Should I switch my SBI Bluechip fund for higher returns?

Ans: Hello Apurv and thanks for writing to me. ICICI Prudential Bluechip Fund is a good fund.

If you can state your objectives and risk appetite, then I may be able to recommend another fund.

Ans: Your current SIPs seem to be diversified across large-cap, mid-cap, and small-cap funds, which is a good strategy for long-term growth. However, whether to continue with these funds or make changes depends on various factors:

Performance: Check the performance of these funds against their benchmarks and peers. Consistently underperforming funds might be a concern.
Fund Manager: Ensure the fund manager has a good track record and is experienced in managing the type of fund you're investing in.
Expense Ratio: Lower expense ratios can significantly impact your returns over the long term. Ensure you're not paying too much in fees.
Fund Strategy: Understand the investment strategy of the funds. Make sure it aligns with your risk profile and investment goals.
Market Conditions: Market conditions can influence the performance of different types of funds differently. Diversification helps, but sometimes a market shift might warrant a change in strategy.
Given that you've been investing for just a year, it might be premature to judge the funds solely based on performance. However, regular review is essential. If you find that these funds are not performing as expected or if there are changes in your financial goals or risk appetite, consider consulting a financial advisor to help you make informed decisions. Remember, investing is a long-term game, and patience is often rewarded.

Ans: Dear Mr. Sunil Lala,

It's commendable that you've been consistent with your monthly contributions to the Canara Robeco Emerging Equities Growth Fund for nearly seven years. Making informed decisions based on performance advice is crucial, but it's equally important to understand the bigger picture.

Switching to a better-performing fund can indeed be a sound strategy, but it's essential to give investments time to perform and align with market cycles. Short-term performance fluctuations are common, and knee-jerk reactions may not always yield desired outcomes.

Considering your concerns about the returns from the Canara Robeco Blue Chip Fund, it's worth evaluating a few aspects:

Performance Analysis: Compare the historical performance of both funds over various market cycles to gauge their consistency.
Fund Objectives: Understand the investment objectives of both funds. Are they aligned with your risk tolerance and investment goals?
Exit Load and Tax Implications: Be aware of any exit loads or tax implications before making a switch.
If the Blue Chip Fund's performance doesn't align with your expectations, switching back to the previous fund could be an option. However, before making any decisions, consider consulting with a Certified Financial Planner to gain insights tailored to your financial situation.

Remember, investment decisions should be based on thorough research, understanding of fund objectives, and alignment with your financial goals. A well-informed choice will ensure your investments work effectively towards achieving your objectives.

Ans: You have consistently invested in the SBI Blue Chip Fund through a systematic investment plan (SIP) for the past five years. This disciplined approach is commendable and ensures you benefit from rupee-cost averaging. However, you are concerned about its underperformance in recent quarters. Let us evaluate whether switching is the right strategy and how to optimise your investments.

Evaluating SBI Blue Chip Fund
Large-cap funds like SBI Blue Chip Fund invest in established companies with stable returns.

Short-term underperformance is not unusual, as large-cap funds may face temporary sector or stock-specific challenges.

Review the fund’s performance over a five-to-seven-year horizon.

Compare its rolling returns and risk-adjusted returns with peers.

Consider the management strategy and whether there are recent changes in the fund house or team.

Switching Strategy: Key Considerations
Switching to another large-cap fund needs careful evaluation. Here are factors to keep in mind:

Consistency: Assess whether the new fund consistently outperforms over longer timeframes.

Expense Ratio: Opt for funds with a reasonable expense ratio to maximise net returns.

Portfolio Overlap: Ensure minimal portfolio overlap between funds to diversify your holdings.

Exit Load and Taxation: Check for exit load charges and tax implications when redeeming investments.

Investment Horizon: With a 13-year horizon, focus on funds with steady growth potential.

Action Plan for Your SIP
Stopping SIP with SBI Blue Chip Fund
You can stop the Rs. 5,000 SIP in SBI Blue Chip Fund.

Retain your existing investments in the fund for now.

Monitor its performance over the next 1–2 years.

If it improves, you can reconsider restarting your SIP.

Starting SIP with a New Large-Cap Fund
Begin a new Rs. 5,000 SIP in an actively managed large-cap fund.

Choose a fund with consistent long-term returns, strong management, and a diversified portfolio.

Nippon India Large Cap and ICICI Prudential Large Cap Fund are potential options.

Review the fund's portfolio allocation and compare it to SBI Blue Chip.

Why Retain Existing Holdings?
Selling the entire holding could trigger capital gains tax.

Long-term capital gains above Rs. 1.25 lakh are taxed at 12.5%.

Retaining allows your existing corpus to grow and recover if the fund’s performance improves.

Evaluate its performance yearly to make informed decisions.

Balancing the Portfolio
Diversification ensures optimal risk-reward. Here’s how you can balance your portfolio:

Large-Cap Funds: Allocate 40–50% of your portfolio to large-cap funds for stability.

Mid-Cap and Flexi-Cap Funds: Add mid-cap or flexi-cap funds for higher growth potential.

Hybrid Funds: Consider hybrid funds for a balanced approach between equity and debt.

Debt Allocation: Invest 20–30% in debt funds or fixed-income instruments for stability.

Tax Implications
Avoid frequent switches to minimise tax liability.

Redeeming mutual funds too early could reduce compounding benefits.

Use systematic withdrawal plans (SWPs) during retirement for tax-efficient income.

