Sir
I have nearly 35 MF scheme.
I have 4 Manu facturing fund.
Axis mau facturing fund..
Canara Robecco Manu. fund G(SIP2000)
Invesco Manufacturing fund G(SIP 2000 PM ). ICICI Manufacturing fund G
Advise how to cut down or exit and invest in other fund continuing only one preferably ICICI.
Then I have following non performing Funds
Axis consumption fund G regular
Hdfc Multcap Fund G regular
Hdfc Multcap 50/25/25Index fund Direct
Hdfc Tech. Fund D Growth
Hsbc India Export Indis export Opp. D Growth
ICICI opp. Fund D Growth
SUNDARAM mutiasst allocation fund R . G SIP
TATA NIFTY AUTO INDEX FUNDNIFTY G DIR.
TATA NIFTY IND. TOURISM INDEX FUND G DIR.
Above mentioned funds not performing.
Your advise whether to and reinvest in an alternative fund.
Overlaping funds
ICICI prudential energy opportunities fund D SIP GROWTH
SBI ENERGY OPP. FUND D. GROWTH
2) FRANKLIN IND. FLEXI CAP FUND R G. 20 UNIT
HDFC FLEXICAP FUND R. G. 25 UNIT
ICICI PRUDENTIAL FLEXI CAP R. G 3000 Unit
TATA mid cap fund R. G. 175 unit
UTI MID CAP FUND R. G. 200 Unit
HDFC MID CAP FUND R G 250 UNIT
Request detailed scrutiny and how to minimise.
Besides l have following funds performing well
Aditya Birla Sun Life focused fund
HDFC Defence fund
HDFC PHARMA FUND
HDFC TRANSPORTATION FUND
HSBC VALUE FUND
HSBC ELSS FUND
ICICI PRU.PHRMA & HEALTHCARE FUND
UTI NIFTY 500 VALUE INDEX FUND
I am 82 years old. No liability . Other investments like PPF BANK FD GOLD ANCESTRAL LAND PM ANNUITY PLAN RENT
15 LAKH health insurance. Equities of 5 lakhs Expenses very basic.
Would like to re invest. for better returns.
Waiting for your early reply.
Your 's sincerely
..... ... V. G. Nadig
Ans: You have built substantial financial assets and, importantly, you have no liabilities. At age 82, the priority should now be simplicity, safety, liquidity and reasonable growth. Having nearly 35 mutual fund schemes is unnecessarily high.
» First Priority
– Reduce the MF portfolio substantially.
– Avoid managing many sector and thematic funds.
– Avoid keeping funds only because they performed well recently.
– Keep a smaller number of diversified funds.
– Keep sufficient money in safer assets for your regular needs.
At your age, chasing maximum returns is not necessary.
» Manufacturing Funds
You currently have four manufacturing funds:
– Axis Manufacturing
– Canara Robeco Manufacturing
– Invesco Manufacturing
– ICICI Prudential Manufacturing
There is considerable overlap in this allocation.
I would not keep four manufacturing funds.
If you have a strong preference for the ICICI Prudential Manufacturing Fund, keeping one manufacturing fund can be considered.
The other three can be reviewed for exit and consolidation.
However, do not switch all four on one day blindly. Check capital gains and exit loads first.
» Funds You Mentioned As Non-Performing
You mentioned:
– Axis Consumption
– HDFC Multicap
– HDFC Multicap 50/25/25 Index
– HDFC Technology
– HSBC India Export Opportunities
– ICICI Prudential Opportunities
– Sundaram Multi Asset Allocation
– Tata Nifty Auto Index
– Tata Nifty India Tourism Index
I would not judge these funds only by recent returns.
Some are sector, thematic or index-oriented funds.
They can have long periods of underperformance.
For an 82-year-old investor, I would reduce such complexity.
The index-oriented funds especially do not need to be retained simply for diversification.
» Energy Fund Overlap
You have exposure to:
– ICICI Prudential Energy Opportunities
– SBI Energy Opportunities
There is no strong need to hold two funds in the same sector.
Keep only one if you want sector exposure.
But given your age, even this allocation should remain limited.
» Flexi Cap Overlap
You currently have:
– Franklin India Flexi Cap
– HDFC Flexi Cap
– ICICI Prudential Flexi Cap
This is another clear area for consolidation.
Three flexi-cap funds are unnecessary.
You can retain one suitable flexi-cap fund.
The remaining two can gradually be consolidated after checking taxation and exit loads.
» Mid Cap Overlap
You have:
– Tata Mid Cap
– UTI Mid Cap
– HDFC Mid Cap
Again, three funds are not required.
Keep one suitable mid-cap fund if your overall portfolio needs this exposure.
However, at age 82, I would not maintain a large mid-cap allocation.
This money can be more useful in diversified and relatively stable investments.
» Funds Performing Well
You mentioned:
– Aditya Birla Sun Life Focused
– HDFC Defence
– HDFC Pharma
– HDFC Transportation
– HSBC Value
– HSBC ELSS
– ICICI Prudential Pharma & Healthcare
– UTI Nifty 500 Value Index
Good past performance alone should not decide whether you retain them.
You have multiple sector and thematic exposures here too.
For example, you already have two healthcare-oriented funds.
Defence and transportation are also thematic exposures.
I would reduce the number of such specialised funds.
» A Better Portfolio Structure
Your portfolio can be simplified into a few clear roles:
– Core diversified equity allocation
– Limited mid-cap allocation
– Limited thematic allocation, if required
– Suitable conservative allocation
– Adequate cash and fixed-income allocation
You do not need 35 schemes to achieve diversification.
Around 5 to 7 carefully selected funds can be more than sufficient.
» Very Important At Age 82
Your investment objective should now be different from that of a 40-year-old investor.
Capital preservation is important.
Liquidity is also very important.
You should have enough safe money for several years of expenses.
Equity should mainly serve the purpose of long-term inflation protection.
Do not put money required for near-term expenses into equity.
» About Reinvesting After Exit
I would not immediately reinvest every redemption into another equity fund.
First identify how much money you need for:
– Regular expenses
– Medical requirements
– Family support
– Emergency needs
– Future personal requirements
The remaining long-term surplus can then be invested.
This approach will make your portfolio much safer and easier to manage.
» Your Other Assets
Your FD, PPF, gold, ancestral land, annuity income and rental income provide additional diversification.
Your basic expenses are also low.
This is a positive position.
Therefore, there is no need to take excessive equity risk for higher returns.
» How I Would Approach The 35 Funds
Do it in three stages.
First, identify sector and thematic duplication.
Second, identify overlapping diversified categories.
Third, consolidate the portfolio gradually.
Do not sell everything together.
Review taxation and exit loads before each redemption.
The money released should then be allocated according to your income and liquidity requirements.
» Final Insights
You have done well in building a large and diversified investment base.
The main issue now is not lack of diversification.
It is excessive diversification.
35 schemes can make monitoring difficult and may create hidden overlap.
I would aim for a much simpler portfolio.
Your manufacturing, energy, flexi-cap and mid-cap holdings are the first areas I would consolidate.
I would also reduce excessive thematic exposure.
At 82, stability and peace of mind should come before chasing the highest possible return.
A detailed scheme-wise review would be useful before redeeming anything. It should consider current value, purchase value, gains, taxation, SIP status and exit load for every scheme.
Best Regards,
K. Ramalingam, MBA, CFP,
AMFI-Registered MFD – ARN 4188
www.holisticinvestment.in
https://www.linkedin.com/in/ramalingamcfp/
Question by Somnath on May 16, 2024Hindi
