BackAsk Mint Money | Large-cap and debt exposure can reduce volatility in returns
Ask Mint Money | Large-cap and debt exposure can reduce volatility in returns
Premium
I am currently investing ₹ 20,000 per month through systematic investment plan (SIP) in the following funds: ₹ 5,000 each in Reliance Growth, HDFC Top 200 and IDFC Premier Equity Fund and ₹ 2,500 each in HDFC Tax Saver and Sundaram Tax Saver. I want to invest additional ₹ 10,000 per month in SIPs. Where should I invest?
—Ameet
Apart from the two tax-saver funds, you are investing equally in a large- and mid-cap fund, a small- and mid-cap fund, and a multi-cap fund. The overall risk profile of this portfolio is on the high side given the fact that all these funds invest in the more volatile mid- and small-cap sectors. As you are bringing in new money to your SIP schedule, you can use this as an opportunity to tone this down by picking schemes from less risky categories. I would advise that you add a large-cap fund such as ICICI Prudential Focused Bluechip and an equity-oriented hybrid fund such as DSP Blackrock Balanced to your portfolio.
The reason for not including tax funds in this equation is that the future of these funds is uncertain. If the direct taxes code gets implemented starting next financial year, these funds will lose their tax-saving status and you will need to move off them at that point. If that happens, you can evenly distribute the contributions to the five non-tax-saving funds in your portfolio to maintain the same allocation.
I can invest about ₹ 10,000 per month in mutual funds (MFs). I don’t want to invest directly in shares. Currently, I have SIPs in HDFC Top 200 ( ₹ 1,000), HDFC Gold Fund ( ₹ 1,000), Franklin Templeton Prima ( ₹ 1,000), Birla Sun Life Frontline Equity ( ₹ 1,000), HDFC Tax Saver Growth ( ₹ 2,500). Do I need to make changes in my portfolio? My time horizon is 3-5 years.
—Anush Nair
The non-tax-saving part of your portfolio contains equal allocations to a gold fund, two large- and mid-cap funds and a small- and mid-cap fund. You have indicated that you can add another ₹ 3,500 to your portfolio. Among the funds that you are holding currently, HDFC and Birla funds are good to hold for the next 3-5 years. However, Franklin Templeton Prima has been a mediocre performer in its category and there are better alternatives available. You can go with IDFC Premier Equity fund in this category. However, note that IDFC Premier Equity has a minimum SIP amount of ₹ 2,000, which means you will need to add ₹ 1,000 to your existing contribution.
For the remaining ₹ 2,500, you can include Franklin India Bluechip fund, a solid performer in the large-cap space.
Srikanth Meenakshi is founder and director, FundsIndia.com.
Queries and views at mintmoney@livemint.com.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
