The right funds for the tenure

By Morningstar |  06-05-19 | 

Morningstar recommends that readers consult their financial advisers. Below are just broad guidelines. You can view our fund analyst reports here and check performance of funds here.

I have a sum of Rs 5 lakh from a rental deposit for 3 years. Where must I invest it? I don’t want to harm my principal amount.

- Raunak

We recommend a short duration fund or corporate bond fund. Alternatively, you could also invest into a conservative allocation fund. Conservative allocation funds typically invest between 75-85% of the portfolio in fixed income and the remaining into equities. Given the current portfolio yields a portfolio with 80-82% allocation towards fixed income securities should be able to grow to your initial capital amount after 3 years. Thus any return the equity portion provides is additional kicker.

I invested in Tata Hybrid Equity Fund via SIP from 2015 to 2017. Since the last few months, it’s not performing well compared to its peers. Shall I exit or stay invested?

I also invested in Reliance Tax Saver in 2015. This fund is not performing well. Should I exit?

- Priya

You can switch out of Tata Hybrid Equity. The investment team at Tata has witnessed multiple exits which doesn’t bode well for continuity of the investment process.

Stay invested in the Reliance Tax Saver. The fund has an aggressive investment style, with a high beta portfolio i.e. rises and falls more than the market. We think the fund will do well over a market cycle.

Read our view on the fund here.

My investment duration is 20 years. Following are my current SIPs:

  • Canara Robeco Emerging Equity: Rs 10,500
  • Mirae Asset Emerging Bluechip: Rs 10,000
  • SBI Small Cap Fund: Rs 12,000
  • Tata Equity P/E Fund: Rs 14,000

– Siva

It is prudent to have some large-cap exposure in your portfolio. Your portfolio has sizeable exposure to small and mid-caps stocks. Large-cap funds should ideally form the core holding of any investor’s 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.

Please suggest your opinion on my below SIPs.

  • HDFC Top 100:  Rs 2,000
  • Tata India Tax Savings: Rs 5,000
  • L&T Emerging Businesses: Rs 10,000
  • Motilal Oswal Multicap 35: Rs 10,000
- Joseph

The funds you have in your portfolio are fine. We wouldn’t mind you adding on some additional exposure to large-cap funds. You could increase the SIP amount to HDFC Top 100. Also, while L&T Emerging Business is a well-managed strategy, having 37% exposure to a small-cap fund is not prudent.

These are my funds. Please suggest an ELSS. Mirae Emerging Business, Motilal Oswal Select Focused 35, L&T Emerging Business, Reliance Small Cap, Aditya Birla Balanced 95.

- Manish

We recommend investing in the Axis Long Term Equity. Jinesh Gopani is a quality conscious manager who looks to invest into stocks that offer a good growth potential. He has done a fantastic job of delivering over market cycles. Read our view on the fund here.

I am 26-years old. My investment time horizon is 10 years. I want to invest Rs 60,000/month through SIP. Please help.

- Rahul

Give the time frame and your age, we think you can take an aggressive allocation in your portfolio.

Debt: 30% (Short Duration Funds and Corporate Bond Funds)

Equity: 70% (Large cap Equity / Multi- cap Equity (45%), Mid Cap Equity (15%), Small Cap Equity (10%).

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