Ask Morningstar: Wrong return expectations could backfire

Feb 21, 2022

My goal: Rs 20 lakh in 12 years. My expected annual return is 12%. I began investing in January 2021. These are my SIPs: Axis Small Cap (Rs 1,000), Mirae Asset Emerging Bluechip (Rs 2,000) and PGIM India Flexi Cap (Rs 2,000). 

I want to add one SIP in Axis Growth Opportunities (Rs 2,000). Then my total SIP amount would be Rs 7,000.

Is my mutual fund selection good? Can I achieve my target?

Axis Small Cap has been in existence since 2013 and is managed by Anupam Tiwari and Hitesh Das. Both are well experienced managers at the fund house.

Mirae Asset Emerging Bluechip runs a large and midcap strategy that carries a Morningstar Analyst Rating of Gold. Manager Neelesh Surana’s distinctive stock-picking ability and skilled execution are the defining factors on the fund. The fund carries an exposure of around 60% in large cap names and the remaining in small and mid-cap stocks. Read more on what our analyst says about this fund.

PGIM India Flexi Cap has been in existence since 2015 and carries an exposure of over 50% in large cap stocks. Mid caps typically constitute around 20-25% of the fund with small caps constituting around 20-30% of the portfolio. The allocation across market caps with a large-cap tilt gives the fund a unique character.

Your portfolio is quite skewed towards small and mid cap names. we think that adding a fund that is focused towards large cap stocks will help reduce risks on the portfolio. Moreover, it will also help balance your portfolio. Typically, we would recommend that you invest about 30-35% of your portfolio in small and mid cap oriented stocks and the rest in large caps.

Another point to note here is that your SIP amount does not match up to help achieve your goal. You will need to increase your SIP investments by about 70-80% with an expected return of 7% in order to meet your investment goal. We think that it's extremely important for an investor to evaluate his goal and invest in a manner that will meet this requirement. Moreover, we would encourage you to keep an achievable target in mind while calculating returns from your investments. Over a long term, a lower return expectation will help exceed your goal rather than fall short of it.

To look at the SIP amount and the target goal for your investments, please use the SIP calculator.

Registered readers can post their queries by accessing the Ask Morningstar tab. Our team will answer SELECT queries ONLY relating to mutual funds and portfolio planning.

Add a Comment
Please login or register to post a comment.
© Copyright 2024 Morningstar, Inc. All rights reserved.
Terms of Use    Privacy Policy
© Copyright 2024 Morningstar, Inc. All rights reserved. Please read our Terms of Use above. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
As of December 1st, 2023, the ESG-related information, methodologies, tools, ratings, data and opinions contained or reflected herein are not directed to or intended for use or distribution to India-based clients or users and their distribution to Indian resident individuals or entities is not permitted, and Morningstar/Sustainalytics accepts no responsibility or liability whatsoever for the actions of third parties in this respect.
Company: Morningstar India Private Limited; Regd. Office: 9th floor, Platinum Technopark, Plot No. 17/18, Sector 30A, Vashi, Navi Mumbai – 400705, Maharashtra, India; CIN: U72300MH2004PTC245103; Telephone No.: +91-22-61217100; Fax No.: +91-22-61217200; Contact: Morningstar India Help Desk (e-mail: in case of queries or grievances.