few high-conviction mid- and small-cap stocks. It has been rated three-star by BusinessLine Portfolio Star Track MF Ratings. However, we have seen relatively significant improvement in its performance in the recent period. This could, in turn, improve the rating of the scheme going ahead.

Add some more mid-cap flavour

The current market-cap allocation of your investments, as stated in the beginning, suits investors with a medium-to-high risk profile. If you are an investor with a high risk profile, the allocation to mid-caps and small-caps may not be sufficient.

So, you can reduce the monthly SIPs to ₹5,000 in both SBI Focused Equity and Canara Robeco Equity Diversified.

Instead, that ₹10,000 can be routed to a mid-cap fund. You can start an SIP in L&T Midcap, which is one of the top-performing funds in the mid-cap category. It allocates 63 per cent and 18 per cent of its corpus to mid- and small-cap stocks, respectively. It has been rated four-star by BusinessLine Portfolio Star Track MF Ratings.

Published on April 12, 2020

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