iStockI am 30 years old. I have a moderate risk appetite. I am currently investing in these mutual funds:
Mirae Asset Large Cap Fund: Rs 2,500
Canara Robeco Emerging Equities Fund: Rs 2,000
SBI Focused Equity Fund: Rs 2,500
Invesco India Contra Fund: Rs 2,000
L&T Midcap Fund: Rs 1,500
Kotak Emerging Equity Fund: Rs 1,500
ICICI Prudential Us Bluechip Equity Fund: Rs 1,000
ICICI Credit Risk Fund: Rs 2,000
Nippon India Liquid Fund: Rs 1.50 lakh (emergency fund)
All these investments are in direct plans. I have a horizon of 15-20 years. My goal is to build corpus (1-1.5 crore) for my house, children education, marriage etc. For my retirement (Rs 5-6 crore) investing Rs 4,000 in PPF and Rs 6,000 in NPS, and increasing every year.
My questions are: I think nine funds are more than enough, so how many funds strictly should be exit from my portfolio?
I want to add these funds in my portfolio. Is it the right decision? Should any of these funds be added or should be replaced by a fund in the portfolio.
Axis Bluechip Fund
Kotak Standard Multicap Fund
Invesco Growth Opportunities Fund
Canara Robeco Bluechip Equity Fund
Mirae Emerging Bluechip Fund
I also want to add a small cap fund. Is Axis Small Cap Fund a good option?
Will I be able to achieve my financial goals?
- Deepesh Warkade
It is always better to keep your investment strategy simple. If you have a moderate risk profile, you should invest mostly in multi cap schemes that are ideal for your risk profile. You can also invest in large cap scheme if you want to diversify your portfolio and reduce the overall risk in it. Adding every possible mutual fund category and top performing schemes would only help you to complicate things.
Your current equity portfolio is a mix of several schemes in different categories. Some categories like multi cap and large cap are suitable for your risk profile. However, categories like mid cap and small cap schemes are not in line with your risk profile. They are suited for aggressive investors with a very large risk appetite and ability to withstand volatility.
You should reassess your risk profile and make sure you have a sharply focused portfolio. You don’t need more than four or five schemes, including ELSS funds, in your portfolio. If you find it difficult to do this on your own, take the help of a reliable (ask your friend and relatives for reference) mutual fund advisor near you.
It is always better to avoid mental math when it comes to financial goals. Always put a number to each long-term goal and include inflation in your calculations to arrive at a realistic target corpus. Once you know the corpus, you can decide which asset class you want to invest to reach your goal.
Finally, it is always better to depend on equity to take care of your long-term goals like retirement. This is mainly because it is extremely important to beat inflation when it comes to build a large corpus over a long period. Countless studies have shown that equity can offer superior returns than other asset classes over a long period. When you bet on safe options like PPF, you need to invest a lot more because such avenues offer modest returns.
Mirae Asset Large Cap Fund: Rs 2,500
Canara Robeco Emerging Equities Fund: Rs 2,000
SBI Focused Equity Fund: Rs 2,500
Invesco India Contra Fund: Rs 2,000
L&T Midcap Fund: Rs 1,500
Kotak Emerging Equity Fund: Rs 1,500
ICICI Prudential Us Bluechip Equity Fund: Rs 1,000
ICICI Credit Risk Fund: Rs 2,000
Nippon India Liquid Fund: Rs 1.50 lakh (emergency fund)
All these investments are in direct plans. I have a horizon of 15-20 years. My goal is to build corpus (1-1.5 crore) for my house, children education, marriage etc. For my retirement (Rs 5-6 crore) investing Rs 4,000 in PPF and Rs 6,000 in NPS, and increasing every year.
My questions are: I think nine funds are more than enough, so how many funds strictly should be exit from my portfolio?
I want to add these funds in my portfolio. Is it the right decision? Should any of these funds be added or should be replaced by a fund in the portfolio.
Axis Bluechip Fund
Kotak Standard Multicap Fund
Invesco Growth Opportunities Fund
Canara Robeco Bluechip Equity Fund
Mirae Emerging Bluechip Fund
I also want to add a small cap fund. Is Axis Small Cap Fund a good option?
Will I be able to achieve my financial goals?
- Deepesh Warkade
It is always better to keep your investment strategy simple. If you have a moderate risk profile, you should invest mostly in multi cap schemes that are ideal for your risk profile. You can also invest in large cap scheme if you want to diversify your portfolio and reduce the overall risk in it. Adding every possible mutual fund category and top performing schemes would only help you to complicate things.
Your current equity portfolio is a mix of several schemes in different categories. Some categories like multi cap and large cap are suitable for your risk profile. However, categories like mid cap and small cap schemes are not in line with your risk profile. They are suited for aggressive investors with a very large risk appetite and ability to withstand volatility.
You should reassess your risk profile and make sure you have a sharply focused portfolio. You don’t need more than four or five schemes, including ELSS funds, in your portfolio. If you find it difficult to do this on your own, take the help of a reliable (ask your friend and relatives for reference) mutual fund advisor near you.
It is always better to avoid mental math when it comes to financial goals. Always put a number to each long-term goal and include inflation in your calculations to arrive at a realistic target corpus. Once you know the corpus, you can decide which asset class you want to invest to reach your goal.
Finally, it is always better to depend on equity to take care of your long-term goals like retirement. This is mainly because it is extremely important to beat inflation when it comes to build a large corpus over a long period. Countless studies have shown that equity can offer superior returns than other asset classes over a long period. When you bet on safe options like PPF, you need to invest a lot more because such avenues offer modest returns.
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