Hello Sir,
Over last few years I have created the below mutual fund portfolio on my own. My goal is to maximise returns for wealth creation and time horizon is 15 years. I am 42 now and can take a more aggressive approach for next 8-10 years. Post that I may want to preserve my wealth more. I am investing total of 43k which i can increase to 50k. Please have a look and suggest.
1. Invesco India contra fund - 9k
2. HDFC midcap fund - 9k
3. Kotak Flexi cap - 4k
4. Mirae Asset large cap (SIP Stopped due to poor performance)
5. SBI Focused equity - 6k
6. PPFAS Flexi cap - 10k
7. SBI Small Cap - 5k
Ans: You have taken a smart step towards wealth creation by starting early.
Your selection shows good understanding of different mutual fund categories.
You have a healthy mix of midcap, flexicap, contra, focused and smallcap funds.
This shows you have diversified your portfolio thoughtfully across different fund styles.
You have kept exposure to both growth and value-oriented investing.
You have rightly identified that one underperforming large cap fund needs review.
Stopping SIP in a poor performing scheme is a practical and wise decision.
Your discipline in continuing SIPs in other funds shows strong financial behaviour.
You have balanced your risk between aggressive and moderate categories effectively.
Overall, your portfolio looks sound and built with good intent for long-term goals.
Portfolio Strengths
Exposure to midcap and smallcap funds is good for long-term wealth creation.
Allocation to flexicap and focused funds adds dynamic fund management advantage.
Your contra fund allocation adds contrarian flavour which can deliver non-linear returns.
Fund selection shows maturity by avoiding too much overlap between categories.
You are investing consistently which is the most important factor in compounding.
Having multiple schemes with different styles reduces portfolio concentration risk.
Your monthly investment of Rs. 43,000 is significant and can create large corpus over 15 years.
Portfolio Areas of Concern
Slight overweight in mid and smallcap category is noted.
Market volatility can hurt more during sharp corrections because of smallcap exposure.
Too many funds may create slight duplication of stocks across different schemes.
Portfolio rebalancing will become slightly tedious if number of funds increase.
Mirae Asset large cap SIP is stopped but the existing investment also needs action.
Largecap exposure is now low compared to ideal for your age and profile.
Post 8-10 years, switching to capital preservation needs gradual strategy shift.
Assessment of Each Fund Category
Midcap category is well represented but should not exceed 25-30% of overall portfolio.
Flexicap category gives flexibility but each flexicap fund behaves differently.
Focused funds are good but carry slightly higher risk due to concentrated portfolio.
Smallcap allocation is suitable but careful monitoring is required during market cycles.
Contra category adds uniqueness but returns can be very cyclical and needs patience.
Action Plan for Your Current Portfolio
Continue all your good performing SIPs without any interruption.
Review the Mirae Asset large cap investment now and take appropriate action.
You may redeem the old largecap fund units if performance continues to lag.
Redeem amount should be moved to a better managed flexicap or large & midcap fund.
Continue your exposure to smallcap but limit total portfolio allocation to 15-18%.
In midcap, ensure you are invested in a fund which consistently outperforms in long-term.
Avoid adding any more new schemes to the portfolio unnecessarily.
Aim to consolidate existing schemes if portfolio overlaps are found during review.
Increase SIP amount from Rs. 43,000 to Rs. 50,000 as you mentioned.
Divide the extra Rs. 7,000 across your best performing flexicap and midcap funds.
Avoid chasing new fund offers (NFOs) or newly launched schemes blindly.
Stick to consistent performers and follow a disciplined SIP approach.
Taxation Angle for Your Portfolio
Equity mutual fund long term capital gains above Rs. 1.25 lakh taxed at 12.5%.
Short term gains are taxed at 20%.
Plan partial withdrawals smartly if needed after 8-10 years to manage tax impact.
Do not redeem fully in panic if market conditions are weak in any year.
Partial SWP (Systematic Withdrawal Plan) method can help to manage taxation better.
Keep holding periods long to minimise short term tax liabilities.
Strategy for Next 8 to 10 Years
Continue being aggressive for next 8-10 years as you have time advantage.
Increase allocation towards midcap, flexicap and smallcap slightly till age 50.
After 50, gradually shift 30-40% of the portfolio towards balanced advantage and large & midcap funds.
Start SIPs in conservative hybrid or balanced advantage categories after age 50.
These categories help in preserving wealth with moderate equity exposure.
By 50, aim for 60% equity and 40% low volatile assets like conservative hybrid funds.
After 55, move towards 40% equity and 60% defensive assets for capital protection.
Common Mistakes to Avoid
Avoid judging funds based only on 1-year or 2-year returns.
Do not over-diversify with too many funds in similar categories.
Avoid direct funds if you are not monitoring performance closely yourself.
Investing through Certified Financial Planner and MFD ensures regular portfolio reviews.
Regular plans give access to better guidance, handholding and investment discipline.
In direct plans, small mistakes in fund selection can cause major underperformance.
Disadvantages of Index Funds
Index funds simply mirror the market returns with no chance of outperformance.
In falling markets, index funds fall exactly like the market without any downside protection.
Actively managed funds have potential to beat index returns with better stock picking.
Active funds can manage risks better during volatile or falling markets.
In long run, good active funds can create far superior wealth than index funds.
Since you are targeting maximum returns, actively managed funds are a better choice.
How to Monitor Your Portfolio Going Forward
Do yearly review of every scheme’s performance against their benchmark and peers.
Replace underperformers only after consistent 2-3 years of lagging.
Do not disturb top performing funds even if they show small dips during corrections.
Review your overall asset allocation every 2 years and adjust if major deviations.
Use portfolio management services of a Certified Financial Planner for objective guidance.
Avoid taking emotional decisions during market crashes or sharp rallies.
SIPs should continue irrespective of market conditions to enjoy full power of compounding.
Your Retirement and Wealth Preservation Approach
Plan to build a corpus of Rs. 2 crore to Rs. 3 crore over next 15 years.
Start partial Systematic Withdrawal Plan from corpus after 55-57 years.
SWP can provide regular income without disturbing your principal.
Move higher portion to balanced advantage and conservative hybrid funds post 50.
Keep small equity exposure even after 60 for inflation protection.
Maintain minimum 30-40% equity even during retirement years to beat inflation.
Emergency fund equivalent to 12 months’ expenses should be maintained in liquid funds.
Three Key Things You are Doing Right
You have started investing systematically and early.
You have created a diversified portfolio across different equity categories.
You are willing to increase investments and stay aggressive till age 50.
Three Areas Where You Should Focus More
Consolidate similar schemes wherever possible to avoid duplication.
Increase largecap and hybrid exposure gradually after 50 for capital preservation.
Monitor tax implications carefully while redeeming or switching after long term.
Final Insights
You are on the right track towards strong wealth creation over next 15 years.
Your fund selection is thoughtful and aligned with aggressive wealth building goals.
Continue SIPs religiously and increase amount whenever possible to reach goals faster.
Take professional help of a Certified Financial Planner for yearly review and adjustments.
Keep long term focus without worrying about short term market ups and downs.
Gradually transition towards safety once you cross 50 years of age.
Wealth creation is a marathon, not a sprint; stay patient and consistent.
By maintaining your discipline, you can achieve your dreams comfortably.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by ashren on May 26, 2021English
.jpg "portfolio-o (2).jpg")
