Your fund portfolio

I invest ₹3,000 each per month in the following funds through the SIP route with a time horizon of 5-7 years: Franklin India Prima, HDFC Small Cap, IDFC Sterling Value and SBI Bluechip. Can the above MFs create significant wealth for me? I plan to increase my investment by another ₹8,000 per month. Should I step up the investment in these existing MFs or should I opt for new schemes?

Satyanarayan Rao

You have done well to give yourself a reasonably long time-span of 5-7 years to generate above-average returns.

By choosing a set of quality funds, you are likely to benefit from significant capital appreciation over the next several years. You can retain all the funds in your portfolio in light of their healthy long-term track record. On SBI Bluechip alone, given its underperformance in recent years, you may need to keep track of its record for the next six months. If it still lags behind peers and benchmark, you can switch to Mirae Asset India Equity, a large-cap oriented fund with an excellent long-term track record.

However, your portfolio is a bit biased towards mid- and small-cap schemes. You should, therefore, consider investing the additional ₹8,000 in reasonably good funds with relatively low risks. Also, you should preferably save towards some specific goal, which will enable you to decide on the suitability of various investment avenues based on your risk appetite, time horizon and criticality of the target.

Invest ₹4,000 each in Tata Equity PE and Invesco India Contra. These funds are value-oriented and have delivered robust returns over the past several years on a consistent basis. Review your portfolio once every years and exit or stop investments in prolonged underperformers. If you reach your targeted corpus ahead of time, sell the units and move the proceeds to safe debt avenues.

I have been investing in mutual funds via the SIP mode for the past one year, with the idea of wealth creation. My objective is to generate at least 12 per cent annually in the next five years. Shall I continue investing in the following funds? If not, please suggest some good funds. HDFC Hybrid Equity -₹3,000, ABSL Frontline Equity - ₹10,000, SBI Bluechip - ₹10,000, Kotak Standard Multicap - ₹10,000, HDFC Balanced Advantage - ₹5,000, and DSP Equity Opportunities - ₹2,000.

Ambila Mani

Although your expectations of 12 per cent annual returns over five years sounds reasonable, there can be no assurance.

You need to modify your portfolio by churning funds and by changing the allocation to individual schemes.

You have two balanced schemes from the same house – HDFC. Although HDFC Balanced Advantage has a healthy track record, it is a tad risky given its high allocation to equity (more than 80 per cent at times). So, you can switch to a less risky ICICI Pru Equity and Debt, and invest ₹6,000 in it. You can retain HDFC Hybrid Equity and invest ₹6,000 in it, too. Because your horizon is only five years, two hybrid funds are acceptable, as you will need to insulate your portfolio from market volatility.

ABSL Frontline Equity, SBI Bluechip and Kotak Standard Multicap have been underperforming over the past couple of years vis-à-vis their benchmarks, though these funds do have robust long-term records. Invest ₹7,000 in each of them for now and churn if their underperformance continues for the next six months or so. You may keep Tata Equity PE, Invesco Contra and Motilal Oswal Multicap 35 as potential replacements. You can switch from DSP Equity Opportunities to Mirae Asset India Equity and invest ₹7,000 in it.

The allocations have been changed to make your portfolio more balanced.

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