This is my portfolio. Please share your views.
- SBI Bluechip
- Canara Robeco Emerging Equities
- Mirae Asset India Equity
- SBI Small Cap
- Reliance Small Cap
- Tata Equity PE
- Axis Long Term Equity
- Aditya Birla Sun Life Tax Relief 96
- HDFC Mid Cap
Venkata Narayana
Your portfolio is diversified in terms of your fund selection. However, we notice that your allocation towards large-cap funds is lower as compared to small- and mid-cap funds. From a risk perspective, we recommend a larger portion of your portfolio be invested in large-cap funds as these tend to be more stable during market downturns.
(See the note on large-cap funds at the end of this post.)
Currently, the only pure large-cap fund that you are invested in is SBI Bluechip. Canara Robecco Emerging Equities Fund also has a fairly long track record and its historical performance has remained positive. However, there has been a recent change in manager on this fund and we think it’s important to keep a watch on this fund given this change. Mirae India Equity is a multi-cap fund.
Value funds tend to go in and out of vogue depending on market cycles and the current market seems to favor growth over value. However, you can continue to hold the Tata Equity PE fund if you have a fairly long investment horizon.
I am 35 years old. Have a 10-year horizon. These are my SIPs.
- L&T Emerging Businesses Fund: Rs 1,000
- Franklin India Smaller Companies: Rs 1,000
- Kotak Select Focus: Rs 1,500
- Motilal Oswal MOSt Focused Multicap 35: Rs 2,000
- L&T India Value: Rs 1,500
- Mirae Asset Emerging Bluechip: Rs 3,000
- ICICI Pru Exports and Other Services Fund: Rs 1,500
A K Rao
Good to know you have a 10-year horizon. The funds in your portfolio are fairly well managed and we don’t think there is any reason to change any particular fund. One thing we note is that there is no pure large-cap fund in your portfolio, though you do have a couple of multi-cap funds, but the overall portfolio is under allocated towards large-cap stocks. We would recommend adding a pure large-cap fund.
(See the note on large-cap funds at the end of this post.)
I am 28 years old. Fall in the 20% tax bracket. This year I began investing in mutual funds. I am doing it for tax saving and long-term capital generation, with a 5-10 years horizon. Is a dividend option suitable?
- Aditya Birla Tax Relief 96 (ELSS): Rs 3,000
- Motilal Oswal Long Term Equity (ELSS): Rs 3,000
- Reliance Small Cap: Rs 2,000
- HDFC Hybrid Equity: Rs 2,000
Ankit
The funds that you have chosen are all well managed strategies with different mandates.
Aditya Birla Tax Relief 96 and Motilal Oswal Long Term Equity are ELSS funds which not only helps you to save tax, but also provides benefits of capital appreciation.
Reliance Small Cap fund invests at least 65% of its net assets in small-cap stocks. Small-cap stocks are excellent wealth creators over the long term, but also can be quite volatile in the short term. 2018 is a classic case in point, whereby small cap stocks have fallen quite significantly and so have small cap funds. But if you have a long-term horizon, small cap funds can serve you well. We notice you do not have a large-cap fund in your portfolio.
(See the note on HDFC Hybrid Equity at the end of this post.)
(See the note on large-cap funds at the end of this post.)
A lump sum investment is generally considered when the investor has a big corpus to invest. We generally recommended SIP in case of investments in mutual funds as it allows you to invest at different levels of market. Read this note on SIPs.
Regarding your last question, if you do not require money at regular intervals and your investments are with a long horizon, then we urge you to go for growth options as it can make compounding work for you.
Can I continue to hold Aditya Birla Sun Life Pure Value Fund? There is no return since last one year.
Deepak
Should I do an SIP in Aditya Birla Sun Life Pure Value Fund?
