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Ramalingam Kalirajan |6999 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 21, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - May 17, 2024Hindi

I am 25 years old with a time horizon of 20 yrs plus.I am doing sip of Rs.3000 each in the following direct plan schemes since the last one year.The schemes are mentioned below: Canara Robeco Blue chip equity fund,ICICI prudential nifty 50 index fund, SBI large and midcap fund, Mirae asset large and midcap fund, Kotak emerging equity fund, Motilal Oswal midcap fund, HDFC mid cap opportunities fund, Nippon India small cap fund, Axis small cap fund, Parag Parekh Flexi Cap fund, Quant Flexi cap fund, Quant Active fund, Quant tax saver fund. Kindly check my portfolio and suggest if rebalancing is required.

Ans: It's impressive to see your proactive approach towards investing at such a young age. Your commitment to SIPs reflects your long-term financial planning mindset.

Understanding Your Portfolio

You've built a diversified portfolio consisting of various equity funds, including large-cap, mid-cap, and small-cap funds. This diversification strategy is essential for mitigating risks and capturing growth opportunities across different market segments.

Analyzing Fund Selection

While direct plan schemes offer lower expense ratios, they require diligent monitoring and research. It's essential to assess the performance of each scheme regularly to ensure they align with your investment goals.

Identifying the Need for Rebalancing

Rebalancing your portfolio periodically is crucial to maintain the desired asset allocation and risk-return profile. Here's how you can evaluate if rebalancing is necessary:

Review Performance: Compare the performance of each fund relative to its benchmark index and peers. Look for consistent performance trends over time.

Assess Alignment: Evaluate if any funds have consistently underperformed or deviated from their stated investment objectives. This could indicate a need for adjustment.

Consider Risk and Horizon: Take into account your risk tolerance and investment horizon. Ensure that your portfolio's asset allocation remains suitable for your financial goals.

Recommendation for Rebalancing

Based on the analysis, if you find any funds consistently underperforming or deviating from their objectives, it might be prudent to consider reallocating your investments.

Reallocation Strategy: Redirect funds from underperforming schemes to those showing better prospects or explore new opportunities in line with your investment strategy.

Maintain Alignment: Ensure that your asset allocation remains aligned with your risk tolerance and long-term financial goals while rebalancing the portfolio.

Final Words

Your disciplined approach to investing is commendable. By periodically reviewing and rebalancing your portfolio, you'll optimize your returns and stay on track to achieve your financial aspirations.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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