I have the following systematic investment plans—DSP BlackRock Small and Mid-Cap Fund (Rs 1,500), ICICI Prudential Discovery Fund (Rs 2,000), ICICI Prudential Focused Bluechip Fund (Rs 1,000), HDFC Top 200 Fund (Rs 2,000) and UTI Wealth Builder Series II (Rs 1,000). Are my choices of funds right? I want to invest another Rs 2,000. Please suggest some funds.
The portfolio that you currently have is an aggressive one. You have about 45% invested in small- and mid-cap funds, 40% in large-cap-oriented funds and the remaining 15% in a hybrid and multi-asset funds. The large-cap and mid-cap funds in your portfolio are good funds with a sound track record. The UTI fund is an interesting one—it is an equity-oriented multi-asset fund. It invests 65% of its corpus in equities and the remaining in either gold or debt instruments. Its current portfolio has about 15% invested in gold and the remaining in equities. Probably due to its exposure to gold that has given great returns recently, the overall fund has outperformed its category. You could hold on to this fund in your portfolio as well.
To increase savings, you do not necessarily need to add more funds. You could add Rs 1000 each to ICICI Prudential Focused Bluechip Fund and HDFC Top 200 Fund. If you absolutely must add another fund, you could go with Birla Sunlife Frontline Equity fund.
I am 48 years old and earn Rs 12 lakh per annum. I can invest Rs 30,000 per month but I am risk averse. My goal is to generate Rs 80 lakh in the next 10 years. Which category of mutual funds will be apt for me?
To reach your goal of Rs 80 lakh in 10 years, you would need to invest approximately Rs 35,000 every month (assuming a relatively conservative return of 12% per year). You can start off with Rs 30,000 per month and slowly increase the quantum of your monthly investments over the years. Regarding your portfolio, it needs to have a balance. While you have mentioned that you are a risk-averse investor, the time frame and the target requires some element of risk.
Two kinds of funds that you can consider in this regard are large-cap funds and equity-oriented hybrid funds. Funds such as ICICI Prudential Dynamic, Franklin India Bluechip and DSP BlackRock Top 100 are good choices for the first category. Birla Sunlife ’95, Tata Balanced and HDFC Prudence are good selections in the second category. You can also add some debt funds and gold investments to about a total of 20% of your portfolio to add to its stability without sacrificing much on overall returns. Sticking to such a portfolio will ensure that your portfolio is reasonably stable, while giving you a good chance at realizing your target.
Srikanth Meenakshi is founder and director, FundsIndia.com
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