Mutual Fund Corner: Should I consolidate my mutual fund portfolio?

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, Himanshu Srivastava, senior research analyst, Morningstar Advisers India, on our show Mutual Fund Corner.

A: You are on right track. It’s nice to know that you have planned your finances well so far. Let’s focus on your objective of generating a corpus of Rs 8 crore in 20 years.

You have already invested Rs 60 lakh so far. Additionally, you are investing Rs 57,500 every month as SIP and you can increase this amount by 10 percent every year. If you continue with this plan, you should be able to reach your target amount within your defined time frame.

Now about your mutual fund portfolio. If I consider the funds where you are continuing your investments, then you already have a consolidated portfolio with a mix of large-cap, multi-cap, mid and small cap funds. The funds are good picks and you could continue with them.

There are few tweaks that I would recommend here.

From asset allocation perspective, you should have some exposure in fixed income funds as well. Keeping in mind the time horizon that you have and considering you are a high-risk high return investor, you can follow an asset allocation of 85 percent equity and 15 percent fixed income to start with. This allocation can change going ahead based on your changing risk appetite.

You have one pure large cap fund in your portfolio and hence there is a scope to add one more to it. Large cap should be the anchor portion of your portfolio as they provide stability to the portfolio over the long term.

Some of the large cap funds which you can consider are:

You can also consider adding a value fund to your portfolio. These funds help provide good portfolio diversification in a market cycle. Some of the funds from the value category you may consider investing are: ICICI Prudential Value Discovery Fund, Templeton India Value or UTI Value Opportunities.

If you don’t want to increase the number of holdings in your portfolio, then you can consider redeeming your investments in Motilal Multicap 35 and Invesco tax Saver and invest the proceeds therein.

Motilal Multicap 35 fund is very similar to Motilal Long-Term Equity, where you are already continuing your investments. Whereas Invesco India Tax Plan has witnessed change in fund manager early this year.