Your fund portfolio

I am a 25-year-old home-maker. I have sufficient investments in fixed deposits. I have also been investing ₹5,000 a month in Aditya Birla Sun Life Frontline Equity through the SIP route. I can invest another ₹10,000 every month in MFs. My aim is to create wealth in the long run (10-15 years). I have a moderate risk appetite. What are the funds I should opt for?

Sona Roselin Joseph

It is good to note that you are investing responsibly and have a reasonable asset-allocation strategy with sums parked in debt and equity mutual funds.

You can continue with your investments in Aditya Birla Sun Life Frontline Equity for now. The scheme has been underperforming its benchmark for a few years now. But it has had a solid long-term track record over the past 16 years. If the underperformance persists even after another six months, you can stop SIPs in the scheme and switch to Axis Bluechip and park ₹5,000 in it.

With a long horizon of 10-15 years, you should ideally consider mid- and small-cap funds. But as you have indicated that you have a moderate risk appetite, multi-caps and quality mid-cap schemes would be a better fit for your requirements.

The remaining ₹10,000 can be split as follows. Invest ₹4,000 in Invesco India Contra, a quality value-oriented fund with a solid track record. Park ₹3,000 in L&T Midcap, a fund that has delivered excellent returns over the years.

The remaining ₹3,000 can be invested in Mirae Asset India Equity, a multi-cap fund that has always figured in the top-quartile of schemes in its category.

Review your holdings once every year and take corrective action, if necessary, and rebalance your portfolio. If you reach your targeted corpus ahead of time, book profits or exit units, and move to safe debt avenues.

I hold a substantial number of units of HDFC Mid-Cap Opportunities, Quantum Long Term Equity, Franklin India Prima Plus and Franklin India High Growth. All funds are held in growth options. I want to hold them for 3-5 more years. The returns of some of the above funds are below their benchmarks. Should I continue to hold them or switch to some other funds?

Aaditya Dhiman

Your portfolio would need to be tweaked a bit to optimise returns. Given that you have a 3-5-year horizon, you cannot take too much risk with your portfolio.

You can retain HDFC Mid-Cap Opportunities as the fund has held steady across cycles. Despite its recent underperformance over the past year or so, you can retain the units of Quantum Long Term Equity, too.

You have two schemes from the same house, with somewhat similar multi-cap mandates. It is advisable to diversify across fund houses so that you benefit from the investment styles of different managers.

Franklin India Prima Plus (now called Franklin India Equity after SEBI’s reclassification) and Franklin India High Growth (now known as Franklin India Focused Equity) have both underperformed over the past 2-3 years.

You can exit Franklin India Focused Equity and switch to Mirae Asset India Equity. Franklin India Equity has a good track record over the long term.

Retain the fund for another six months. But if the underperformance continues, you can consider moving to Motilal Oswal Multicap 35.

If you want to redeem units within three years for any specific requirement, it would be advisable to opt for balanced funds. You can consider HDFC Hybrid Equity and ICICI Prudential Equity & Debt funds.

Keep a close tab on scheme performances to ensure that your targets are met, and shuffle the funds, if need be, so that you do not lose out on better returns.

Send your queries to mf@thehindu.co.in

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