Personal Finance

Mutual Fund Corner: Should I change schemes in my mutual fund portfolio?

Updated : November 29, 2018 04:13 PM IST

Want to invest in mutual funds but don’t know how to go about it?

Get all your mutual fund related queries answered by our expert, Harsh Roongta, independent financial advisor, on our show Mutual Fund Corner.

Q: 33-year-old Avinash Parwani writes us from Chennai. I have been investing in mutual funds for more than five years now. I feel I have too many funds in my portfolio. I recently redeemed units from IDFC Infrastructure Fund, DSP BR Micro Cap Fund and DSP BR Focus Fund and reinvested this amount in HDFC Small Cap and BSL Front Line Equity. I have active SIPs in HDFC Small Cap, IDFC Core Equity, Mirae Asset India Opportunity, L&T Mid Cap, HDFC Mid Cap Opportunities, Aditya BSL Front Line Equity, Tata Equity PE Fund and SBI Blue Chip Fund. Other funds in my portfolio are ICICI Pru Banking & Financial Services, ICICI Balanced Advantage, BSL Advantage Fund, BSL Tax Relief 96, HDFC Tax Saver and DSP Tax Saver. Also, I am waiting for one year to finish IDFC Sterling Equity and BSL Pure Value Fund and to redeem it, so I can avoid exit load. Since these funds have not performed well. Please suggest if any correction required.

A: You are right far too many funds. But bigger problem is no goal, no tenure, no risk profiling etc. Take professional help. Maximum 1-2 funds per goal. If you have only one goal, then maximum of three funds. Over diversification just means average returns at high cost leading to overall poor returns. You would do much better by investing for a specific goal with a specific time frame and target amount in mind. One large cap fund (60-70 percent), which can be a Nifty Next Index Fund Plus 1 Midcap Fund (30 percent) and one small cap fund (10 percent). From among your funds, I would say retain only L&T Mid Cap and maybe HDFC Small Cap. ICICI Prudential Nifty Next Index Fund Direct Growth for large cap exposure. Take professional assistance and prune your portfolio. It has way too many funds.

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