Mutual Funds

Your Fund Portfolio

K Venkatasubramanian | Updated on January 24, 2018 Published on March 29, 2015


I am a salaried person and have a yearly income of ₹4 lakh. I have invested ₹30,000 in mutual funds and approximately ₹1.5 lakh in fixed deposits in the current financial year. Should I continue to invest like this or do I need to change my investment pattern?

Ujjwal Kapadia

You are investing a substantial portion of your income in FDs. While these are ‘safe’ products, they may not be able to deliver inflation-beating returns over the long term, especially on a post-tax basis.

Equity mutual funds have generally delivered well over the long-term of 7-10 years. Without taking too much risk, even large-cap schemes have delivered 15-20 per cent returns over the last 10 years.

So, in future, you must try to invest in equity mutual funds, in keeping with your age and risk appetite. It would be appropriate to have at least 30-50 per cent allocation to equity, even if you have only a moderate risk appetite.

Also, invest through the systematic investment plan (SIP) route every month rather than putting lumpsums. Increase your investments as your surplus increases.

You must try to invest in equity, debt, gold and real-estate over the long term to create a balanced portfolio.

I am 33 and want to invest ₹6,000-8,000 in mutual funds every month. Half the amount I wish to invest for the long term and the rest for the short term (three-four years). Please do advise.

Siva

You have done well in splitting your goals into short and long-term. Of course, it would be better if you can invest a larger portion towards long-term goals. It is assumed that you can invest ₹8,000 every month.

Coming to your short-term goals, which are three-four years away, it would be better to invest in balanced schemes or large-cap funds. Invest ₹2,000 each in HDFC Balanced and L&T Equity. While the former is a quality, equity-oriented, hybrid scheme, the latter is a large-cap fund with a strong performance record. For short-term goals, it is better to sell units six months ahead of time and move the proceeds to safer debt avenues so that there is no market-related erosion at the time when you actually require the money. For your long-term goals, invest ₹2,000 each in Franklin India Flexi Cap and Canara Robeco Emerging Equities.

This will give you exposure to a multi-cap and a mid-cap scheme, respectively.

I intend to invest ₹2 lakh for my grandson’s education with a 15-year time horizon.  Kindly suggest at least four equity schemes where I can invest ₹50,000 each.

Please do not suggest debt related funds as we intend to earn interest-free income in keeping with the Islamic religion. Kindly suggest safe equity funds.

M Yunus  

Given the long investment horizon that you have, it is definitely a good idea to invest in equity schemes to achieve your goal.

It may, however, be a good idea to start SIPs and invest on a regular basis over the long term so that you can ride out market volatility and average costs. But if you are particular about investing lumpsums, you can consider the following schemes.

Invest ₹50,000 each in UTI Equity, ICICI Pru Focused Bluechip Equity, Franklin India Prima Plus and Birla Sun Life Top 100.

All the above schemes are mostly large-cap schemes with very minor exposure to mid-caps, which can help ride broader market rallies. They have proven performance records.

This portfolio has been suggested as you have asked for a ‘safe’ set of funds.

Review the schemes in your portfolio once every year. Have a target corpus in mind and book profits or sell units in case you reach your goal early.

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