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Photo: iStock

If Bharat-22 ETF is less than 20% of portfolio, wait out the difficult times

Bharat-22 ETF has been languishing over the past one year, and especially since the onset of the covid-19 crisis. What you should do with it would depend on what part of your portfolio is invested in this security

I am 25 years old and I want to start systematic investment plans (SIPs). My investment horizon is 10-15 years or more and I plan to invest 1,000 each in ICICI Prudential Bluechip and Kotak Standard Multicap. I am also planning to invest 1,000 in a mid-cap fund. Please advise whether I should go for DSP Midcap or Axis Midcap or some other fund. I may also go for one more SIP of 1,000, which would make my total monthly investment 4,000, which I intend to increase gradually. Can you please suggest where should I invest this 1,000?

—Name withheld on request

For a young person with a long-term time horizon, you have started off well with a powerful SIP portfolio. The two funds you have chosen—one in large-cap and one in multi-cap—are both solid picks in those areas and you have done well to go with them. For the third fund, you can go with DSP Midcap. For your fourth fund, you’ll do well to add a solid performer in the large-and-mid-cap category, where Mirae Asset Emerging Bluechip would be a good choice.

I invested 1 lakh during the initial offer of Bharat-22 ETF in November 2017. Right now, the value is less than what I invested. I can wait for five to 10 years. What should I do?

—Jimmy Paul

Bharat-22 ETF has been languishing over the past one year, and especially since the onset of the covid-19 crisis. What you should do with it would depend on what part of your portfolio is invested in this security.

If a significant ratio of your investments is in this ETF, continuing to hold to these units will pull down your overall portfolio performance. That is something you should guard against. On the other hand, if it is a relatively small portion, you can afford to be patient and wait out these difficult times. If the ETF holding is less than 20% of your portfolio, and as you indicate, you can wait for five to 10 years, you should continue holding it. Else, you should exit and reinvest in more promising diversified instruments.

I am 29 years old and invest in these funds via SIPs: ICICI Prudential Bluechip ( 7,500 with a step-up of 2,500 every year) and Axis Bluechip ( 10,000). I can’t take the risk of investing in a mid-cap or small-cap fund. I have an investment horizon of 15-20 years as all my goals are long-term in nature. I aim to have a corpus of 1.5 crore or 2 crore, without taking inflation into consideration. I am currently investing only in equity. Shall I go for debt funds too? I can invest 5,000 more each month. Also, which debt funds shall I go for? Should I invest only in one equity fund for consolidation?

—Harshit Rastogi

Given the starting point of your SIP and the step-up amount that you are committing to annually, you will be able to reach your target corpus if your annualized portfolio return is about 11% over the next 15-20 years.

To address your questions, it would be fine to add a debt fund to the mix, but not absolutely necessary, given the time frame that you have. You can add a multi-cap fund such as Kotak Standard Multicap to achieve broad-market diversification. If you want to avoid the risk and go for debt funds alone, please go for a safe debt fund such as SBI Magnum Ultra Short Duration. Regarding equity funds, please stay invested in both the funds that you are holding without reducing the number.

Srikanth Meenakshi is co-founder, PrimeInvestor.in. Queries and views at mintmoney@livemint.com

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