Even 50 schemes is too many for a retail portfolio of funds. Treat Mint 50 as a universe of funds from which you will pick the ones that suit your particular investment needs and risk appetite. Greater ability to take risk would mean greater allocation to equity, while the risk-averse should go more towards debt-oriented funds.
Ideally you need 6-10 funds to build a well-diversified portfolio. The 50 funds selected here offer a variety of management styles and risk levels so that you get to pick and choose those that suit your style and needs.
First, decide how much you want to put into equity and how much into debt. You can build an all-equity portfolio out of the large-cap, equity-linked saving scheme and mid-cap funds and do your debt investing in government-guaranteed products such as Employees’ Provident Fund and Public Provident Fund.
For investors wanting a hybrid product, that has both debt and equity, go for the balanced funds. A moderate allocation fund, with a maximum of 75% equity allocation, is good for those who seek a safety cushion in their equity funds. A conservative equity allocation with a maximum of 30% in equities is good for conservative investors who also seek some sort of a monthly income from investments.
Next, look at “core” funds as those at the heart of a good portfolio and soak up a large chunk of money. Select out of “satellite” funds to add a returns kicker to the portfolio.
If you are already invested in a scheme and it doesn’t figure in Mint 50, no need to panic. Not all schemes that are outside the Mint 50 are bad. However, our selection is based on the schemes that are better than what exists in the market. So don’t exit at once, but look at returns and ratings for the funds you own in the context of Mint 50. Some poor performers may be better sold than held.
Mint will update the portfolio on the Web with live feeds of net asset value (NAV), returns and rating at www.livemint.com/mint50. The portfolio will be audited once a quarter for rogue funds and managers. And we churn the portfolio once a year.
Look out for Web chats with fund managers each week on Livemint.com and a scheme update every Thursday in this space.