I am aged 57 years and retired. I have an ongoing SIP in Axis Bluechip Direct Growth fund for Rs.1000, for the past two years. I had a SIP in Axis Long Term Equity Direct Growth for Rs.2500 for four years and stopped last year. Since both the funds are underperforming, shall I redeem and switch to other funds ? I have a long term view and aggressive risk appetite. - Ganesa moorthy, Coimbatore.

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: 3 rated schemes need to be reconsidered from the ones below.

Equity - Large Cap Fund:

• Mirae Asset Large Cap Fund – Growth
• Axis Bluechip Fund – Growth
• LIC Largecap Fund – Growth

Multicap: Suitable options considering quality and value for money at present levels are:

• UTI Equity Fund – Growth
• Motilal Oswal Multicap 35 – Growth
• Parag Parikh Long Term Equity Fund - Growth

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: Your portfolio demonstrates a disciplined approach to wealth building through SIPs and lump sum investments. The diversification across different fund categories is commendable, which is crucial for risk management. Let us carefully evaluate your current investments to determine if changes are necessary.

Analysis of Existing SIPs
Large-Cap Fund: Rs. 20,000 SIP
Large-cap funds provide stability with steady growth potential.
Returns may be consistent but not aggressive compared to mid or small-cap funds.
This fund is suitable for long-term goals and risk-averse investors.
Multicap Fund: Rs. 10,000 SIP
Multicap funds offer flexibility across market capitalizations.
They balance risk and reward well, diversifying across sectors.
This category suits medium-to-long-term goals with moderate risk appetite.
Midcap Fund: Rs. 5,000 SIP
Midcap funds are ideal for higher growth potential with increased volatility.
They can generate better returns during market uptrends.
This allocation aligns well for wealth creation over 8–10 years.
Evaluation of Lump Sum Investments
DSP Small Cap Fund: Rs. 5 Lakhs
Small-cap funds carry higher risk but can deliver substantial long-term growth.
The current allocation of Rs. 5 Lakhs is slightly concentrated in this high-risk segment.
HDFC Hybrid Equity Fund: Rs. 2 Lakhs
Hybrid equity funds offer a balanced mix of equity and debt.
They are suited for investors with a moderate risk profile seeking stability.
This allocation provides a cushion against market volatility.
Axis Bluechip Fund: Rs. 4 Lakhs
Bluechip funds focus on financially strong, large-cap companies.
They ensure consistent returns with relatively low risk.
Your allocation here complements the large-cap SIP strategy.
Suggestions for Portfolio Rebalancing
Retain SIPs in Large-Cap, Multicap, and Midcap Funds:
The existing SIPs in these funds are well-placed for diversification and growth. No changes are required.

Do Not Redeem Lump Sum Funds to Invest in SIPs:
Redeeming funds like DSP Small Cap or HDFC Hybrid Equity to reinvest in current SIP funds may reduce portfolio diversity.

Avoid Fixed Deposits for Redeemed Amounts:
Fixed deposits offer low returns and do not beat inflation over the long term. They are not ideal for growth-oriented investors.

Recommendations for Lump Sum Funds
DSP Small Cap Fund

Retain this allocation if you have a high-risk appetite and a horizon of 8–10 years.
Monitor the fund’s performance annually to ensure consistency.
HDFC Hybrid Equity Fund

Retain this allocation for moderate risk coverage.
This fund adds a balanced approach to your portfolio.
Axis Bluechip Fund

Retain this allocation as it aligns with your large-cap SIP strategy.
It ensures stability during market corrections.
Additional Recommendations
Diversify Further:
Add an international mutual fund to gain exposure to global markets. This reduces dependency on the Indian economy.

Review Portfolio Annually:
Assess the performance of funds regularly with the help of a Certified Financial Planner. Replace consistently underperforming funds.

Tax Efficiency:
Mutual fund taxation is critical for your returns. Keep track of long-term capital gains (LTCG) and short-term capital gains (STCG) rules:

LTCG above Rs. 1.25 lakh is taxed at 12.5%.
STCG is taxed at 20%.
Key Takeaways
Your SIPs are well-aligned with diversified categories. Continue them without changes.
Avoid putting lump sum amounts in fixed deposits, as mutual funds offer better inflation-beating returns.
Maintain current lump sum investments, as they contribute to portfolio diversification.
Consider including international mutual funds for broader exposure.
Monitor and rebalance your portfolio with expert guidance annually.
Finally

Your portfolio reflects a solid foundation for long-term wealth creation. By maintaining diversification and monitoring fund performance, you can achieve your financial goals effectively.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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