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Seeking Investment Advice: Should I Invest 20k Monthly in These Mutual Funds?

Milind

Milind Vadjikar  |1208 Answers  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Mar 25, 2025

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Asked by Anonymous - Dec 31, 2024Hindi
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Please give suggestions. I am planning to invest 20k/month in below mutual funds. Please review it. 7000 ICICI Pru Bluechip Fund 5000 Motilal Oswal Midcap Fund 3000 Nippon India Small Cap Fund 2000 ICICI Pru Manufacturing Fund 3000 Parag Parikh Flexi Cap

Ans: Hello;

What is the financial goal for which this investment is planned?

Also please update us about your risk appetite, financial profile (loan, insurance, self occupied property) and time horizon.

This will help us to guide you suitably.

Thanks;
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |8325 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 02, 2025

Asked by Anonymous - Jan 01, 2025Hindi
Money
Please give suggestions. I am planning to invest 20k/month in below mutual funds. Please review it. 7000 ICICI Pru Bluechip Fund 5000 Motilal Oswal Midcap Fund 3000 Nippon India Small Cap Fund 2000 ICICI Pru Manufacturing Fund 3000 Parag Parikh Flexi Cap I am planning to keep these funds for minimum 5 Years
Ans: Your planned investment strategy shows a thoughtful mix of funds. It includes large-cap, mid-cap, small-cap, thematic, and flexi-cap funds. Let us assess and refine this portfolio for better long-term returns.

Strengths of Your Portfolio
1. Diversification Across Market Segments

The mix of large, mid, and small-cap funds ensures broad market coverage.
This reduces concentration risk and captures growth potential in different segments.
2. Flexi-Cap Inclusion for Versatility

Flexi-cap funds offer allocation flexibility.
They help adjust to market trends dynamically.
3. Thematic Exposure for High Growth

Manufacturing-focused funds tap into specific growth sectors.
These are ideal for investors seeking thematic diversification.
Potential Areas of Improvement
1. Overlap Between Funds

Some funds may have overlapping stocks, diluting diversification.
Large-cap and flexi-cap funds often share similar holdings.
2. Short Holding Period

Five years is a relatively short horizon for small-cap and thematic funds.
These categories perform best over longer horizons, 7–10 years.
3. Underweight Debt Allocation

No allocation to debt funds limits stability.
Debt funds are crucial to counter volatility, especially in uncertain markets.
4. Direct Fund Selection Challenges

Direct plans save costs but lack professional advice.
Regular plans with Certified Financial Planner guidance offer better long-term value.
Recommended Adjustments
1. Reassess Thematic Allocation

Thematic funds are higher-risk due to their sector-specific focus.
Limit allocation to 10–15% of the total portfolio.
2. Balance Small-Cap Exposure

Small-cap funds can be volatile in the short term.
Reallocate a portion to mid-cap or diversified funds for balance.
3. Introduce Balanced Advantage Funds

Balanced advantage funds offer a mix of equity growth and debt stability.
They reduce risk while maintaining reasonable growth potential.
4. Avoid Overdependence on Large-Caps

Review the allocation in large-cap funds.
Add multi-cap funds for diversified exposure to different market capitalisations.
Active Funds vs Index Funds
Actively managed funds can outperform during volatile markets.
They provide opportunities for higher alpha through active management.
Index funds lack the adaptability to changing market conditions.
Taxation Considerations
LTCG above Rs 1.25 lakh from equity funds is taxed at 12.5%.
STCG is taxed at 20%.
Plan investments and withdrawals to optimise post-tax returns.
Suggested Strategy for Rs 20,000 Monthly SIP
1. Diversified Equity Focus

Allocate Rs 8,000–10,000 to flexi-cap and mid-cap funds.
These funds balance growth potential with stability.
2. Stable Growth Through Large-Cap Funds

Allocate Rs 5,000 to large-cap funds for consistent performance.
They anchor the portfolio in volatile markets.
3. Balanced Advantage and Debt Allocation

Allocate Rs 3,000 to a balanced advantage fund.
This adds stability and ensures a cushion against market corrections.
4. Controlled Thematic Exposure

Allocate Rs 2,000 to thematic or sectoral funds.
Keep this allocation minimal due to sector-specific risks.
Final Insights
Your planned investments show thoughtful diversification and growth potential. Refining allocations can further optimise returns while reducing risks. Work with a Certified Financial Planner for personalised guidance and regular reviews.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

Ramalingam

Ramalingam Kalirajan  |8325 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jan 30, 2025

Money
Hello sir, I am aged 38 and like to invest in mutual fund for first time. My horizon is minimum 15years for wealth creation.Kindly review my choices for 35k monthly allocation. 1. Gold mf 3000 2. Hdfc balanced advantage fund - 5000 3. Icici pru equity and debt fund - 5000 4. Parag parikh flexi cap fund - 5000 5. Hdfc flexi cap fund - 5000 6. Hdfc midcap opportunities - 3000 7. Kotak emerging midcap equity - 3000 8. Icici nifty IT index fund - 4000 9. Kotak nasdaq 100 fof - 2000 Please let me know if o need to add any fund or change the allocation of amount among these funds for moderate risk profile. Also i want to invest 20-25 lakh lumpsum as STP. On which fund above and how much shall i invest lumpsum.
Ans: You are 38 years old and investing in mutual funds for the first time.

