Your Fund Portfolio

I am 33. I earn about ₹60,000 a month and my wife ₹32,000. Our monthly expenses include ₹35,000 (housing loan and loan from the Employee Provident Fund organisation). We spend ₹15,000 per month on household expenses. We want to invest for our twin daughters (nine months now) for a corpus of ₹1.5 crore, 15-17 years later. How much should we invest in monthly SIPs and in which funds? How is STP different from SIP?

Amarnath Jha

For a corpus of ₹1.5 crore 15-17 years later, you need to invest ₹15,000-20,000 per month, assuming your investments earn a compounded annual return of 12 per cent, a reasonable expectation. Your joint surplus of ₹42,000 per month now, after meeting your expenses, should allow you to comfortably start investing this amount in SIPs.

Assuming you start with ₹15,000 per month, you can spread this investment across four funds. Invest ₹4,500 per month in Franklin Prima Plus and UTI Equity, two large-cap oriented funds with a good track record; ₹3000 each can be put into L&T Value ( multi-cap fund) and Mirae Asset Emerging Bluechip ( mid-cap fund), for a good blend across market capitalisations.

Over time, as your surplus increases, make additional investments towards the same goal. You can also set up a separate portfolio for savings towards your retirement. Review your funds every few years and replace underperformers, if necessary.

Like how SIPs transfer money from your savings accounts into the mutual fund, STPs or Systematic Transfer Plans help you transfer a sum regularly from one scheme to another within the same fund house. Typically if you have a lumpsum to invest when stock markets are volatile, you can put the entire sum in a debt fund (which invests in government securities, corporate bonds,etc.) first and move it gradually into equity funds to help average costs. Else, closer to reaching your goals, you can move funds systematically from an equity fund to a debt fund to shield your corpus from stock market gyrations.

I am 29 . I have been doing SIPs in the following funds for the last two-and-a-half years: ₹12,000 in ICICI Pru Focused Bluechip, ₹4,000 in ICICI Pru Dynamic, ₹2,000 in Franklin US Opportunities and ₹1,000 each in Franklin India Prima Fund and Reliance Pharma Fund. I wish to continue for the next 11 years. Please give your opinion on my choices. 

Arijit M

Eleven years give you enough time to let your investments work and give superior returns compared to debt instruments. But if you do not have any specific goals for the money 11 years hence, you can continue saving beyond that, towards goals such as retirement. As for your fund choices, you could do with more diversification across fund houses. You could also spread ₹20,000 better, instead of investing 60 per cent of it into one fund (Focused Bluechip).

Finally, while international funds (Franklin US Opportunities) give your portfolio diversification against weakening of the rupee over the long term, thematic funds (Reliance Pharma) generally bear higher risk than normal diversified funds. Thematic investments require timing the entry and exit quite well. You could invest in Reliance Pharma for the time being. But you need to set a target return, monitor performance closely and exit when your target is reached.

Split ₹20,000 as follows: ₹5,000 each in ICICI Pru Focused Bluechip (large-cap) and Kotak Select Focus (large and mid-cap) and ₹3,000 each in L&T Value (multi-cap) and HDFC Mid-Cap Opportunities (mid-cap). The remaining ₹4,000 can be split equally between Franklin US Opportunities and Reliance Pharma.

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