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Mutual Fund Corner. Q: 33-year-old Sumedh Ganu writes us from Mumbai. I am living with my 30-year-old wife in Mumbai. Our aim is to generate wealth and have an aggressive risk appetite. We have accumulated a corpus of Rs 30 lakh in equity mutual funds as of now. Generally, mutual fund experts recommend investing in a maximumÂ of four funds in a portfolio. But, considering the following points, we have chosen to invest in eight different mutual fund schemes: What if all four selected funds start performing badly? So, we have selected a couple of good funds in each category to diversify performance risk. We have checked the portfolio overlap of all schemes against each other. Overall portfolio overlap is only 15-25 percent . Current SIP amount is Rs 1.6 lakh per month which is a large investment per month. We have selected one large, two large and mid, two multi and three small-cap funds. All mutual fund schemes are selected from different mutual fund houses. We both together have monthly SIP investments in following direct mutual fund plans: SBI Blue Chip (Large): Rs 25,000 per month. Mirae Asset Emerging Blue Chip (Large & Mid): Rs 20,000 per month. Principal Emerging Blue Chip (Large & Mid): Rs 15,000 per month. ABSL Equity (Multi): Rs 5,000 per month. Motilal Oswal Multicap 35 (Multi): Rs 15,000 per month. L&T Emerging Blue Chip (Small): Rs 40,000 per month. Reliance Small Cap (Small): Rs 30,000 per month. Franklin India Smaller Cos (Small): Rs 10,000 per month. Please, advice regarding our overall portfolio construct and schemes selection within each category. We have Rs 3 lakh corpus in DSPBR Small Cap Fund. This fund is not performing well since the last 1-2 years. We have stopped SIP and would like to switch to DSPBR Mid Cap Fund as it is a decent performing fund and we want to add pure mid-cap exposure to our portfolio. This would be the ninth different scheme in our portfolio. We want to start new SIPs of Rs 40,000 per month. Please suggest in which schemes should we start new SIPs. How much corpus can we accumulate with SIP of Rs 2 lakh/month starting with Rs 30 lakh corpus in 25 years? How much additional corpus can we accumulate if we increase SIP amount by 10 percent every year?
A: You can exit from SBI Blue Chip Fund, Principal Emerging Blue Chip, Motilal Oswal Multi-Cap 35, L&T Emerging Businesses Fund, Reliance Small Cap Fund and Franklin India Smaller Cos Fund. You can hold your investments in Mirae Asset Emerging Bluechip Fund and ABSL Equity Fund. You can invest in Reliance Large Cap Fund, Canara Robeco Emerging Equities Fund, Mirae Asset India Equity Fund, HDFC Small Cap Fund and Kotak Emerging Equities Fund.
For your corpus of Rs 3 lakh in DSP Small Cap Fund, we would suggest you switch to SBI Focused Equity Fund. For your new SIPs of Rs 40,000/month, you can invest Rs 20,000 in Kotak Standard Multi-Cap Fund and for the remaining Rs 20,000, you can increase your exposure in the above-mentioned funds. You will able to accumulate Rs 75 crore with SIP of Rs 2 lakh in 25 years. If you increase your SIP amount by 10 percent every year, you will be able to accumulate around Rs 129 crore.
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