Mutual Funds

Your Fund Portfolio

Parvatha Vardhini C | Updated on January 11, 2018

I am 30 years old, working in a public sector bank and under the NPS scheme. I am investing ₹5,000 through SIP mode in the Axis ELSS scheme. Can I reduce the amount of SIP in this fund and diversify into other ELSS schemes? If yes, kindly suggest better ones. I can put another ₹15,000 every month in MFs through SIPs.

Abhijeet Mishra

Given your age, it is good that you are looking at a pure equity product for tax-saving purposes instead of fixed deposits. Besides, since you are already locked-into the NPS for long-term needs such as retirement, equity mutual funds can help create additional corpus to supplement retirement needs as well as provide for other financial goals that may arise.

Coming to the funds, instead of investing all the ₹5,000 in one ELSS fund, you can definitely spread your risks. Apart from Axis Long-Term Equity, you can consider funds such as DSPBR Tax Saver, ICICI Pru Long Term Equity, HDFC Tax Saver or Franklin Tax Shield. Divide the ₹5,000 equally between Axis Long-Term Equity and any of these funds.

It is not clear how much exactly you can invest in ELSS under Section 80C after considering your NPS and EPF contribution, insurance premium payments, etc. If you have to invest more to exhaust the ₹1.5 lakh limit under Sec 80C, you can choose other ELSS funds from the shortlist.

Assuming you can invest ₹15,000 outside of ELSS investments for long-term savings purposes, you can choose the following diversified equity funds: Invest ₹4,500 each in Birla Sun Life Frontline Equity and Quantum Long-Term Equity. The remaining ₹6,000 can be divided equally between Kotak Select Focus and ICICI Pru Value Discovery. This combination of funds will leave you with an allocation of 60 per cent towards large-cap oriented funds (Frontline Equity and Quantum Long-Term) and 40 per cent towards multi-cap funds (Select Focus and Pru Value Discovery). This allocation suits an investor who can take moderate risks. If your investible surplus is lower than ₹15,000 because of additional investments in ELSS schemes, reduce investments in each of these funds proportionately.

Please advise for long-term investment of ₹2,000 per month in the following — Tata Equity PE, Sundaram Rural India, Motilal Oswal MOSt Focused Multicap 35, L&T India Value, Birla Sun Life Equity, IDFC Classic Equity, Reliance Small Cap, Mirae Asset Emerging Bluechip, L&T Midcap, DSP BlackRock Small and Mid Cap.

Vishwas Joshi

Overall, you want to invest ₹2,000 per month in 10 funds amounting to ₹20,000 per month via SIPs. Your portfolio choices need fine-tuning. For one, out of the 10 funds mentioned, you want to invest in five multi-cap (Tata Equity PE, Motilal Oswal MOSt Focused Multicap 35, L&T India Value, Birla Sun Life Equity, IDFC Classic Equity), four mid and small-cap funds (Reliance Small Cap, Mirae Asset Emerging Bluechip, L&T Midcap, DSP BlackRock Small and Mid Cap) and one thematic fund (Sundaram Rural India). This points to a high risk appetite.

The risk factor can definitely be pegged lower, because you have a long-term perspective. You can do away with some of the current choices and bring in large-cap funds. Besides, for ₹20,000 you can also do with a limited set of funds rather than 10 of them. Invest as follows: Put in ₹3,500 each in Quantum Long-Term Equity, SBI Bluechip and Franklin Prima Plus, three large-cap oriented funds with a reliable track record of good returns. Another ₹7,000 can be equally divided between Birla Sun Life Equity and Tata Equity PE, good multi-cap funds and ₹2,500 can go into L&T Midcap.

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Published on May 14, 2017

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