I have 4 sip in mutual fund and 1 sip in gold ETF. but I feel ,gold ETF is not giving that returns as compare to mutual fund ? should I stop that ETF and start in mutual fund SIP ?

Ans: In Large Cap: Axis Bluechip Fund - Growth is a better option

Too many Sectoral Funds; the risk of concentration is high; instead diversified funds are better option.

1. UTI Equity Fund – Growth
2. DSP mid cap Fund – Growth
3. Tata Large & Mid Cap Fund - Growth
4. Canara Robeco Emerging Equities – Growth

Above funds have decent exposure to Pharma, Banking and Technology

Rest of the funds are okay.

Ans: No details given by you.

Ans: Hello and thanks for writing to me.

The funds you mention are thematic funds. Thematic funds have the potential to give high returns, but as focus area of the fund is narrow and restricted and the fund will only invest only in companies operating in the particular theme.

If you build a concentrated portfolio comprising only in themeatic/sectoral fund and if there is a downturn in that particular theme, then you may see your portfolio growth stagnate for some time.

I recommend that you consult a financial advisor who can help you create a diversified portfolio after understanding your own goals and risk appetite.

Ans: Your disciplined approach to investing through Systematic Investment Plans (SIPs) is commendable. Diversifying across various fund categories shows a thoughtful strategy. Let’s analyse your portfolio in detail.

Large Cap Funds
You have investments in two large cap funds. These funds focus on established companies, providing stability and moderate growth.

Large cap funds are generally less volatile and offer steady returns, making them suitable for long-term goals.

Mid Cap and Small Cap Funds
Your portfolio includes mid cap and small cap funds. Mid cap funds invest in medium-sized companies, which can offer higher growth potential but come with increased risk.

Small cap funds invest in smaller companies, which are riskier but have significant growth potential.

Flexicap Funds
You have SIPs in two flexicap funds. Flexicap funds provide flexibility by investing across large, mid, and small cap stocks. This diversification within a single fund can enhance returns and reduce risk.

Sector and Thematic Funds
The inclusion of a sector-specific fund, like the Nifty IT Index Fund, and a thematic fund, like the Motilal S&P 500 Fund, adds diversity. However, these funds can be volatile as they are concentrated in specific sectors or themes.

Commodity-Based Fund
Your portfolio includes the Nippon India Silver ETF Fund of Funds (FOF). Commodity-based funds can provide diversification, but they can be volatile and are influenced by market demand and global trends.

Portfolio Overlap and Concentration
While your portfolio is diversified, it is essential to assess the overlap. Multiple funds investing in similar sectors or companies can lead to redundancy.

Disadvantages of Index Funds and ETFs
Index funds and ETFs track a specific index and replicate its performance. They cannot outperform the market since they lack active management.

Actively managed funds, on the other hand, aim to beat the market through strategic decisions and dynamic adjustments.

Benefits of Actively Managed Funds
Actively managed funds have experienced managers who strive to outperform the market. They can adjust the portfolio based on market conditions and select high-potential stocks, offering better returns.

Assessing the Need for Rebalancing
Given your portfolio, it may be beneficial to rebalance for optimal performance. Here are some suggestions:

Reduce Overlap: Consider reducing the number of large cap funds to avoid redundancy.

Focus on Quality Funds: Ensure the funds you invest in have a consistent performance record and a good management team.

Reevaluate Sector/Thematic Funds: Assess if the sector and thematic funds align with your risk tolerance and investment goals.

Regular Monitoring and Review
Regularly review your portfolio to ensure it aligns with your financial goals. Market conditions change, and periodic adjustments are necessary.

Consulting a Certified Financial Planner (CFP) can provide professional advice tailored to your needs. A CFP can help you select suitable funds, monitor performance, and make necessary adjustments.

Conclusion
Your diversified SIP portfolio shows a thoughtful approach towards long-term wealth creation. With some adjustments and regular reviews, you can enhance your portfolio's performance.

Focus on reducing overlap, prioritising actively managed funds, and aligning your investments with your financial goals. Keep up the good work and continue your disciplined investing.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in