Nanda
The fund is managed by Mahesh Patil who is a great stock picker. Though the fund has not done well so far this year, we think that this will be a short-term blip given that the current market is in favor of growth stocks. Running a value strategy in this market and finding stocks that fit into the manager’s ‘value’ criterion could prove slightly difficult considering that the market is witnessing a rising P/E trend. Having said that, we have a positive view on the fund given its past track record and the manager’s capability. We would not recommend exiting a fund based on short term performance.
I am a 31-year old. I want to stay invested till the age of 60. These are my funds.
- ABSL Tax Relief 96: Rs 4,000
- Motilal Oswal Long Term Equity Fund: Rs 2,000
- Parag Parikh Long Term Equity Fund: Rs 2,000
- Mirae Asset Emerging Blue Chip: Rs 1,000
- HDFC Equity Hybrid Fund: Rs 3,000
- SBI Small Cap Fund: Rs 1,000
Rohtash
Most of the funds you have named are fairly well managed strategies. Aditya Birla Tax Relief 96 and Motilal Oswal Long Term Equity are ELSS funds which not only helps you to save tax, but also provides benefits of capital appreciation.
(See the note on Parag Parikh Long Term Equity Fund at the end of this post.)
Mirae Asset Emerging Blue Chip traditionally a mid-cap fund, is now positioned as a large and mid cap fund. The fund has displayed above average returns on all time frames and we have a high conviction on the fund manager Neelesh Surana.
(See the note on HDFC Hybrid Equity at the end of this post.)
SBI Small Cap fund invests at least 65% of its net assets in small-cap stocks. Small-cap stocks are excellent wealth creators over the long term, but also can be quite volatile in the short term. 2018 is a classic case in point, whereby small cap stocks have fallen quite significantly and so have small cap funds. But if you have a long-term horizon, small cap funds can serve you well. If these funds meet your investment objective and is a fit in your portfolio, then you may consider holding on to it. We have observed that you do not have a large-cap fund in your portfolio.
(See the note on large-cap funds at the end of this post.)
I am 27 years old. These are the SIPs in my funds. All direct plans.
- Motilal Oswal Focussed Long Term Equity ELSS: Rs 2,500 for 5 years
- SBI Bluechip: Rs 2,500 for 10 years
- L&T Midcap: Rs 2,500 for 10 years
- HDFC Midcap Opportunity: Rs 2,500 for 20 years
Pinaki
Your portfolio seems diversified in terms of the fund selection. Having said that, we would recommend that you invest a higher percentage of your total portfolio in large-cap funds. Your current portfolio reflects a higher allocation in mid-cap funds which essentially raises your portfolio risk during a market downturn. Large caps are an essential option to cushion a fall in the market.
(See the note on large-cap funds at the end of this post.)
SBI Bluechip and HDFC Midcap Opportunities are rated by our analysts. L&T Midcap is also a good fund with a positive long-term performance. Motilal Oswal Long Term Equity Fund was only launched in 2015 but has since managed to remain a positive performer.
While staying invested, we would recommend that you keep monitoring your portfolio on a timely basis.
It’s also great to see that you have chosen to invest in direct plans instead of investing in regular plans. This will bring down the expenses that are charged to you by the fund companies and thus give you a slightly higher return as compared to investing in a regular plan.
I am 31 years old. My horizon is 20 to 30 years. This is my portfolio, all SIPs.
- Parag Parikh Long Term Equity: Rs 3,000
- Motilal Oswal Multicap 35: Rs 3,000
- Principal Emerging Business Fund: Rs 2,000
- L&T Emerging Business Fund: Rs 2,000
- IDFC Focussed Equity Fund: Rs 3,000
Dhanraj
It’s heartening to see the long-term investment horizon that you have set for yourself.
Given your age, investment horizon, and assuming you have relatively high-risk appetite, you can invest 80% of assets in equity-oriented funds and 20% in debt-oriented funds (to provide your portfolio stability during market downturns). We notice that you do not have a pure large-cap fund in your portfolio.
