Hi I am 39 years old, I have mutual fund(sip) in 3 different scheme.it's regular fund and investment almost 5 years 1 st 2 fund and last fund for 18 month 1.SBI small cap regular fund 2. SBI large cap regular fund 3.SBI mid cap regular fund Should I invest for more years or switch to other fund.plz recommend.

Ans: You have done a good job by investing regularly through SIPs in different categories of mutual funds. Staying invested for five years shows patience and discipline. This habit is the real strength of wealth creation. Let us assess your portfolio in a structured way and explore what can be improved.

» Assessment of Your Current Portfolio

Your portfolio covers small-cap, mid-cap, and large-cap categories. This gives you exposure across different market segments. That is a positive start.

The large-cap fund brings stability. It invests in established companies that usually give steady growth.

The mid-cap fund offers a balance between growth and stability. It can grow faster than large-cap but has slightly higher risk.

The small-cap fund adds aggressive growth potential. It carries higher volatility but can deliver strong long-term gains.

Since you are 39, you have time on your side. The equity exposure you have taken through these funds is suitable for wealth creation over the long term.

» Performance and Holding Period Analysis

Five years is a decent period, but equity funds ideally need longer. Especially small-cap and mid-cap funds perform better when held for 7 to 10 years.

Your first two funds have completed about five years. You can start evaluating their performance against their respective benchmark indices and category averages.

If both are giving above-average returns compared to peers, continue them.

If any fund has underperformed for more than three years continuously, you can consider a gradual exit.

The last fund has been running only for 18 months. It is too early to judge. All equity funds go through short-term ups and downs. So, stay invested at least for 5 to 7 years before making any change.

» Importance of Staying Invested

Mutual fund SIPs work best through compounding and rupee-cost averaging. By continuing your SIPs, you buy more units when markets are down and fewer when markets are high. Over time, this smooths out the average cost.

Stopping or switching frequently disturbs this process. Equity wealth creation takes time. Even good funds need market cycles to prove their strength.

Therefore, do not be influenced by short-term volatility. Continue investing with patience unless your funds are consistently lagging behind their category peers.

» Portfolio Diversification and Overlap Check

Although you have selected three different categories, all are from one fund house. Having all schemes from the same AMC is not always ideal.

Each AMC follows its own investment style and risk approach. When all funds belong to one AMC, there may be portfolio overlap. The same stocks might appear in different schemes.

This reduces the benefit of diversification. A Certified Financial Planner can help check portfolio overlap and suggest diversification across different AMCs.

If the overlap is high, consider shifting one or two schemes to other reputed fund houses with consistent long-term track records. This helps reduce concentration risk.

» Reviewing Fund Allocation

Your risk capacity and financial goals decide how much you should allocate to large, mid, and small-cap funds.

If you need stability, increase the weightage of large-cap funds.

If you want long-term growth, keep some exposure to mid and small-cap.

Avoid overexposure to small-cap because it fluctuates sharply in volatile markets.

A balanced combination might look like this –
Large-cap 40%, Mid-cap 35%, Small-cap 25%.

However, this ratio must align with your personal goals, investment horizon, and risk tolerance.

» Rebalancing Strategy

Periodic rebalancing is important to control risk and capture gains. Over time, one fund category may grow faster and disturb your target ratio.

For example, if small-cap grows sharply, it can form a larger part of your portfolio. In such cases, shift some amount from small-cap to large-cap or mid-cap to maintain balance.

Rebalancing once a year is enough. It helps protect gains and ensures your portfolio remains aligned with your goals.

» Importance of Regular Funds and Role of Certified Financial Planner

You have invested in regular plans through a distributor. That is a wise move. Many investors think direct plans are cheaper. But they ignore the value of professional guidance.

Regular plans come with ongoing support, periodic reviews, and rebalancing help from a Certified Financial Planner.

Direct plans leave you alone. You have to track performance, do rebalancing, and handle taxation yourself.

Regular plans help avoid emotional decisions during market swings. The planner keeps your investments aligned with goals and risk profile.

Over time, the planner’s advice adds more value than the small expense difference between direct and regular plans.

» When to Switch Funds

Switching should not be based on short-term performance or market news. Switch only if –

The fund is consistently underperforming its category peers for more than three years.

