Mutual Funds

Your fund portfolio

K Venkatasubramanian | Updated on June 17, 2018 Published on June 17, 2018

Our family has investments in the debt schemes of Birla Sun Life as well as ICICI Prudential asset-management companies. The increase in the NAVs of these funds since April 1, 2018, have been quite low. Is there any likelihood of improvement over the next one year, or should we switch to liquid debt schemes?

Somnath Sanganeria

As you have not specified the schemes in which you have invested, it would be difficult to comment on your holding.

Having said that, it would be too early to judge the performance of the funds in your portfolio. You may not be able to generate meaningful returns within just two months, even if it is a debt fund. Give yourself at least a year to review the schemes in your portfolio before taking corrective action.

Usually, liquid debt schemes are useful for parking short-term funds that you may require for your regular liquidity needs, as against parking them in a savings bank account. But liquid funds have done well over the past few years and delivered returns comparable with those offered by FDs. L&T Money Market, Franklin India Low Duration and ABSL Floating Rate are good debt fund options that you can consider.

I work in a PSU. My age is 31. Through the SIP route, I have been investing ₹1,000 each in ABSL Frontline Equity and Invesco India Dynamic funds for the past one year. I had invested ₹1,000 every month in Franklin India High Growth Fund through the SIP for two years till 2014. Also, I had parked ₹5,000 in Franklin India Smaller Companies as a one-time investment.

I have a high-risk appetite. I want to save money for my child’s education in 10 years. Please suggest suitable funds.

Anuradha Kande

You have been investing in too many funds and spreading yourself very thin. Also, there are overlaps in the mandates of the funds you are investing in.

You must run SIPs for 5-10 years, to be able to derive significant returns and meaningfully beat inflation. Avoid investing lump-sums in funds, unless you can time the markets. ABSL Frontline Equity is a quality large-cap fund with a proven long-term track record. Invesco India Dynamic, too, is a large-cap fund, but has not had a great run over the past few years. Stop SIPs in Invesco and instead increase your investments in ABSL to ₹2,000-2,500 every month.

You can sell the units of Franklin India High Growth Companies (renamed to Franklin India Focused Equity), as the fund has underperformed its benchmark over the past couple of years.

Franklin India Smaller Companies has delivered strong returns over the long term. But do check if the amount that you have invested meaningfully adds to your targeted corpus. If not, exit the units and redirect the amount to MFs through the SIP route. Once your surplus increases by ₹3,000-4,000 monthly, you can add mid-cap schemes to your portfolio. It would also be better if you have a target corpus in mind for your child’s education so that you can invest suitable amounts to reach your goal comfortably.

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