Reviewing Your Investments
Regularly review your portfolio every six months or annually.

Evaluate funds based on performance consistency and market conditions.

Consult a Certified Financial Planner for tailored advice and portfolio optimisation.

Final Insights
Switching SIP from SBI Blue Chip Fund to another large-cap fund can be a strategic move. However, retaining your existing investment allows time for recovery and avoids tax implications. Focus on long-term goals, diversify across asset classes, and periodically monitor your portfolio. With disciplined investments, you are well-positioned for a secure retirement.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Ans: You have shown great discipline by investing consistently for 10 years.

Let us now analyse your situation in a simple and professional manner.

We’ll assess the fund, its style, structure, and what steps you should take next.

Fund Type and Portfolio Behaviour
This is a large cap mutual fund focused on top 100 companies

It follows growth-style investing with low risk in terms of volatility

Blue chip funds invest in established companies with high market capitalisation

These stocks usually offer stability, but limited return potential in bull markets

Suitable for conservative investors who want slow and steady growth

Direct Plan Consideration
Since you mentioned "Direct Plan", let us address the risk of holding it without guidance.

Direct funds don’t offer any advice or handholding during market fluctuations

No professional rebalancing is done as per your financial goals

SIPs in direct funds often lack review, tracking, or correction support

Investors often miss exit signals, goal re-alignment, and tax-saving windows

If your SIP was through a Certified Financial Planner under regular plan, performance would be tracked and reviewed

A regular plan through MFD gives goal-linked advice, not just scheme suggestion

Evaluating the Fund’s Past Returns
You mentioned an average XIRR of 17% over 10 years

This is excellent performance considering it is a large cap fund

The fund has delivered better than typical expectations from this category

Be proud of your consistency—it matters more than fund timing

However, future performance may not match past due to slowing in large cap space

Hidden Risks of Holding Only One Style
Having only one fund for 10 years builds style concentration risk

Large cap funds miss growth opportunities in mid and small caps

You may miss out on newer sectoral trends and evolving businesses

Inflation-adjusted growth could become low over next 5–10 years

Diversification reduces long-term portfolio fatigue and improves compounding

Should You Exit the Fund?
Not entirely. But continuing blindly without review may reduce your future returns.

Keep the existing investment as is—no need to withdraw immediately

Switch only the future SIPs into a diversified mix of active mutual funds

Don’t exit from this fund just to chase short-term high performers

Large cap should form only a part—not the whole—of your portfolio

Suggested Action Plan
Keep existing Rs 10 lakh in same fund (don’t redeem if no immediate need)

Stop SIP in this direct plan and reroute SIPs to diversified funds under regular plans

Select actively managed flexi-cap, mid-cap, and balanced advantage funds

Choose regular plans through a Certified Financial Planner, not through direct mode

Link every SIP to a specific life goal like retirement, child’s future, etc.

Why Not Index Funds?
Some investors move to index funds at this stage. That may not help much.

Index funds only mirror the market—there is no active decision-making

They underperform in falling markets since they can’t shift sectors or stocks

They overexpose you to heavyweight stocks like HDFC Bank, Reliance, Infosys

Sector-specific risks are not managed actively in index strategies

Actively managed funds respond better to economic and political events

Fund manager insights are valuable in uncertain market phases

Asset Allocation Perspective
Review if you have other equity fund categories in your portfolio

A proper mix of flexi-cap, mid-cap, and balanced funds is ideal

Don’t over-allocate to large caps even if performance has been good

Review allocation every 12 months with a Certified Financial Planner

Diversification protects not just returns—but also peace of mind

Taxation Factors (if you redeem)
If you withdraw, the new capital gains tax rules will apply.

Since you’ve held the fund for 10 years, it qualifies as long-term

Long-Term Capital Gains (LTCG) above Rs 1.25 lakh will be taxed at 12.5%

If gains are below Rs 1.25 lakh in a year, no tax is due

No need to redeem now unless you have a new allocation strategy

Switching SIPs doesn’t create tax—only redemptions do

What You Should Avoid
Don’t make hasty switches due to short-term fund rankings

Don’t move to index or direct funds thinking they are cheaper—they lack support

Don’t mix insurance and investment again—stay away from ULIPs and LIC policies

If you hold any old LIC, ULIP or endowment plans, consider surrendering and moving into mutual funds

Don’t assume past returns will repeat—market cycles change styles

Role of a Certified Financial Planner
At this stage, your fund is fine—but your plan may not be complete.

A Certified Financial Planner will map all goals to right asset mix

They track fund performance, review asset allocation, and optimise tax

They suggest fund rebalancing based on market condition and age profile

They review portfolio during market fall and recovery—not after damage is done

CFPs also consider cash flow, emergency fund, risk cover, and lifestyle goals

Next Steps
Keep your Rs 10 lakh investment untouched

Stop SIP in direct fund immediately

Start SIPs under regular plan via Certified Financial Planner in diverse active funds

Ensure you diversify across market cap and fund styles

Plan for each life goal—don’t leave funds without a purpose

Finally
Your fund has done well. But future growth needs better strategy, not just fund loyalty.

You don’t need to exit now. But change your SIP direction immediately.

Don’t depend only on large caps. Add flexi-cap and mid-cap exposure.

Avoid index and direct funds—they lack guidance when needed most.

Continue your journey with a broader, actively managed mutual fund strategy.

Take support from a Certified Financial Planner to keep your portfolio healthy.

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