The fund has a major change in management or investment philosophy.

The fund’s risk level no longer suits your profile.

Before switching, always consult a Certified Financial Planner. They can analyse the rolling returns, consistency, and risk-adjusted performance of each fund. This ensures your decisions are data-based, not emotional.

» Aligning SIPs with Your Goals

Every SIP should have a clear purpose. It could be for retirement, children’s education, or wealth creation. When goals are defined, you can decide how long to stay invested and what risk to take.

If your SIPs are not linked to specific goals, start doing that now. It gives you better clarity and helps you avoid premature withdrawals.

Also, the investment horizon for each goal should decide your fund category:

Short-term goals (less than 3 years): Keep in debt or liquid funds.

Medium-term goals (3 to 5 years): Use balanced or large-cap funds.

Long-term goals (above 5 years): Use mid-cap and small-cap funds.

» Taxation Aspect

Under the new rules, long-term capital gains from equity mutual funds above Rs 1.25 lakh per year are taxed at 12.5%. Short-term gains are taxed at 20%.

This makes it even more important to stay invested for longer. The longer you stay, the lower the tax impact on your returns due to compounding.

Avoid unnecessary redemptions or switches. Each transaction can trigger tax liability.

» Behavioural Discipline

One of the biggest success factors in mutual fund investing is behaviour. Most investors do not lose because of bad funds. They lose because of bad timing or panic selling.

When markets fall, continue your SIPs. You are buying units at cheaper prices. When markets recover, your gains multiply faster.

Keep emotions aside and stick to your plan. The market rewards patience and consistency.

» Role of Periodic Review

Review your portfolio once or twice a year. Do not check daily or weekly. That leads to unnecessary anxiety.

In each review, assess three things –

Fund performance compared to category average.

Asset allocation alignment with goals.

Any changes in your financial situation.

Based on this, make minor adjustments if needed. But do not overhaul your portfolio frequently.

» Benefits of Staying with Actively Managed Funds

Actively managed funds have professional fund managers who study companies, sectors, and valuations. They can make changes when markets shift.

In comparison, index funds only copy the index. They cannot react to market conditions. When the market falls, index funds fall equally. They also carry concentration risk because the top few stocks dominate the index weight.

Actively managed funds have the flexibility to hold cash, shift sectors, and protect downside risk. Over long periods, well-managed active funds often outperform index funds after tax.

So, staying with actively managed funds like yours is a better strategy for wealth creation.

» Market Outlook and Investment Tenure

Equity markets go through cycles. Sometimes they move sideways for a few years, and then deliver strong growth later.

Your small and mid-cap funds will need time to show their true potential. Historically, they outperform large-caps when held for 8 to 10 years.

Since you are 39, you can easily continue your SIPs for another 10 to 15 years. That will align well with long-term goals such as retirement or children’s education.

» Contingency and Liquidity Planning

Ensure you have an emergency fund of 6 to 9 months of expenses. Keep it in liquid or ultra-short-term funds.

This protects you from redeeming your equity investments during market corrections. Equity SIPs should never be used for short-term needs.

Having this buffer ensures your long-term investments grow undisturbed.

» Insurance and Protection Planning

Before continuing or increasing your SIPs, make sure your family is well protected.

Take adequate term life insurance.

Have health insurance for the entire family.

If you already have any investment-cum-insurance or ULIP policies, surrender them and reinvest in mutual funds for better returns and flexibility.

Pure protection plans are cost-effective and leave more money available for investments.

» Future Growth Approach

If your income increases, raise your SIPs by at least 10% every year. This step-up approach helps you build wealth faster.

Also, as you get closer to your goals, gradually move from small-cap and mid-cap to large-cap or balanced funds. This protects gains from market volatility.

Always plan these transitions with a Certified Financial Planner to ensure your portfolio remains goal-aligned and tax-efficient.

» Finally

Your investment journey has started on the right path. You have shown consistency and discipline. Do not lose that focus.

Continue your SIPs for more years, review annually, and avoid frequent switches. Diversify across AMCs if needed, and align each SIP with a goal.

Actively managed regular funds, reviewed and guided by a Certified Financial Planner, can help you achieve strong, steady, and tax-efficient long-term growth.

Stay patient, stay invested, and let time compound your wealth.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment