I am 34 years old and looking to invest for a long term (10-15 years) to build a corpus of 1.5+ crores. Please review my current holdings (monthly SIPs) and suggest if I need to make any changes. Thank you

L&T Infrastructure Fund - 1500 p/m

DSP Natural Resources and New Energy Fund - 2000 p/m

L&T Midcap Fund - 1500 p/m

Aditya Birla Sun life Frontline Equity fund - 1500 p/m

ICICI Prudential Banking and Financial Services - 1500 p/m

UTI Transportation and logistics fund - 2000 p/m

Ans: Building a Corpus for Your Dreams: Feedback on your SIP Portfolio
Hi Arun,

I appreciate you reaching out! It's fantastic that you're a new investor starting your journey towards a Rs. 2 crore corpus in five years. That's a commendable goal, and SIPs are a smart way to get there. Let's dive into your current portfolio and see how we can fine-tune it for your needs.

Current Portfolio Analysis:

Diversification: You've chosen a mix of funds across different market capitalizations (Large, Mid, and Small Cap). This is a good starting point for diversification, but ten funds might be a bit too many to manage effectively.

Fund Overlap: There might be some overlap between these funds in terms of the stocks they invest in. This can dilute the diversification benefit.

Risk and Your Time Horizon: Five years is a relatively short time frame for aggressive investment strategies. Some of these funds might carry higher risk.

Here are some suggestions to consider:

Reduce the number of funds: Aim for 4-5 well-diversified funds across market capitalizations. This simplifies tracking and rebalancing.

Focus on Actively Managed Funds: Actively managed funds, where experienced fund managers make investment decisions, can potentially outperform the market over time. Consider consulting a Certified Financial Planner (CFP) to help you choose these funds.

Regular vs. Direct Plans: Regular plans with an advisor can provide valuable guidance, especially for new investors. They can help you choose funds, understand your risk profile, and stay on track with your goals. While direct plans offer a lower expense ratio, the advisor's role can be crucial in your investment journey.

Considering your goal and risk tolerance, a possible approach could be:

2 Large-Cap Funds: These provide stability and good growth potential.

1 Mid-Cap Fund: Offers the chance for higher returns but with more volatility.

1 Flexi-Cap Fund: Gives the fund manager the flexibility to invest across market capitalizations based on market conditions.

Remember, this is a general guideline. Consulting a CFP can help you create a personalized portfolio based on your specific risk appetite and financial goals.

Taking it Forward:

Review Regularly: Meet with your CFP periodically to review your portfolio and adjust it as needed based on market conditions and your life goals.

Increase SIPs if Possible: If your income allows, consider gradually increasing your SIP amount to reach your target corpus faster.

Stay Disciplined: Market fluctuations are normal. Don't panic and redeem your investments during downturns. Stay focused on your long-term goals.

Building a Rs. 2 crore corpus in five years is ambitious, but with a well-diversified portfolio, regular investments, and professional guidance, you can increase your chances of success.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello Value Investor. I can see over diversification with your current investments with sip amount. I would suggest to concise your mf investments and reshuffle the portfolio. Additionally, reconsider Aditya Birla Sun Life Tax Relief 96 Fund , Axis Long Term Equity Fund and SBI Focused Equity Fund for your portfolio. You can achieve your target till retirement with your current sip amount.

Ans: You've built a diversified portfolio, reflecting a thoughtful approach to investing. To reach your ambitious goal of 5 CR in 20 years, consider periodically reviewing and rebalancing your portfolio. Reassess the performance and alignment of your funds with your goals, and be open to making necessary adjustments. Remember, the investment landscape and your personal circumstances may change over time, so staying flexible and informed will be key to navigating towards your financial milestone. Keep up the disciplined investing!

Ans: I appreciate your effort in building a structured investment portfolio. You have a good mix of asset classes. However, some refinements can improve returns and risk management.

Key Observations
You have a strong SIP commitment of Rs 1 lakh per month.

Your investment horizon is 7 years, which is medium-term.

Your risk appetite is moderate, but some holdings may not align.

Index funds and ETFs may limit your portfolio’s growth potential.

Issues in Your Current Portfolio
1. Over-Reliance on Index Funds
Index funds provide average market returns.

Actively managed funds can outperform in a 7-year horizon.

Index funds limit downside protection in volatile markets.

2. High Exposure to International Markets
Investing in global ETFs increases currency risk.

Your portfolio already has enough diversification within India.

Removing international exposure can simplify taxation.

3. Overlap in Large-Cap Allocation
Large-cap index funds and flexi-cap funds create redundancy.

A better option is an actively managed large-cap fund.

4. Conservative Hybrid Fund Allocation
Hybrid funds are good for capital preservation, but not for growth.

Your investment horizon is long enough for a pure equity approach.

Reducing this allocation can improve overall returns.

Recommended Portfolio Adjustments
1. Replace Index Funds with Actively Managed Funds
Actively managed funds have historically outperformed index funds.

A well-managed large-cap and large & mid-cap fund will be better.

2. Reduce International Exposure
Exit from the international ETF.

Keep investments in strong Indian equity funds.

3. Optimise Large-Cap and Flexi-Cap Allocation
Replace index-based large-cap funds with top-performing active funds.

Continue flexi-cap investment but monitor fund performance.

4. Increase Mid-Cap and Small-Cap Allocation
Mid-cap and small-cap funds offer higher growth potential.

Increase allocation based on risk comfort.

5. Exit Hybrid Funds for Higher Growth
Shift hybrid fund allocation to mid-cap or flexi-cap funds.

This will ensure better long-term returns.

Suggested New SIP Allocation
Large-Cap Fund: Rs 10,000 (actively managed)

Large & Mid-Cap Fund: Rs 10,000 (actively managed)

Flexi-Cap Fund: Rs 25,000

Mid-Cap Fund: Rs 20,000

Small-Cap Fund: Rs 15,000

Gold ETF: Rs 5,000 (optional for diversification)

PPF and NPS: Continue existing contributions

This new allocation ensures higher growth while managing risk.

Final Insights
Replace index funds with actively managed funds.

Reduce international exposure to avoid currency risks.

Shift hybrid allocation to growth-focused funds.

Increase mid-cap and small-cap exposure for better returns.

Continue PPF and NPS as stable long-term investments.

This approach will improve returns while keeping risk moderate.

Best Regards,

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