Personal Finance

Your Fund Portfolio

Parvatha Vardhini C | Updated on December 23, 2018 Published on December 23, 2018

I have been investing — for my retirement and the education of my kids who are currently aged seven and three years — in the following mutual funds through the SIP route since October 2016: Reliance Tax Saver - ₹1,000, Franklin India Prima - ₹1,500, SBI Magnum Midcap - ₹1,500, Mirae Asset Emerging Bluechip - ₹1,500, Motilal MOSt Focused 35 (now Motilal Oswal Multicap 35) - ₹2,000, Axis Long Term Equity - ₹1,500 and ICICI Prudential Value Discovery - ₹1,500.

I want to stop investing in SBI Magnum Midcap, which has been giving negative returns, and also in ICICI Prudential Value Discovery. Please advise.


You are right about the negative returns of SBI Magnum Midcap.

In the last one year, lump-sum investments in the fund have dropped by 16 per cent, while SIPs sport about 13 per cent fall in the NAV.

However, with mid- and small-cap stocks correcting sharply in the market volatility of the last one year, this is the case with most funds in the mid-cap category.

That said, what is noteworthy about SBI Magnum Midcap’s underperformance is that it trails the returns of its benchmark — Nifty Midcap 150 TRI — over not just the last year, but also over longer periods of three and five years.

Hence, you can move out of this fund to other better players in the mid-cap category, such as L&T Midcap.

As far as ICICI Prudential Value Discovery goes, the fund lags its benchmark — Nifty 500 TRI — over one- and three-year periods. With stocks across market caps taking a beating in 2018, this multi-cap fund, too, took a knock.

Further, its shift from mid- and small-cap orientation to large-cap orientation (due to high valuations in this space) when mid- and small-cap stocks did well until 2017 has pulled down its three-year returns.

However, considering the value buys emerging in many pockets from the ongoing corrections, the fund’s value strategy is expected to hold it in good stead going forward. Hence, you can possibly continue the SIPs here for another year, and take a call then.

You currently have an allocation of ₹2500 in tax-saving funds (Reliance Tax Saver and Axis Long Term Equity), ₹3,000 in mid-cap funds (Franklin India Prima and SBI Magnum Midcap), ₹3,500 in multi-cap funds (Motilal Multicap 35 and ICICI Prudential Value Discovery) and ₹1,500 in a large- and mid-cap fund (Mirae Asset Emerging Bluechip).

Considering your children are quite young and your retirement, too, may not be around the corner, we assume that you will have at least 10-15 years for any of your goals.

Given that you are comfortably placed, you can consider adding a large-cap fund to your portfolio to bring down the risks.

You can replace either Reliance Tax Saver or Franklin India Prima with SBI Bluechip or Aditya Birla Sun Life Focused Equity.

Most of the other funds you hold have a good long-term track record, although the more recent performance for some doesn’t seem inspiring. You can continue the SIPs in these for another year or so and then review your holdings.

Ideally, you need to create a separate portfolio for each of your goals — children’s education and retirement — with an individual target value in mind for each of them.

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