Mutual Funds

Your Fund Portfolio

Parvatha Vardhini C | Updated on January 20, 2018


I am investing ₹10,000 each in SIPs since 2012, in the following funds: Reliance Equity Opportunities, Franklin Prima Plus, IDFC Premier Equity and HDFC Mid-Cap Opportunities. I am trying to accumulate ₹1.2 crore by 2022 for my child’s education, and ₹5 crore by 2029 for retirement. I’m also investing in PPF and the account now has a balance of ₹18 lakh. Am I on track? Would you recommend any changes?

Ram

Keeping the return expectation at 12 per cent, a target of ₹1.2 crore, 10 years after 2012, would mean a monthly SIP of about ₹52,000; similarly, a requirement of ₹5 crore, 17 years from 2012, would mean a SIP of ₹75,000 a month. That’s more than ₹1.25 lakh a month, a far cry from the ₹40,000 that you have been investing in the last four years or so. Of course, you may get higher returns and your PPF may also chip in to bridge some of the shortfall. You may also be able to increase your monthly investments over the years as your surplus moves up. But you need to assess how much more you can realistically cough up to meet these goals. Based on this assessment, you need to scale down your targets, if necessary.

As far as your funds go, you can probably do with more diversification for the ₹40,000 you are investing. Split ₹40,000 as follows: invest ₹7,000 each in the following three mid-cap funds: IDFC Premier Equity, HDFC Mid-cap Opportunities and Mirae Emerging Bluechip; ₹10,000 can go into Franklin Prima Plus, while the remaining ₹9,000 can be split equally between Reliance Equity Opportunities and L&T Value, which are multi-cap funds. We have suggested additional funds, keeping the ratio of large-cap to mid-cap to multi-cap funds almost the same as in your existing portfolio.

I am 30. My wife and I started SIPs totalling ₹43,000 since January 2016 in the following funds: Reliance Equity Opportunities and Mirae Emerging Bluechip – ₹7,000 each; Birla Sun Life Frontline Equity – ₹6,000; DSPBR Microcap, Axis Long Term Equity, ICICI Pru Long Term Equity – ₹5,000 each; Franklin Tax Shield and Reliance Tax Saver – ₹4,000 each. I plan to continue for at least 20 years to build a retirement corpus as well as for my child’s education. Please review my portfolio and tell me if any changes are required.

Vidit

If you invest ₹43,000 a month for 20 years and your investments earn a 12 per cent compounded annual return, you will get a corpus of about ₹4.3 crore at the end of the period. You can increase your SIPs as and when your surplus increases to provide for additional requirements, if any. Else, you can also spread out your investments into other asset classes by saving in debt instruments such as fixed deposits.

Considering your age and the long time period you have in mind, it is good that you have shown a high risk appetite when choosing funds. For one, you have allocated three-fourths of your investments to diversified funds, to small/mid-cap (DSPBR Micro-Cap and Mirae Emerging Bluechip) and multi-cap funds (Reliance Equity Opportunities). Secondly, you have also chosen ELSS funds over other debt options among tax-saving instruments. You can continue your investments in all these funds since they have a dependable performance record. Review your portfolio periodically and replace prolonged underperformers.

I am currently investing ₹1,000 in Axis Long Term Equity and ₹500 in Reliance Tax Saver through SIPs. Should I continue these two funds? I want to invest another ₹1,500 a month from April 2016 onwards. Suggest two other good ELSS funds.

Kavindra Salunke

For the ₹3,000 that you want to invest every month totally, it is not necessary to diversify into four different funds. Both the schemes you currently invest in have good track records. You can continue with these funds and step up your investments to ₹1,500 in each of them. You can also invest in diversified equity funds as your surplus increases.

Published on April 03, 2016

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