Mutual Funds

Your Fund Portfolio

Parvatha Vardhini C | Updated on October 18, 2020

I am a retired government servant with a monthly pension of ₹80,000. I have a daughter (15 years of age). I have been investing ₹50,000 a month for five years in the following funds (direct, growth plan) for her future requirements such as higher education, wedding and others, if any: Parag Parikh Long Term Equity: ₹10,000, DSP Midcap: ₹5,000, Mirae Asset Large Cap: ₹5,000, Kotak Standard Multicap: ₹5,000, Motilal Oswal Multicap 35: ₹5,000, Axis Bluechip: ₹5,000, Aditya Birla Sun Life Equity: ₹5,000, ICICI Prudential Equity & Debt: ₹10,000. I have stopped SIPs in HDFC Top 100 and HDFC Equity, but haven’t withdrawn the accumulated amount of about ₹7 lakh. Please review and give your valuable suggestion.

Ramesh Pogaku

It is good that you started investing for your daughter’s future from when she was 10 years old. Assuming you will need some of the funds for her higher education when she turns 20 or 21, you have another five to six years to go before you may partly require the money.

A 10-year time-frame, in total, for funding higher education requirements seems reasonable, though you would have been more comfortable had you started investing early in your daughter’s life. However, if the ₹7 lakh accumulated in the two HDFC funds mentioned above is outside of the investments for your daughter, this may come in handy to meet any shortfall.

It is better to invest separately for each goal, given the different time periods in which one may require the corpus.

This way, your fund choices can also be determined by the time-frame in which you can stay invested. For example, a short-term goal may require investing in, say, debt and hybrid funds, whereas for long-term goals, you can invest in multi-cap, and mid- or small-cap funds.

In your case, since the wedding of your daughter will fall much later than her higher education needs, you would probably be better-placed to take higher risk for higher returns when investing towards the goal of funding her wedding.

An amount of ₹50,000 a month from a ₹80,000 pension implies that you are directing a little over 60 per cent of your income towards savings for your daughter.

If you retired recently, you may want to evaluate whether you can continue this until you reach the goal. Do keep aside a sum for your monthly expenses and other emergencies before you invest.

Coming to your portfolio, you have invested 50 per cent of your portfolio in multi-cap funds (Parag Parikh Long Term Equity, Kotak Multicap, Aditya Birla Sun Life Equity and Motilal Oswal Multicap 35) and 10 per cent in a mid-cap fund (DSP).

Both these segments carry relatively high risk. The remaining 40 per cent is in less-risky large-cap and hybrid funds.

This signifies an overall moderate to high risk appetite on your behalf.

Among the multi-cap funds, the Parag Parikh, Kotak and Aditya Birla funds are rated five- or four-star by BusinessLine Portfolio Star Track MF Ratings. The Motilal Oswal fund alone is not rated as it does not have a seven-year history yet.

While you can continue investments in all these funds as of now, multi-cap funds, as a category, need to be closely watched due to SEBI’s mandate that require them to invest at least 25 per cent each in large- , mid- and small-cap stocks by February 2021. You can take a call based on how the fund houses respond to this development, as it could change the risk-return parameters for funds.

Both the large-cap funds (Mirae Asset Large Cap and Axis Bluechip) enjoy 5-star ratings, while ICICI Prudential Equity & Debt is rated 4-star by BusinessLine Portfolio Star Track MF Ratings. You can continue your investments here.

You are right about stopping your SIPs in the two HDFC funds, ratings of which have slipped to 2-star.

Depending on your return experience, you can either let the sums continue to float here or move it elsewhere based on the time to reach your goal and your risk appetite.

Send your queries to

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on October 18, 2020
This article is closed for comments.
Please Email the Editor