Photo: iStock
Photo: iStock

It is not advisable to have an aggressive MF portfolio for shorter time frame

  • If you are going to be adding funds to your SIP, I would suggest that you bring in an ultra short-term bond fund or a savings (debt) fund into the mix to the extent of 20-30% of the allocation
  • You may also bring in a diversified fund to provide more diversity to your holdings

I'm an investor with a moderate risk appetite. I have two financial goals—a short-term goal to create 2 lakh in 2.5 years and a mid-term goal to create 25 lakh in five years. I have been investing for the past one year in the following funds recommended by my friend. This is the current value of these funds—Edelweiss Mid Cap fund ( 30,000), SBI Equity Hybrid fund ( 30,000), IDFC Tax Saver fund ( 30,000) and Aditya Birla Tax Relief ‘96 ( 1 lakh). SIP of 10,000 is equally split between all the above four mutual funds. Do you think it is appropriate for my goals?

—Sarah Thomas

At present, you have 1.9 lakh as invested corpus and additionally, you also have a 10,000 SIP running every month. For your short-term needs of 2 lakh, the growth of your current corpus would suffice. It would grow to about 2.20 lakh to 2.30 lakh by then, hopefully, and you can take 2 lakh out of that. For your longer term goal in five years, you will fall short of your corpus with the level of your current monthly investment. To get to a 25 lakh goal in five years, assuming (rather generously given the short time frame) a 12% annual return, you would need to save and invest 30,000 a month.

Regarding your portfolio, it is a very aggressive portfolio considering the relatively short time frame that you are investing for. If you are going to be adding funds to your SIP, I would suggest that you bring in an ultra short-term bond fund or a savings (debt) fund into the mix to the extent of 20-30% of the allocation. About the funds themselves, they are a reasonably fine mix. There are better options in the mid-cap segment such as L&T Midcap fund and DSP Midcap fund. You may also want to bring in a diversified fund such as Kotak Standard Multicap to provide more diversity to your holdings.

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

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