Ask Mint Money | For long term, you don’t need balanced fund in your portfolio

I save Rs 15,000 per month. I get 10% return on my current investments. I want to start investing in mutual funds (MFs). Suggest some MFs so that by 2018, I have sufficient amount to buy a property. How can I keep a track of all the funds?

—Pankaj Rajan

If you invest Rs 15,000 per month in a diversified MF portfolio for seven years, you can hope to get between 12% and 14% returns per annum. In this range, the corpus of your portfolio would be between Rs 20 lakh and Rs 22 lakh, approximately. A good portfolio for this purpose would be to invest in different segments with an aim to achieve an optimum risk-adjusted return. You can invest 50% of your portfolio in large-cap-oriented funds. Around 30% of the portfolio can be diversified funds and the remainder can be invested in a small and mid-cap fund.

The best way to keep track of your portfolio is to use one of the many online services available. You can either use offline channels to invest and merely track your portfolio using online portfolio tracking tools, or you can choose to invest using online channels where you will be able to track it automatically.

I am 46 years old and my net monthly salary is Rs 30,000. I have systematic investment plans (SIPs) of Rs 2,000 each since 2008 in the following MFs: DSP BlackRock Top 100, HDFC Top 200, Sundaram Select, ICICI Dynamic Growth, Reliance Regular Savings Equity, Reliance Growth and Tata P/E Growth. I plan to discontinue Reliance Growth and transfer the fund to Reliance Regular Savings and do away with Tata P/E Growth Fund. I want to start a new SIP of Rs 2,000 in HDFC Prudence. I plan to continue all these funds for another 10 years to build a corpus of Rs 25 lakh for my daughter’s education and marriage. Will these investments serve the purpose?

—S.N. Ladge

You are investing a total of Rs 14,000 per month in a portfolio of MFs. You have been doing so for the last three years and intend to continue for another 10 years. Given these, your goal of building a corpus of Rs 25 lakh in 10 years is easily achievable. It is likely that you will reach your goal a year or two earlier, and in that case, you should start moving your investments to safer avenues such as liquid or short-term debt funds to ensure that you have the funds when you need to utilize them. Regarding the changes to the composition of the portfolio that you are considering, the consolidation of the Reliance scheme investments into one scheme (Regular Savings Equity scheme) is a good idea. However, the move away from Tata P/E Growth fund could be reconsidered. First, Tata P/E Growth fund is a good with impressive long-term track record, and second you don’t need a balanced fund in your portfolio when your investment horizon is long term.

Srikanth Meenakshi, Founder and director, FundsIndia.com

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