I am 24. I invest in the following funds: ICICI Pru Export & other services - ₹1,000, IDFC Premier Equity - ₹2,000, Franklin India Smaller Companies - ₹3,000 and ₹4,000 in Axis Long-Term Equity.

I am considering stopping IDFC Premier Equity as it has not done well in recent times. I also want to exit Export and Other Services Fund.

Kindly suggest alternatives. I have a high risk appetite.

Dinesh Kumar S

ICICI Pru Export and Other Services Fund is a thematic fund focusing mostly on segments such as Pharma and Technology. While its returns over one, three and five-year periods are commendable, thematic and sector funds need not necessarily be part of one’s long-term portfolio.

They also require more precision in timing your entry and exit than normal diversified funds as sectors may go into prolonged spells of outperformance and underperformance.

You could move to a diversified equity fund such as BNP Paribas Equity, which offers more stability as well as good returns.

As regards IDFC Premier Equity, though it is the best mid-cap fund when looking at returns over a long term of 10 years, it has been a laggard in recent times.

A conservative approach based on taking cash calls and avoiding overheated segments has cost the fund dear in the last two years.

Besides, the fund has also seen its fund manager change from September 2015. To its credit, though, the fund has beaten the returns of its benchmark, the Nifty 500, convincingly over one, three and five-year periods by 8-11 percentage points.

Its returns are on a par with the category average during these periods. While it may still catch up over the long term, you can move to better performers such as Mirae Emerging Bluechip.

Split the ₹10,000 that you are currently investing in various funds as follows: Invest ₹2,000 each in BNP Paribas Equity, Mirae Emerging Bluechip and Franklin Smaller Companies. We have suggested one large-cap oriented fund in BNP Equity and two mid-cap funds, keeping in mind your age and high risk appetite.

You can continue investing ₹4,000 in Axis Long-Term Equity to save taxes.

I am 32 . I want to accumulate ₹1-1.5 crore for my children’s education and marriage over the next 15-20 years. Towards this goal, I can currently allocate ₹15,000 per month for SIPs.

Will this be enough?

Besides, for my retirement, beginning 2017, I want to accumulate ₹1.5 to ₹2 crore within a 23-year time horizon. How much should I invest for this purpose?

Ravi Krishna Palivela

If you invest ₹15,000 per month towards the needs of your children and your funds earn a reasonable 12 per cent compounded annual return per annum, you can accumulate ₹75 lakh and ₹1.5 crore at the end of 15 years and 20 years, respectively.

Similarly, if you want ₹1.5 crore at the end of 23 years from 2017, keeping the same return assumption of 12 per cent, you will have to start investing an additional ₹10,200 per month from that year onwards towards your retirement.

A ₹2-crore requirement would need a slightly higher monthly investment of ₹13,600.

You can use online SIP/Target calculators to try out different permutations and combinations of monthly SIP amounts, return expectations, investment horizon and target corpus to see what suits you best.

But you need to keep in mind that the value of money then will not be the same as it is today. To not fall short, it is best to periodically step up investments. Alternately, you can also invest in safer debt instruments so as to spread your risk.

You can invest the ₹15,000 towards your children’s future as follows: ₹4,500 each in Franklin Prima Plus and Kotak Select Focus, two good large-cap funds; ₹3,000 each in L&T Value and HDFC Midcap Opportunities, which are multi-cap and mid-cap funds, respectively.

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