Mutual Funds

Your Fund Portfolio

Parvatha Vardhini C | Updated on January 12, 2018


I have been investing ₹3,000 in UTI Equity, ₹1,500 in ICICI Pru Value Discovery and ₹2,000 in Birla Sun Life Top 100 over the last 18-24 months. I intend to further invest ₹5,000 through SIPs. My time horizon is 15-20 years. Kindly comment on my choices and suggest new funds for the additional sum.

Siddharth Mishra

Including the additional ₹5,000 you intend to put in, you will totally be investing a sum of ₹11,500 a month in mutual funds. Assuming you have a moderate risk appetite, you can balance your portfolio somewhat equally between lower risk large-cap oriented funds and higher risk mid-/small-cap and multi-cap funds.

As far as large-cap funds go, you can stick with UTI Equity and Birla Sun Life Top 100 itself as these are funds with consistent track record. Both these funds have been sporting good returns of 15-18 per cent in the last five years. Continue investing ₹3,000 a month in UTI Equity. Step up your investment to ₹3,000 a month in Birla Sun Life Top 100. With ICICI Pru Discovery being a solid performer among multi-cap funds, you can continue with this fund as well. Double your current investment of ₹1,500 in this fund to ₹3,000. The remaining ₹2,500 can be invested in Mirae Emerging Bluechip, a top mid-cap fund.

Since you have a horizon of 15-20 years, it is best to review the performance of these funds periodically and replace them with better performers, if necessary, over the years.

My son is 23. He can save ₹15,000 per month. He wants to accumulate ₹50 lakh in 10 years in order to buy an apartment. Is this amount enough or should he save more? How should he allocate the sum across various funds? He has also invested about ₹1 lakh in stocks.

Nagananthini Kannan

If your son puts in ₹15,000 per month and his investments earn a compounded annual return of 12-15 per cent, he will obtain a corpus of only about ₹34.5-41.3 lakh at the end of 10 years. The other factor that he needs to keep in mind is that the purchasing power of ₹50 lakh after 10 years may not be the same as it is today. While predicting how property prices will move is not practical, assuming a 6 per cent inflation, what is worth ₹50 lakh today will become ₹89.5 lakh at the end of 10 years.

Either way, there is a shortfall between his target amount and his savings capacity today. What can help bridge the gap to an extent is the fact that the funds might earn more than the assumed 12-15 per cent; secondly, he can increase his SIP amount over the years; besides, his stock investments may also grow to a bigger sum by then. He can also extend his goal by a few years to reach the required sum.

Coming to the funds, he can divide the ₹15,000 that he will currently be investing as follows: ₹3,500 each in SBI Bluechip and Birla Sun Life Frontline Equity which are large-cap funds; ₹3,000 each in Franklin High Growth Companies and Kotak Select Focus which are multi-cap funds and ₹2,000 in HDFC Mid-Cap Opportunities, a mid-cap fund.

I am 35 and working in a PSU bank. I am investing ₹17,220 every month in a 10-year recurring deposit in my wife’s name, to build a corpus of ₹30 lakh at an interest rate of 7 per cent. I also want to maximise returns by investing in other avenues where I can put in ₹22,000 every month for 10 years. I want my investments to be safe.

Ram Prasad

Since you are already investing a substantial sum in debt (recurring deposit) every month, you can invest in equity mutual funds through monthly systematic investment plans (SIPs). Equity investments are not entirely risk-free or safe. But, a long-term horizon along with a choice of time-tested funds can keep your risk low and also give you higher returns than debt. Divide the ₹22,000 as follows: invest ₹5,000 per month in SBI Magnum Equity, Birla Sun Life Frontline Equity and Quantum Long-Term Equity, three large-cap oriented funds with a good track record. The remaining ₹7,000 can be equally divided as ₹3,500 between HDFC Balanced and Franklin Prima Plus. This allocation will ensure that 85 per cent of your investment is in less risky large-cap/balanced funds.

Send your queries to mf@thehindu.co.in

Published on February 05, 2017

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