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I am 33, and a salaried professional. I would like to invest in mutual fund through SIP. Kindly suggest the best mutual fund schemes in small-cap and mid-cap range for investment upto a minimum 10 years, leading to maximum corpus gain. Should I choose to invest in balanced funds or ELSS?

 

P O

Though you are young and can take higher risks, we suggest that you need not plunge into mid- and small-cap funds right now.

Since you are new to equity investing, you can begin with large-cap oriented funds or equity-oriented balanced funds, which have a relatively lower risk profile than mid- and small-cap funds. In the large-cap category, you can choose from funds such as Aditya Birla Sun Life Top 100, SBI Blue chip and ICICI Prudential Focused Bluechip. For balanced funds, go for HDFC Balanced, Tata Balanced or L&T Prudence.

You can diversify into mid-cap funds at a later stage when your investible surplus increases. Besides, mid- and small-cap stocks and consequently, most funds focused on this space, have been big gainers in the market rally of the last few years. With the indices touching dizzying heights, the time may be ripe for a correction now.

Ten years is a reasonably long enough timeframe to safely invest in equity funds. However, continue investing for more years towards long-term goals such as retirement.

ELSS funds are a prudent choice for youngsters for tax-saving purposes. But in your case, it is wiser to not put all your eggs in one basket at this stage. PPF is one of the best debt options for tax saving.

Send your queries to mf@thehindu.co.in

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