Your Fund Portfolio

I am a 25-year-old who has been investing in the following mutual funds: ₹2,000 in SBI Equity Hybrid (Regular, Growth), ₹1,000 in SBI Blue Chip (Regular, Growth) and ₹1,000 in SBI Magnum Global (Regular, Growth). I also have made a one-time investment of ₹1.5 lakh in SBI Dual Advantage Fund - Series XXIV (Regular, Growth).

Please review my portfolio. I want to restructure my portfolio and invest in mid- and small-cap funds.

Aakash Patel

By choosing to invest only in the schemes of one fund house – SBI Mutual Fund — you have put all your eggs in one basket. It is a good idea to diversify your investments.

Secondly, you need to look at the suitability of your fund choices after the recent rejig due to SEBI’s new classification norms. The characteristics of SBI Blue Chip and SBI Equity Hybrid funds have not changed much after the rejig. The former remains a large-cap-focussed fund, while the latter is still an equity-oriented balanced fund with a minimum of 65 per cent exposure to equities.

However, the features of SBI Magnum Global have changed. Earlier, it was a mid-cap fund, investing 80 per cent of its portfolio in mid- and small-cap stocks. Since mid-May 2018, it is a thematic fund focussed on investing in stocks of multinational companies (MNC Fund). This pegs up the risk profile of the fund.

Thirdly, you have made a lump-sum investment in a closed-end debt fund — SBI Dual Advantage Fund Series XXIV. While it is listed in the stock exchange, you may not be able to sell it at a desired price and at a desired time since trading volumes are very thin. Also,it may trade predominantly at a discount to the current Net Asset Value (NAV). Hence, you may not have much of a choice but to hold on to it till maturity.

In future, keep in mind that if you choose to invest in a close-ended fund, you need to time your investments to when interest rates are peaking. When this fund was launched in October 2017, interest rates were closer to the bottom of the rate cycle than to the top.

Rejig your total investment of ₹4,000 in the open-ended schemes as follows. Stop investments in SBI Magnum Global. You can instead choose L&T Midcap and invest ₹2,000 in it every month. Since you are young and already have a lump-sum investment in a debt fund, you can redirect the amount you are investing in SBI Hybrid Equity to SBI Blue Chip. Invest ₹2,000 here.

Send your queries to mf@thehindu.co.in

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