It’s best to have a compact mutual fund portfolio1 min read . Updated: 05 Feb 2020, 11:11 PM IST
- To get the diversification and market coverage you desire
- You can spread out your investments in a maximum of five to six funds
I am a 30-year-old software professional. I have equity-linked savings scheme (ELSS) investments of ₹2,500 each in Aditya Birla, DSP Tax Saver, Axis ELSS, IDFC Tax Advantage, Motilal Oswal Long Term Equity and Tata Tax Savings; large-cap investments in Axis Bluechip ( ₹2,000) and SBI Bluechip ( ₹2,000); multi-cap investments in a Kotak fund ( ₹3,000), a Mirae fund ( ₹3,000) and a PPFAS fund ( ₹2,000); mid-cap investments in Mirae Asset Focus ( ₹3,000); hybrid investments in an HDFC fund ( ₹1,000); small-cap investments in an SBI fund ( ₹2,500) and an HDFC fund ( ₹2,000); and index fund investments in Motilal Oswal NASDAQ ( ₹2,500), UTI Nifty 50 ( ₹1,500) and UTI Nifty Next 50 ( ₹1,000). I don’t have any goals right now, which is why I have invested in different sectors. Is my portfolio okay?
—Name withheld on request
Though you have provided many details in your question, there are two key pieces of information missing. One, I do not know whether these are ongoing SIPs (systematic investment plans) or not. Given the sums of amounts involved, I am going to presume they are. Two, and more pertinent to your question, the actual scheme names are missing in several places. For this, I am going to assume the appropriate market-cap-based scheme names from the fund houses concerned.
Now, coming to your question. The thing that struck me immediately as I read it is the number of funds you are investing in. Eighteen funds are a lot, even for a ₹40,000 SIP portfolio. To get the diversification and market coverage you desire, you can spread out your investments in a maximum of five to six funds and achieve the same. For example, one tax-saving fund, one large-cap fund, one multi-cap fund, two small-cap funds (with same total allocation as the other funds), and one hybrid fund (if needed) would make a good and manageable portfolio. Your large-cap fund can be an index fund and that will take care of that segment as well. Having a compact, manageable portfolio is as important as getting the diversification and market coverage that you need.
Srikanth Meenakshi is co-founder, PrimeInvestor.in. Queries and views at firstname.lastname@example.org