First-time investors must keep only three-four funds in their portfolios2 min read . Updated: 10 Sep 2020, 08:23 AM IST
SIPs can be restructured to make your portfolio diverse. Reduce funds that are similar and introduce debt
I am 35 years old and I am aiming for a corpus of ₹30 lakh each for my two children. I will need the money after 15 and 18 years, respectively. I also want to have a corpus of ₹3.5 crore for my retirement, which is 20 years away. For the first child, I have a systematic investment plans (SIP) of ₹6,000 in HDFC Mid-Cap Opportunities and ₹2,000 in HDFC Top 100. I have ₹80,000 in HDFC Tax Saver and ₹95,000 in HDFC Balanced Advantage. For the second child, I have SIPs of ₹2,000 in SBI Blue Chip and ₹4,000 each in Nippon India Small Cap and Motilal Oswal Multicap 35. For retirement, I have SIPs of ₹2,000 in ICICI Prudential Long Term Equity Fund and ₹5,000 each in ICICI Pru Bluechip and ICICI Pru Value Discovery. I also invest ₹15,000 in Public Provident Fund (PPF) every year and ₹6,000 in Employees’ Provident Fund (EPF) every month. I have accumulated ₹25 lakh. Please analyze my portfolio.
For beginners, three-four funds in a portfolio is a good start. However, as your wealth grows, you will need to diversify. Generally, 8-12 is a good number of funds to have. Also, review your portfolio annually.
Your SIPs can be restructured to make your portfolio diverse. Reduce funds that are similar and introduce debt. In the large-cap space, there is no need to have different funds since differentiation between fund performances is low and they all have a limited universe to invest. So you can simply hold one fund across your portfolios. SIPs in other large-cap funds can be stopped.
First child’s portfolio: Invest ₹3,000 each in ICICI Pru Bluechip and Kotak Emerging Equity, and ₹2,000 in ICICI Pru Corporate Bond. Stop SIP in HDFC Mid-cap Opportunities (since this is less aggressive than Kotak Emerging Equity) and HDFC Top 100 and hold investments made so far. Exit HDFC Balanced Advantage and HDFC Tax Saver (once you cross lock-in) and reinvest equally in ICICI Pru Corporate Bond and Kotak Emerging Equity.
Second child’s portfolio: Invest ₹2,000 each in ICICI Pru Bluechip and ICICI Pru Corporate Bond, and ₹3,000 each in Kotak Standard Multi-cap and Nippon India Small Cap. Stop SIPs in SBI Blue Chip and Motilal Multicap.
For retirement: Stop SIPs in ICICI Pru Tax and Value Discovery, as there is an overexposure to this AMC in this portfolio and the value fund is underperforming. Hold investments made so far in the tax fund. Exit the value fund and switch it to ICICI Pru Corporate Bond to give some debt allocation. Restructure SIP as follows: ₹4,000 in ICICI Pru Bluechip, ₹3,000 in Kotak Emerging Equity and ₹2,500 each in Invesco India Tax Plan and Kotak Standard Multicap.
Srikanth Meenakshi is co-founder, PrimeInvestor.in. Queries and views at email@example.com