Should you invest in IT or Pharma funds to achieve your goals?

My current mutual fund corpus is around Rs.60 lakhs and running SIPs of Rs.60,000 mainly in large, mid and small-caps.

1. Will I be able to deposit around Rs 3 crore at the end of 10 years?

2. I am currently looking to choose a sectoral fund for another SIP of Rs 10,000 for 10 years.

Please suggest which sector should I focus on – pharma, IT or consumer funds.

Name withheld on request

Reply to Harshad Chetanwala, founder of MyWealthGrowth.com

If your portfolio generates 10% p.a. returns, then your plan to build a corpus of Rs 3 crore in the next 10 years with the help of your accumulated corpus of Rs 60 lakh and regular SIP of Rs 70,000 can be achieved. Is. It is quite reasonable to assume a 10% return from your equity-oriented portfolio over the long term.

You can follow a de-risking strategy for this goal where you start withdrawing a part of the accumulated amount every month for a year through SWP. This will help you reduce the impact on your overall accumulated portfolio if the market is not in your favor in the tenth year. In this case, you have to increase your SIP by 6% annually and invest for nine years. From the beginning of the tenth year, you can start monthly withdrawals and by the end of the tenth year you should have Rs.3 crores.

As you are already investing in large cap, mid cap and small cap funds, it may not be necessary for you to invest in any sectoral fund. Sectoral funds are cyclical and carry additional risk. Investments in such funds are made only in a particular sector or theme. With the help of a diversified equity fund portfolio, you can also achieve your goals. While we are not aware of your current allocation in mid cap and small cap funds, it is better to limit it to 20%. As an alternative, you can add flexicap funds to your portfolio as these funds invest in a mix of large cap, mid cap and small cap depending on the market outlook. However, if you still want to stick with a sectoral fund, you can consider IT over pharma or any other sectoral fund.

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