I am 61 years old and am investing total 1 lakh every month in the name of five members of my family (including me) for the last five years in the following funds: Aditya Birla Sunlife Frontline Equity Fund- 10,000, Franklin India Focused Equity Fund- 15,000, Franklin India Small Companies Fund- 30,000, HDFC Mid-Cap Opportunities Fund- 15,000, Kotak Emerging Equity Fund- 15,000 and Kotak Flexi Cap Fund- 15,000. i’m investing 20,000 per person per month and plans to do so for the next five years. I am looking at good returns in the long term and need to know whether I should make any changes to these Systematic Investment Plans (SIPs).
—Name withheld on request
Ideally, six to eight equity funds are good to build a portfolio for the long term. However, you need to review the portfolio at least every six months. Some of these funds have been underperforming their peers over the years. You don’t need to redeem funds that performed poorly during review, but can invest later sip in better options. You are investing 60% in mid cap and small cap funds, which have higher risk appetite. To make it more balanced in the market capitalization in the underlying portfolio and diversify the asset management companies, you may consider making the following changes to the SIP.
One, stop investing in Aditya Birla Sunlife Frontline Equity Fund and start Mirae Asset Large Cap or Canara Robeco Bluechip Fund. Increase SIP amount 20,000 Second, stop Franklin India Small Companies Fund and start Parag Parikh Flexicap Fund with SIP amount instead of 20,000 30,000 You may also re-evaluate HDFC Mid-Cap Opportunities Fund after a few months from an investment perspective as the fund’s performance has improved in the near term. If it continues to perform well as compared to its peers, then you can go ahead with SIP.
* Harshad Chetanwala is the co-founder of MyWealthGrowth.com.
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