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Mutual Fund Corner: All your queries answered

Updated : October 16, 2018 03:19 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, Gajendra Kothari, managing director and chief executive officer, Ética Wealth Management Private Ltd, on our show Mutual Fund Corner.


Q: 45-year-old Balachandran Srinivasan writes to us from Chennai. I have SIPs running for Rs 80,000 a month since the last couple of years and it has two goal targets one in 2024 and the other in 2033. The SIPs would be increased annually by about 10 percent. While I have seen and read many articles advocating the need to invest in equities via SIPs, it would be great if you can advise a strategy on how an investor should go about redeeming the accumulated funds? Do we start moving it to a debt fund in portions a year before the target date or is there anything else you may want to throw light on?

A: Having a strategy to withdraw funds is equally important just the way you invest money to meet these goals. The best way to withdraw is to have goal based investing in place so that whenever the goals are achieved, the money can be moved to a safer alternative. In your case, if you achieve the goals before the due date, then immediately you should move the entire money to short term debt funds so that you do not get any shock due to unfavourable market conditions.


Q: 40-year-old Samir Kumar Pandey writes to us from Bengaluru. I am investing Rs 9,000 in Axis Focused 25 Fund – Direct Plan-Growth, Rs 9,000 in ICICI Prudential Bluechip Fund - Direct Plan, Rs 9,000 in Kotak Standard Multicap Fund - Direct Plan, Rs 9,000 in HDFC Mid-Cap Opportunities Fund - Direct Plan, Rs 9,000 in Mirae Asset India Equity Fund - Direct Plan and Rs 5,000 in Franklin India Feeder - Franklin U.S. Opportunities Fund - Direct Plan through SIPs from last 6 months. I want to continue these SIPs for at least 10-15 years as I am planning for retirement corpus of around Rs 3-4 crore. I want to know if this SIP amount will help me to achieve my goal in 15 years from now. Also suggest me if these mutual fund plans are the best plans or I need to make some changes to my SIP portfolio.

A: Rs 50,000 SIP for 15 years at 12 percent will fetch you a corpus of Rs 2.50 crore. Hence to achieve a corpus of Rs 4 crore, you need to have an SIP of Rs 80,000 per month. Your fund selection is good and you do not need to change the funds. However, not all funds will perform all the time and hence, be prepared for volatility in performance over shorter term. Also, the portfolio returns matter and not the individual funds. Moreover, you need to find out the exact retirement corpus based on your lifestyle and not just a random number as retirement is the most important goal and you cannot go wrong here.


Q: 30-year-old Sudipta Chatterjee writes to us from Jharkhand. Investing in mutual funds for the past one year or so. I am having a horizon of 10-12 years. I am a moderate risk taker. I am investing Rs 5,000 per month in SBI Bluechip, Rs 3,000 per month in Mirae Asset Emerging Bluechip, Rs 1,000 per month in Motilal Oswal Multicap 35, Rs 4,000 per month in Axis Long Term Equity Fund and Rs 1,000 per month in Reliance Small Cap Fund. My questions are: Is my Portfolio fine in regards of diversification? Any changes that you recommend?

A: Since you are a first time investor and have a moderate risk portfolio, this portfolio is not ideal for you. This is a very high risk portfolio as it a complete equity portfolio with a high mix of large, mid and small cap portfolio. You should ideally be into hybrid equity funds, which has anywhere from 25-70 percent exposure in equity and the remaining in debt. Since you are a moderate investor, I will recommend you the following funds: conservation hybrid - ICICI Equity Income Fund, moderate hybrid - Invesco Dynamic Equity Fund and aggressive hybrid - Mirae Asset Hybrid Equity Fund. You can expect around 10-11 percent return from the portfolio over a 10-12 year period.


Q: 28-year-old Ranjan Mallick writes to us from Kolkata. I have the following funds in my portfolio: SBI Bluechip, ABSL Frontline Equity, Kotak Std Multicap, L&T India Value, HDFC Midcap Opp, Franklin India Focused Equity, HDFC & L&T Hybrid Equity and ABSL Tax Relief '96. I want to stop Franklin India Focussed Equity Fund and both the Hybrid Funds and switch out to HDFC Midcap Oppo and L&T India Value funds respectively. For the rest, I want to continue.

