Dear Sir, I have 3 MF which I have discontinued before 10/2020. HSBC MidCap Reg - Amount Bal 3.3 lacs . HDFC Hybrid Equity Amount Bal 3.1 lacs. AB Sunlife Flexicap Amount Bal 3.0 lacs. Should I withdraw these amount and invest lumpsum in my existing MF. I have been investing 20k monthly through SIPs in the following MFs since 10/2021. Parag Pareikh Flexi Cap Fund - 4500 HDFC Flexi Cap Fund - 2000 Kotak Midcap Fund - 4500 Axis Midcap Fund - 2500 Mirae Asset Large and Mid - 2500 Nippon India Small Cap Fund - 4000. My second question: is there any MF from my existing portfolio that I should exist. My goal is to create a corpus of 1 crore in the next 6/7 years.

Ans: Please continue; funds are good. The lump sum of Rs. 15 lakh can be invested in short duration funds 0f Aditya birla and HDFC mutual fund.

Ans: You dont need any additional funds. Just exit the below funds & hold the rest,

- Axis Focused 25

Ans: It's great that you're investing your monthly surplus in SIPs to build your wealth.

You have a well-diversified portfolio and the funds in your portfolio are performing well in the current market scenario. In the finance planning of any portfolio, we consider many factors, including client age, risk profile, current asset allocation, etc.

All mentioned funds are performing good and have good potential in long-term. However, UTI MNC Fund - Sectoral funds focus on a specific sector or industry and it is difficult to predict which sector will perform and how long. Hence, we recommend to go for diversified funds to avoid the concentration risk
.
If you continue the monthly investment of Rs 18,000 for the next 15 years the accumulated corpus will be 89.92 lakhs approx. at the average growth rate of 12% for 15 years.
Note - the amount may get differ at that time as the actual return can be vary.

Ans: Understanding Your Investment Concern

You are 30 years old now.

You have invested Rs. 18 lakhs in mutual funds.

Most of the money is lump sum, not SIP.

You are disappointed with the growth in the past year.

You are holding a mix of sectoral and thematic funds.

Some funds are mid-cap, small-cap, and hybrid too.

Let us assess this from all angles and give a 360° guidance.

Why the Portfolio May Not Be Performing

Equity markets are volatile in the short term.

One year is too short to judge mutual funds.

Mid and small caps are more volatile than large caps.

Sector funds like tech or pharma are risky and cyclical.

Some funds may overlap in holdings.

Direct plans don’t offer guidance or portfolio correction.

Disadvantages of Sector and Thematic Funds

Sector funds invest in only one industry.

If that sector underperforms, the fund suffers.

Healthcare and PSU sectors are not consistent.

Technology funds are highly volatile in current markets.

These funds need expert entry and exit timing.

They are not suitable for long-term wealth building.

You are exposed to concentrated risks.

Disadvantages of Direct Plans

Direct funds have lower expense ratio, but lack support.

No one guides when to shift or redeem.

No tracking, no rebalancing is available.

You may miss important updates or changes.

There is no hand-holding in market corrections.

Regular funds through MFD with CFP give complete advice.

You get periodic reviews and goal-based tracking.

That improves long-term discipline and confidence.

Need for Portfolio Simplification

Your portfolio is spread across too many categories.

This makes review and monitoring very hard.

Overlap of stocks can reduce diversification benefits.

You should not hold more than 3–4 funds.

Sectoral and thematic funds should be avoided now.

They create confusion and increase risk exposure.

Only keep diversified equity and hybrid funds.

Suggested Action Plan

Avoid exiting all funds at once.

Create a clear portfolio goal for each holding.

Divide your Rs. 18 lakhs based on time horizon.

Shift out from sectoral funds in a phased manner.

Move into diversified equity and balanced hybrid funds.

Take help of MFDs with CFP credential.

They will help in goal alignment and fund selection.

Phased Exit Strategy

Do not redeem all funds together.

Use market rallies to exit thematic funds slowly.

Exit technology and PSU funds first.

Then shift funds to suitable long-term diversified funds.

Avoid panic selling in bearish phases.

Why Actively Managed Funds are Better

Index funds just copy the market.

They don’t protect capital in market falls.

No flexibility to exit weak sectors.

Actively managed funds adjust based on market trends.

Fund managers use research to find strong stocks.

They aim to beat the market consistently.

This helps in long-term wealth building.

Rebuilding with a Fresh SIP Plan

Start new SIPs in actively managed flexi-cap or large-mid funds.

Add a hybrid fund for medium-term goals.

Choose funds that suit your risk and goals.

Use Rs. 10,000–15,000 monthly SIP to average cost.

Let lump sum units stay and recover gradually.

Review portfolio every 6 months with a CFP.

Taxation Considerations While Switching

Capital gains tax applies when you redeem mutual funds.

Equity fund gains over Rs. 1.25 lakh are taxed at 12.5%.

Gains below that are tax-free.

Short-term capital gains taxed at 20%.

Check holding period before redeeming.

Exit only when gains are above cost and taxable limit is safe.

Emergency Fund and Insurance Check

Maintain 4–6 months’ expenses in liquid fund.

Don’t invest emergency money in equity.

Ensure term insurance and health insurance are in place.

Insurance is not investment. Don’t mix both.

Avoid These Common Mistakes Going Forward

Don’t invest based on returns of past 1 year.

Don’t hold too many funds without reason.

Don’t continue with direct funds if you feel lost.

Don’t mix sectoral funds with core portfolio.

Don’t exit mutual funds during market correction.

Benefits of Working With a CFP

CFP gives goal-based investment plans.

Reviews and updates are done regularly.

Asset allocation is adjusted based on life stage.

Tax planning is included in strategy.

You save time and avoid emotional decisions.

Certified advice builds long-term confidence.

Final Insights

Your frustration is understandable but avoid sudden exits.

Markets take time to reward patient investors.

Avoid sectoral and thematic funds for long-term goals.

Direct plans are not suitable without expert hand-holding.

Regular plans through MFD and CFP offer support and clarity.

Keep your investments simple and well-diversified.

Create new SIPs for long-term wealth creation.

Exit existing risky funds in steps, not all at once.

Track and review your goals every 6–12 months.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment