Choose a multi-cap mutual fund over a mid-cap one
Parag Parikh Long term Equity fund would be a good choice in this regard
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I am 38 years old and my monthly salary is ₹ 58,000. I have been investing ₹ 1,000 each in ABSL Frontline Equity Regular G and ICICI Value Discovery Regular G since January 2018. I invested a lump sum of ₹ 25,000 in ICICI Bharat 22. I started another SIP of ₹ 2,000 in SBI Small Cap fund (Direct) G from 26 August and plan to start an SIP of ₹ 1,000 either in Mirae Asset Emerging Bluechip (Direct) G or Canara Robeco Emerging Equities (Direct) G. Which one should I choose? I want to start an SIP in a mid-cap fund too. Which fund would you suggest? Also, is my current portfolio okay? How much will these funds return till 2034 as I want to create a corpus of above ₹ 1 crore in 16 years? Also, how much should I invest?
—Kumar Rajeev
Before we get into the schemes, allocations etc., let’s first see if you are investing adequately to reach the goal you have set for yourself. You would like to realise an amount of ₹ 1 crore in 16 years. To get there, assuming an annualised return of 12% per year from a long-term, equity-oriented portfolio, you will need to invest ₹ 18,000 a month (this amount would become ₹ 20,000 if you assume an 11% annualised return). The current amount ( ₹ 4,000) that you are investing will get you about a third of the way there (to about ₹ 25 lakh). So, the first thing you would need to do is slowly start increasing the amount of your monthly investment every few months until you get to ₹ 20,000. When you do that, coupled with your aggressive portfolio, there is a decent chance that you will be able to reach your goal.
Regarding your allocation, it’s befitting a long-term aggressive portfolio composition. It’s an all-equity portfolio with 20% in a large-cap fund, 20% in a diversified value fund, and the remaining 60% in mid- and small-cap funds. Please go with the Mirae fund for your fourth fund. Regarding the extra ₹ 1,000 that you plan to bring into your portfolio, I would advise that you go with a multi-cap fund as opposed to a mid-cap fund. Parag Parikh Long term Equity fund would be a good choice in this regard.
Srikanth Meenakshi is co-founder and COO, FundsIndia.com. Queries and views at mintmoney@livemint.com
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