A: First of all you should not invest purely for chasing returns. The ideal way to invest is to have a goal based financial plan and an investment strategy. Moreover, your portfolio is having too many funds and highly diversified. Also, churning your portfolio in the short term will not add anything to your returns, but will surely add to your costs. When you invests in any equity fund, you should give at least 3-5 years before taking any action.


Q: 26-year-old Prashant Kumar writes to us from Rajasthan. I have invested Rs 7,000 per month in SBI Bluechip, Rs 3,000 per month in SBI Magnum Midcap, Rs 2,000 per month in ICICI Pru Multicap and Rs 3,000 per month in Franklin Smaller Companies from June 2018. My target is Rs 15 lakh in five years. Please advise whether to continue with current portfolio.

A: Glad to see that you have started quite young. Presently, you are doing an SIP of Rs 15,000 which at 12 percent will result into a corpus of approximately Rs 12.5 lakh assuming 12 percent returns. To achieve a corpus of 15 lakh, you need to increase your SIP to Rs 20,000 per month. Your portfolio is a complete equity portfolio and hence it can be volatile in the shorter term. It's a diverse mix of large, mid, small and multicap funds. You don’t need to add any new funds.


Q: 24-year-old Tejas Chandan writes to us from Mumbai. I am planning do a SIP of Rs 50,000 each month with a span of at least 10 years. Could guide me as of how should I allocate my portfolio and also some good schemes for a long run.

A: First of all, you should have an investment plan in place and you should have goal based investing. Also, it depends on your risk appetite. Rs 50,000 SIP for 10 years at 12 percent will create a corpus of Rs 1.2 crore. You may go ahead with the following funds to start with: Aggressive Hybrid Equity Fund - UTI Hybrid Equity Fund and Diversified Equity Fund - Mirae Asset India Equity Fund.


Q: 40-year-old Bhavani Sankar writes to us from Hyderabad. Can I now start SIP in thee mutual funds: SBI Small Cap Fund (G), HDFC Small Cap Fund (G) and Reliance Small Cap Fund (G). Which is the best fund? Please advise me.

A: There is nothing called best fund. It depends on your time horizon and risk appetite. The funds you have chosen are very high risk high return fund and hence can be highly volatile in the shorter term.


Q: 27-year-old Akshay Shukla writes to us from Mumbai. My grandmother with six grandchildren wishes to invest Rs 30,000 per child with a time horizon of 20 years with the motive to contribute towards their education and future needs. Mutual funds with average returns of 14 percent for 20 years, Rs 30,000 becomes Rs 382,305. I need your advise for multi-bagger stocks which can give better returns than mutual funds (Rs 10 lakh per Rs 30,000 invested) which comes to 20 percent return per year.

A: You should not invest in stocks based on someone else’s advice or tips. If you able to do your own research and has adequate time and knowledge then only you should invest in stocks. Else, you should go through profession advice and invest through mutual funds. Moreover, 20 percent returns is highly aggressive and may not be possible.


Q: 31-year-old Karthikeyan R writes to us from Pune. Doing SIP of Rs 48,000 on monthly basis for the below fund. I need good returns for my children's education. My goal is to achieve Rs 1.5 crore in next 10 to 15 years. Please let us know the portfolio looks okay or do I select any other fund to achieve my goal.
Category Fund  -- Direct Growth Monthly
Contra Inves India Contra Fund 10,000
L&M Mirae Emearging Bluechip fund 10,000
Multi Axis Focused 25 10,000
Small HDFC Small Cap 10,000
ELSS Mirae Asset Tax  Saving fund 8,000

A: Rs 48,000 SIP in 10 years will get you a corpus of around Rs 1.1-1.2 crore. Rs 48,000 SIP in 15 years will get you a corpus of around Rs 2.4-2.5 crore. The portfolio is completely equity oriented and hence can be highly risky in the near term. However, the funds have a decent track record over the longer term and you can expect around 12 percent return at the portfolio level. Moreover, you should not add any new funds in this portfolio.

Disclaimer: The views and investment tips expressed by investment experts on CNBCT-V18 are their own and not that of the website or its management. CNBC-TV18 advises users to check with certified experts before taking any investment decisions.
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