Don’t have more than one fund in a portfolio for tax-saving purpose1 min read . Updated: 20 Aug 2020, 10:44 PM IST
In large-caps, there is no need to have two funds and one can stop Nippon India Large Cap, which is not performing well
I am 28 years old, and want to build a corpus of around ₹50 lakh in five-six years. I have investments of around ₹2 lakh in the following funds with monthly systematic investment plans (SIPs) of ₹1,000 each: L&T Emerging Businesses, Axis Long Term Equity, Mirae Asset Emerging Bluechip, Tata Equity PE, Mirae Asset Large Cap, Nippon India Large Cap, Tata India Tax Savings and Aditya Birla Sun Life Tax Relief 96. I also invest ₹50,000 each in corporate fixed deposits (HDFC Ltd, Bajaj Finance and ICICI Bank), Public Provident Fund (PPF) and National Pension System (NPS) every year. I can increase SIPs to ₹40,000. Please review my portfolio.
As you can save ₹40,000 per month, do increase your SIPs, which can be spread across your existing schemes. However, there are a few schemes which you can consider reducing exposure to. Instead of L&T Emerging Business you can consider SBI Small Cap. In large-caps, there is no need to have two funds and you can stop Nippon India Large Cap, which is not performing well. For tax saving, there is no need to have three funds, as you can continue to hold Axis Long Term Equity and discontinue the other two, and you can increase the exposure to Axis scheme itself.
You will still be having five schemes, which will make your portfolio well diversified. Your saving of ₹40,000 will accumulate to ₹28.80 lakh in six years and assuming an earnings rate of 12%, the portfolio will be ₹42.3 lakh. The existing ₹2 lakh at a similar return will become ₹3.95 lakh. Likewise with corporate FDs, PPF and NPS, you can achieve the targeted number.
Surya Bhatia is managing partner of Asset Managers. Queries and views at email@example.com