Your Fund Portfolio

I am 42 and work in a private organisation. My wife is working in a PSU bank and we have a nine-year-old child. I invested ₹1,000 a month through SIPs for 23 months in ABSL MNC – Growth – Direct in favour of my spouse. Later, nine months ago, I switched to ABSL Banking & Financial Services - Growth - Direct. Now I see that I am not getting that much growth in ABSL Banking & Financial.

Should I continue with this scheme?

For myself, I am investing in the following schemes: ABSL Frontline Equity - Dividend - Direct - SIP of ₹1,000 since the last 28 months; UTI MNC – Dividend – Direct – SIP of ₹1,000 since the last eight months; Mirae Asset Emerging Bluechip - Growth - Direct – SIP of ₹2,000 since the last 14 months.

For my child, I am investing since 2012 in HDFC Children’s Gift –Direct –Lock in by way of SIP of ₹1,000.

Please give your suggestions on my investments.

Kiran Kumar Tavva

The fact that you are creating separate portfolios for each member of your family is appreciable. But from the limited information that you have given, we are not able to decipher what goals you are saving for, how much you want to save, how many years you have to reach the goal and what is the current market value of your investments.

Besides, barring probably the investment for your child, your other choices predominantly seem to lack focus.

For your child, you can continue investing in HDFC Children’s Gift Fund which is a top performer in the category. The fund boasts of SIP returns of about 16.57 per cent since the launch of the direct plan in January 2013.

Under the lock-in option, your investments will be locked in until your child turns 18 in 2027.

Assuming you started investing in January 2013 and your investment earns 10-12 per cent compounded annual return, you will end up with a corpus of about ₹4-5 lakh when your child turns 18. This will come in handy to part-fund his/her college education.

If you feel you need more, you can supplement with SIPs in other good diversified equity funds from now on.

Coming to investments for your wife, it is not clear how you are investing in favour of your wife. Mutual funds do not allow third party investments, and hence you cannot invest from your bank account in your wife’s name.

You can, at best, transfer a sum equivalent to the SIP to her as a gift. Else, you can invest in your name and transfer the amount on redemption to her as a gift. Since she is also working, it may be a better idea for her to do the investments herself.

Whatever be it, you can do away with sector or thematic funds that you have experimented with so far and stick to more consistent diversified funds. Sector and thematic funds carry high risk and timing of entry and exit is extremely important.

The sector/theme may make big gains when popular and be pounded when the idea loses steam. These funds are best suited to be part of the satellite portfolio after you have built a core portfolio of funds which have a consistent track record.

Aditya Birla MNC has underperformed its benchmark over one and three-year periods. Switch to Aditya Birla Sun Life Top 100 or Aditya Birla Sun Life Equity which are good large-cap and multi-cap funds respectively. As her investible surplus increases, your wife can also add more funds to her portfolio to save towards long-term goals.

For yourself, Aditya Birla Sun Life Frontline Equity and Mirae Emerging Bluechip are good choices and fit to be part of a core portfolio. You can continue investments in the same. For UTI MNC, the risk-return proposition explained above applies here as well. Besides, the fund has been a laggard, underperforming its benchmark over one, three and five-year periods. You can switch to UTI Equity or UTI Top 100.

Send your queries to mf@thehindu.co.in

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