Mutual Funds

Your Fund Portfolio

Parvatha Vardhini C | Updated on August 16, 2020

I am 53 and a home-maker. I made lump-sum investments in the regular, growth plans of the following funds in 2018: Nippon India Equity Hybrid, Franklin Focused Equity, IDFC Core Equity, SBI Magnum Multicap, L&T India Value and HDFC Hybrid Equity. Around the same time, I also started SIPs in Nippon India Large Cap and Motilal Oswal Multicap 35. Currently, my portfolio return stands at a negative 6 per cent. Please advise if I need to exit or hold these schemes.

Mrs Mohan

Before we comment on the specific funds, there are a few general observations about your portfolio. One, you are investing in funds across categories such as large-cap, large- and mid-cap, multi-cap, value, aggressive hybrid and focussed funds.

The rationale behind the choice of funds and choosing the lump-sum mode for some and the SIP mode for the others is not clear.

Also, you have not mentioned exactly when you made the lump-sum investments in 2018 or exactly when you started the SIPs; the time horizon for the investment and your risk appetite have also not been mentioned.

Among equity-oriented funds, large-cap and aggressive hybrid funds suit those with a lower risk appetite; large- and mid-cap, multi-cap and value funds suit a moderate risk profile, while focussed funds are for those who can take higher risk.

You have also not given details about how much you have invested through the lump-sum mode or are investing through SIPs in each of the funds. Hence, we will not be able to provide you a complete action plan.

Here are some things for you to mull over. You started investing in 2018. At the outset, it is important to note that a two-three-years time-frame is too short to judge the performance of your investments in equity mutual funds. More so for SIPs, which require a horizon of at least seven years to go through market ups and downs and deliver good returns.

Your portfolio returns of negative 6 per cent is not surprising, given the wide market swing seen this year. However, the choice of funds also play a role.

Among the funds in which you have made lump-sum investments, L&T India Value is rated five-star by Business Line Portfolio Star Track MF Ratings, while SBI Magnum Multicap is rated four-star. The Nippon and HDFC aggressive hybrid funds, as well as Franklin Focused Equity are rated three-star, while IDFC Core Equity scores lower at two-star. If you are not saving towards any specific goals and are not comfortable with seeing capital erosion due to market ups and downs, you can set a target return for each of them and can redeem when the target is reached. Else, if they are sporting negative returns now, you can also redeem when the returns move back into the green, if you can’t take volatility.

Keep an eye on the performance of the funds rated three-star and two-star. If the ratings fall further, it is better to cut losses/book profits sooner than later.

As far as your SIP investments go, Nippon India Large Cap is rated three-star by Business Line Portfolio Star Track MF Ratings, while Motilal Oswal Multicap 35 is unrated. Over three- and five-year periods, SIPs in Nippon India Large Cap have delivered minus 2 per cent and 3 per cent returns, respectively.

This places the fund among the bottom quartile of performers in the large-cap category. You can stop the SIPs in this and redirect the sums to Axis Bluechip, Canara Robeco Bluechip Equity or Mirae Asset Large Cap, which have a more consistent track record. Motilal Oswal Multicap 35 is a middle-of-the-road performers among multi-cap schemes. Continue the SIPs in it for now. You can take a call six months to a year later, if the performance slips.

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Published on August 16, 2020

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