(See the note on large-cap funds at the end of this post.)
Also, you don’t have a dedicated mid-cap fund in your portfolio, which you must consider including. With the long-term investment horizon that you have, a well-managed mid cap fund could prove to be a huge wealth creator. Access the list of rated funds here.
Parag Parikh Long Term Equity and Motilal Oswal Multicap 35 are from multi-cap category. Both the funds are run with a concentrated investment mandate with Motilal Oswal Multicap 35 having more concentrated portfolio. This is an aggressive investment style and is apt for investors with a high-risk appetite. In our opinion there is no need to have two funds from this category. Going ahead, you can consider stopping fresh allocation in one of these funds and divert the same into a large cap fund. However, there is no need to redeem the amount already invested.
(See the note on Parag Parikh Long Term Equity Fund at the end of this post.)
Principal Emerging Bluechip is from a Large & Midcap category. This fund has performed well over the trailing 5-year period. However, if you are investing in a large cap fund, you can consider allocating fresh investments in a mid-cap fund.
L&T Emerging Business Fund is from the small-cap category. The fund was launched in May 2014 and doesn’t have a five-year track record yet. However so far, it has delivered a noteworthy performance. You can continue your investments in this fund. But if you want to check more options from this category then you can do so by clicking on the above given link.
IDFC Focused Equity Fund is from the focused category. The funds from this category are run with a relatively aggressive investment style as they can invest in a maximum of 30 stocks and hence maintain a concentrated portfolio. Such fund’s come with their own set of risks and investors need to have an appetite for the same if they want to invest in them. The only fund from this category which has a positive Morningstar analyst rating is Franklin India Focused Equity. You can invest in the funds from this category if they are in line with your investment objective and risk appetite. Having said this, the overall allocation can be lower than other regular categories.
On large-cap funds
Broadly speaking, if an individual has a moderate risk appetite, the asset allocation should consist of a larger allocation towards large cap funds.
Having said that, large-cap funds should ideally form the core holding of any investors’ portfolio. While they may not be huge wealth creators such as small/mid cap funds, from an asset allocation perspective, large cap funds add an element of stability to portfolios.
For a first-time equity investor, it would make sense to allocate a large portion into a large-cap fund as there would be lower volatility as compared to any of the other equity funds.
Access the list of rated large-cap funds here.
On Parag Parikh Long Term Equity Fund
This is a multi-cap fund. The fund manager looks for opportunities across sectors, across market caps and across geographies.
Its distinctive feature is its exposure to international companies. This provides a good hedge against both the rupee and underperformance in the Indian economy. Worth mentioning is that the fund hedges the currency to eliminate currency risks.
Exposure to foreign stocks is capped at 100% so that it retains its equity fund categorization.
The stock selection process is bottom-up stock picking, where the primary criteria is management quality, competitive advantage, low debt, and availability at a reasonable price.
On HDFC Hybrid Equity
HDFC Hybrid Equity is an aggressive allocation fund that invests in equity, fixed income and cash, but the larger allocation is in equities in the range of 65-80%.
Post the realignment of funds as per SEBI guidelines, HDFC Premier Multicap Fund was merged with HDFC Balanced Fund and the entity thus formed was named as HDFC Hybrid Equity Fund.
The fund house retained the features of HDFC Balanced Fund in HDFC Hybrid Equity Fund and categorised it under Aggressive Hybrid Fund. This category mandates the manager to invest between 65-80% of assets in equities and between 20-35% of assets in fixed income instruments, which is not different from the way HDFC Balanced Fund was historically managed.
Simply put, HDFC Hybrid Equity Fund will be managed in the similar fashion as the erstwhile HDFC Balanced Fund.
The manager continues to be Chirag Setalvad who is an experienced and an old hand at that fund house.
Post your query by accessing the Ask Morningstar tab. Our team will endeavor to answer queries ONLY related to mutual funds and portfolio planning from our registered readers.
