I am happy I am 28 years old and I am an aggressive investor. My SIP (Systematic Investment Plan) amount is 50,000 per month. I don’t need the money till 43-45. In the last nine months, I have invested in the following funds – Nippon India Small Cap ( 46,000), L&T Emerging Business ( 47,000), Axis Small Cap ( 48,000), PGIM India Midcap Opportunities ( 46,000), Miria Asset Emerging Bluechip ( 17,500), Nippon India US Equity Opportunities ( 40,000), Canara Robeco Bluechip Equity ( 47,000), Parag Parikh Flexi Cap ( 43,000), Tata Digital India ( 53,500), ICICI Prudential Technology ( 49,000) and PGIM India Global Equity Opportunities ( 20,500). I am also investing Rs. 2,000 per month from 2018 in IDBI India Top 100 Equity.
I want to invest another Rs 15,000 in SIP. Please suggest where should I invest.
(Answer by Harshad Chetanwala, Co-Founder at MyWealthGrowth.com)
You have mentioned that you have around 15 years to invest and the risk appetite is also high. This will help you build a well-diversified and aggressive portfolio. Since you started investing in the last nine months, it is likely that most of the funds in your portfolio are based on their near-term performance. While a fund’s performance is an important criterion, you may want to consider looking at various market cycles and their long-term performance before deciding on a fund. You have reasonable exposure to technology and international funds that are primarily thematic and add additional risk to the overall portfolio. If we look at your current portfolio, you have 38% in large cap, 27% in mid cap, 17% in small cap and around 18% in international market. While you have high risk appetite, I suggest you increase some allocation to large caps and reduce your exposure to regional and international funds. You can continue with good allocation in mid and small cap funds as you have time.
I would also like to highlight an important point as to how various market capitalization benchmarks have performed over the years, giving you an idea of why you might consider large caps as well. The 10-year performance of BSE 50, BSE Mid Cap and BSE Small Cap indices is 12.63%, 13.88% and 14.75% respectively. This establishes the potential of mid- and small-caps, but they will also be more volatile over a period. Therefore, you should be patient with these investments when the market is volatile. Whereas large cap funds will be less volatile and bring stability to your portfolio. You can also consider making your SIP investments using the following approach (fund option) to build a more balanced portfolio. Thesis are Canara Robeco Bluechip and Parag Parikh Flexi Cap ( 11,000 each), UTI Nifty Index Fund ( 10,000), PGIM India Midcap Opportunities, Kotak Emerging Equity and Nippon India Small Cap ( 7,000 each), Axis Small Cap ( 4,500), Mirae Emerging Bluechip ( 2,500) and Motilal Oswal S&P 500 Index ( 5,000).
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