Your investment horizon is at least 15 years, which is good for wealth creation.

You plan to invest Rs. 35,000 per month through SIP.

You also want to invest Rs. 20-25 lakhs as a lump sum through Systematic Transfer Plan (STP).

Your risk profile is moderate, meaning you want a balance of growth and stability.

Reviewing Your Current Fund Selection
1. Gold Fund (Rs. 3,000 per month)
Gold is not a long-term wealth creator like equity.

It offers hedging against inflation, but returns are not consistent.

A small allocation is fine, but 10% of your SIP is too high.

Reduce to Rs. 1,500 per month and use the extra Rs. 1,500 in equity.

2. Balanced Advantage Fund (Rs. 5,000 per month)
These funds dynamically shift between equity and debt.

They reduce volatility but may not maximise returns over 15 years.

Keeping it is fine, but Rs. 3,000 per month is enough.

3. Equity & Debt Hybrid Fund (Rs. 5,000 per month)
This fund offers stability with some equity growth.

Good for a moderate risk profile.

Rs. 3,000 per month is sufficient.

4. Flexi Cap Funds (Rs. 10,000 per month in two funds)
Flexi-cap funds invest across large, mid, and small caps.

They offer diversification and strong long-term returns.

Keeping two funds is fine, but they should be different in strategy.

Rs. 10,000 allocation is good, but ensure they don’t overlap too much.

5. Midcap Funds (Rs. 6,000 per month in two funds)
Midcap funds can deliver high growth but are volatile.

Investing Rs. 6,000 per month (17% of SIP) is reasonable.

If you want less risk, reduce midcap allocation to Rs. 4,000.

6. IT Index Fund (Rs. 4,000 per month)
Index funds are not ideal, as they don’t outperform actively managed funds.

IT sector is cyclical and has periods of underperformance.

If you want sector exposure, use an actively managed technology fund instead.

Avoid this fund and redirect Rs. 4,000 to flexi-cap or large-cap funds.

7. International Fund (Rs. 2,000 per month)
Exposure to global markets is good for diversification.

The Nasdaq 100 is tech-heavy, which makes it risky.

If you want international exposure, choose a diversified global fund instead.

Keep Rs. 2,000 allocation but switch to a fund with wider global exposure.

Suggested SIP Allocation After Changes
Gold Fund: Reduce from Rs. 3,000 to Rs. 1,500 per month. Gold is not a long-term wealth creator.

Balanced Advantage Fund: Reduce from Rs. 5,000 to Rs. 3,000 per month. These funds are good for stability but may not maximise returns.

Hybrid Equity & Debt Fund: Reduce from Rs. 5,000 to Rs. 3,000 per month. This allocation is enough for stability.

Flexi Cap Funds: Keep the Rs. 10,000 per month allocation. These funds provide good diversification and long-term growth.

Midcap Funds: Reduce from Rs. 6,000 to Rs. 4,000 per month. Midcap funds are volatile. A moderate risk profile requires a slightly lower allocation.

IT Index Fund: Remove the Rs. 4,000 per month allocation. Index funds don’t outperform actively managed funds, and IT sector performance is cyclical.

International Fund: Retain Rs. 2,000 per month, but choose a fund with broader global exposure instead of a tech-heavy index.

Large Cap Fund (New Addition): Add Rs. 5,500 per month to a well-managed large-cap fund for stability and consistent growth.

How to Invest Rs. 20-25 Lakhs as STP
Invest the lump sum in a liquid or ultra-short-term fund to avoid market timing risks.

Transfer through Systematic Transfer Plan (STP) over 12-18 months to reduce volatility impact.

Allocate 60% to flexi-cap and large-cap funds for stability and growth.

Allocate 30% to midcap and hybrid funds for balanced growth.

Allocate 10% to international and gold funds for diversification.

Final Insights
Your SIP plan is well-structured, but minor changes will improve risk-return balance.

Removing the IT index fund and reducing midcap exposure will lower volatility.

Increasing large-cap allocation will bring stability without compromising returns.

Investing the lump sum through STP over 12-18 months will reduce risk.

Choosing actively managed funds over index funds will provide better returns.

This approach ensures long-term wealth creation with controlled risk.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

..Read more

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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