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This article is more than 2 year old.

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

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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.

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.

Q: 39-year-old Siddhartha Mishra writes to us from Pune. I am looking to build my retirement corpus as all other other goals like house, children education and marriage have already been allocated. I and my wife are covered under Rs 10 lakh medical insurance policy. I am looking at Rs 8 crore in 20 years as the retirement corpus and wanted a view on whether I need to consolidate the mutual fund schemes further or do any changes. I have already invested about Rs 60 lakh in these mutual fund schemes and looking at Rs 8 crore in 20 years. I can increase my investment by 10 percent every year. Following are the consolidated view of the SIP every month and I have discontinued few SIPs, but still hold these schemes.
FundSIP Amount (In INR)
SBI Bluechip              10,000
Kotak Standard Multicap              10,000
Motilal Long Term Equity              12,500
HDFC Midcap Opp              10,000
HDFC Small Cap                5,000
Franklin Smaller Companies                5,000
L&T Emerging Business                5,000
SIP DISCONTINUED
DSP Tax Saver
Motilal Multicap 35
 Invesco Tax Saver
Mirae Asset India Equity
Mirae Emerging Equity
Please help me with the consolidation of the mutual fund schemes as too many schemes are not helping me.
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:
    Group/InvestmentMorningstar Analyst RatingMorningstar Rating OverallReturns (%)
    1-Yr3-Yr5-Yr
    Aditya BSL Frontline Equity GrSilverÙÙÙÙ-4.618.9014.26
    DSP Top 100 Equity Reg GrBronzeÙÙ-8.346.2210.34
    Franklin India Bluechip GrGoldÙÙÙ-5.356.8112.05
    HDFC Top 100 GrGoldÙÙÙÙ-1.5711.1914.81
    ICICI Pru Bluechip GrSilverÙÙÙÙÙ-1.0610.9614.34
    Reliance Large Cap GrSilverÙÙÙÙÙ0.4910.9017.58
    SBI Bluechip Reg GrBronzeÙÙÙÙ-5.247.9315.24
    UTI Mastershare Unit Reg GrBronzeÙÙÙ-0.628.0413.03
    • 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.
    • Group/InvestmentMorningstar Analyst RatingMorningstar Rating OverallReturns (%)
      1-Yr3-Yr5-Yr
      ICICI Pru Value Discovery GrSilverÙÙÙÙ0.237.8920.03
      IDFC Sterling Value Reg GrSilverÙÙÙÙ-11.4611.9617.91
      Templeton India Value GrSilverÙÙ-13.996.8314.07
      UTI Value Opportunities Reg GrBronzeÙÙ-1.736.9310.90
      • 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.
      • Click here to watch the full episode of Mutual Fund Corner

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