I recently got a bonus of ₹25,000. I want to invest in mutual funds and I am a first-time investor. I want this money to be at my disposal in case of any emergency; so I don’t want to invest in products that have a lock-in. Can you suggest a few funds? I have a medium risk appetite.
If you need to be able to withdraw from your investment in case of an emergency, you are in essence creating a contingency fund for yourself. For such a purpose, the investment vehicle that you need to look for are the ones that provide capital safety (very low-risk investments, that is), and easy liquidity (where money is available at any time without any exit load). The category of funds that satisfy these criteria are liquid funds and ultra short-term funds. I would recommend that you invest your bonus in a fund like Kotak Savings fund, an ultra-short bond fund that could provide decent returns while being available for you without any strings or conditions at any time you may need it.
I have SIPs in the following funds—Aditya Birla Sun Life Pure Value fund, Axis Long Term Equity, DSP Small Cap, Franklin India Equity and ICICI Prudential Bluechip. Apart from the Axis funds, all funds are currently in the red. How can I re-evaluate my portfolio?
Without knowing the allocation to each of your funds, it is hard to do a wholesome portfolio review, but just by looking at the scheme names, I can see that you have a mixed bag of funds. You have a value-oriented fund, a tax-saving (diversified) fund, a large-cap fund, a multi-cap fund, and a small-cap fund. Some of the funds are solid performers even if they have fallen in bad times recently due to the broader market and economic issues. The Franklin fund and the ICICI fund would fall under this category. The Axis fund, as per your finding, is a good fund and a keeper in the portfolio. You can replace the other funds with either schemes from the same fund house or outside. For example, you can replace Aditya Birla Sun Life Pure Value fund with Aditya Birla Sun Life Equity fund, and DSP Small Cap fund with DSP Mid-cap fund. If you would like to stay in the small-cap segment, then Franklin India Smaller companies fund would make a good choice. I would recommend making just these changes and holding on to the portfolio and investments through the ups and downs in the market.
Srikanth Meenakshi is co-founder and former chief operating officer, FundsIndia.com. Queries and views at firstname.lastname@example.org