Your Fund Portfolio

I have invested in ABSL Pure Value fund. This fund has done very badly. Should I switch to, say, Tax Saver or Equity fund?

S Prabhakar Gupta

You are right in observing that ABSL Pure Value has had a poor run. It has underperformed its benchmark and peers. With substantial exposure to mid- and small-cap stocks that bore the brunt of the market correction over the last year, the scheme’s returns were naturally underwhelming.

ABSL Pure Value has a great long-term track record. If you are willing to bet on a revival in the mid-cap space and on value as a theme with a five-year timeframe, you can stick to the fund.

But if you do not want to take any more risks, you can invest in Tata Equity PE, which is a solid performer over the long term. You should not shift to a tax-saving fund as the purpose is different in that case. If you want to stick to a scheme from the same fund house, you can opt for ABSL Equity.

I am 60 years old. I want to invest ₹18,000 in mutual funds monthly through the SIP route. Please suggest fund houses and schemes for seven years. I am a pensioner and the SIP amount will derived from my fixed deposit. The idea is to combat inflation.

KC De

As you have retired, the order of priority in deploying sums for investment must be safety, steadiness of cash flow and, only then, returns. Of course, you do need to invest in avenues that help you beat inflation. But you must be careful about going overboard with market-linked investments.

We assume that the ₹18,000 you have mentioned comes through the interest pay-out from your fixed deposits. Another assumption we make is that your pension is sufficient for your current monthly expenses, including healthcare. Finally, we take it that you are investing only the sum that you will not need for the next few years at least.

Take a health cover for yourself and your wife, if you haven’t done so already. The premium may be a tad expensive, but will be well worth it.

Avenues such as the Senior Citizen Savings Scheme (SCSS) and the Pradhan Mantri Vaya Vandana Yojana (PMVVY) offer rates that are well ahead of the prevalent inflation on a post-tax basis. But if inflation does increase substantially in the future, debt funds (which are tax-efficient) and equity will be needed to combat price rise.

You can spread your surplus of ₹18,000 across four schemes. You can park ₹5,000 each in Kotak Corporate Bond and Aditya Birla SL Money Manager. Both funds invest only in instruments with the highest ratings (AAA for long-term and A1+ for short-term securities) and almost entirely avoid credit risk. You can invest ₹4,000 each in ICICI Pru Nifty Next 50 and Mirae Asset Hybrid Equity. The former is an index fund with a sound track record of matching its benchmark, while the latter is a balanced fund that has consistently topped the charts without taking too many risks.

Invest in the direct plans of the above funds by visiting their respective websites.

I had initiated an SIP in Reliance Small Cap in June 2018. After continuing for 10 months, I find that the scheme has delivered negative growth. Kindly advise whether I should continue with the scheme or not.

Subrata Saha

Reliance Small Cap has delivered negative returns in the last one year, and so have most funds in the category. It has contained losses better than its benchmark — BSE SmallCap TRI. If you have an investment horizon of 5-7 years, you can continue investing in the fund through the SIP route.

Send your queries to mf@thehindu.co.in

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