BackStreamline MF portfolio with careful allocation across different categories
When investing towards a goal with a fixed time frame and a corpus expectation, the first thing to ensure would be that you are investing sufficient amount of money periodically to enable you to get to your goal
PremiumI am currently investing ₹1,500 each in SBI Magnum Midcap fund, SBI Magnum Multicap fund, Axis Bluechip fund and Axis Midcap fund; ₹500 in DSP BR Small Cap fund; ₹1,000 in DSP Midcap fund; and ₹2,500 in Axis Long Term Equity fund. I want to build a corpus worth ₹2 crore in the next 15 years. Am I on the right track?
—Pradeep
When investing towards a goal with a fixed time frame and a corpus expectation, the first thing to ensure would be that you are investing sufficient amount of money periodically to enable you to get to your goal. In your case, if your target is ₹2 crore in 15 years, you would need to save and invest ₹42,000 a month during this period, assuming a reasonable (but not low) 12% compounded annual growth rate (CAGR) from your portfolio. So, the first thing you need to do to ensure that you are on the right track is to either lower your corpus requirement, or increase your SIP amount, or both. You are presently investing ₹10,000 a month. If you continue on this course, you will likely end up with a corpus of ₹50 lakh in 15 years. You could, if possible, increase your investments to ₹20,000 and expect to generate a corpus of about ₹1 crore during this period.
Regarding your portfolio, it is an aggressive all-equity portfolio that is split almost half and half between funds that invest in the broad market (multi-cap, tax-saving funds etc.) and those that invest in small- and mid-cap segments. It would be better to streamline the portfolio into four or five funds with careful category allocations. One fund from the large-cap category, one from the multi-cap category (and possibly another from the similarly segmented, but differentially themed value investing category), and two mid- and small-cap funds would do for your portfolio. You can choose the right set of funds from the Mint 50 list of funds across these categories to build your portfolio. Such a portfolio would still be aggressive, but would be better structured with funds that are well-curated from the universe of options.
Srikanth Meenakshi is co-founder and former chief operating officer, FundsIndia.com. Queries and views at mintmoney@livemint.com
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