Mutual Funds

Your Fund Portfolio

Parvatha Vardhini C | Updated on January 11, 2018


I am 26 years old and have been investing ₹5,000 each in DSP BR Micro Cap, Mirae Asset Emerging Bluechip and Motilal Oswal MoST Focussed Multicap 35 Fund for the past 24 months.

I am willing to take high risk. As I am single, I have no specific goals. My investment horizon is more than 20 years. I plan to increase the SIP amount to ₹10,000 each in the above mentioned schemes.

Is it wise to invest the additional amount in the existing SIPs or should I go for new schemes? For tax benefits, I have investments in Axis Long Term Equity (current value ₹3.65 lakh). Please advise.

Goutham N U

Mid- and small-cap stocks have had a dream run in the rally since 2014, and it is no surprise that you have chosen to invest in the flavour of the season through DSPBR Microcap (small-cap fund) and Mirae Emerging Bluechip (mid-cap fund).

Having begun operations in April 2014 while the markets were firmly on the ascent, the Motilal Oswal Multicap 35 fund too has delivered handsome returns in this period.Considering the high valuations in this space, mid- and small-cap stocks may be subject to correction in the near to medium term and hence, the NAVs ( Net Asset Value) of funds that invest in this space may take a knock.

But given that you have a long investment horizon and have also stated that you have a high risk appetite, you can continue investing ₹5,000 each in these funds through SIPs. You can also continue with Axis Long-Term Equity for tax-saving purposes.

As regards the additional investments, it is not a wise idea to divide the entire ₹30,000 you want to invest across these three schemes only. In the current market scenario, it is better to allocate some amounts to large-cap funds to provide some stability to your portfolio.

This way, the risk gets spread. You can also benefit from the investing styles of more fund houses.

Divide the additional ₹15,000 as ₹5,000 each in Birla Sun Life Frontline Equity, Franklin Prima Plus and SBI Bluechip Equity. These three are large-cap oriented funds with a solid track record across market cycles. Note that given your high risk appetite, pure large-cap funds, which are for slightly more conservative investors, are not suggested; these three funds are large-cap oriented, investing predominantly in large-caps but also taking 10-20 per cent exposures to mid- and small-caps to boost returns.

With respect to goal-setting, being single is no excuse. You can plan to save now to build/buy a house in a few years’ time or can even save towards retirement.

I am 31. I have been investing ₹4,000 each in the following funds for the last two years through SIP — Franklin India Smaller Companies, Axis Long-Term Equity, ICICI Pru Balanced Advantage and ICICI Pru Focussed Bluechip Equity.

I want to make an investment of ₹1 lakh . I have a time horizon of 15 years. Please suggest some good funds that will give handsome returns. I also want to know whether to make a bulk investment or invest through SIP/STP.

Sundeep

You choice of one small-cap fund (Franklin Smaller Companies), one balanced fund (Pru Balanced Advantage), one large-cap fund (Pru Focused Bluechip) and one ELSS (Axis Long-Term Equity) makes your portfolio quite well-balanced. You can continue your SIP investments in these funds.

Your portfolio choices indicate a moderate risk appetite. As far as the lumpsum investments go, given that markets are at a high, it is better to do a systematic transfer (STP) if you have a low to moderate risk appetite.

Invest the ₹1 lakh in a liquid fund and do a systematic transfer of, say, ₹5,000 every month. Since you don’t have a multi-cap fund in your portfolio, you can choose from among funds such as Birla Sun Life Equity, Kotak Select Focus or SBI Magnum Multicap.

Do keep in mind that to do a systematic transfer, both the source fund (i.e. the liquid fund) and target fund (i.e. the equity fund you want to invest in) should be from the same fund house. Also note that while liquid funds don’t usually charge an exit load, capital gains tax is applicable on each transfer from the source fund.

Send your queries to mf@thehindu.co.in

Published on July 30, 2017

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