I am having following 6 regular SIPs in mutual funds

1. Aditya Birla Sunlife Tax Relief'96 Rs 2,000/-
2. HDFC Top 100 Fund Rs 3,000/-
3. Franklin India Prima Fund Rs 2,000/-
4. Franklin India Smaller Companies Fund Rs 3,000/-
5. Nippon India Small Cap Fund Rs 3,000/-
6. Nippon India Large Cap Fund Rs 2,000/-
7. In addition to above, I also hold some units in SBNPP SMILE Fund since 2012,

Please advise whether I should continue with the above mutual funds or exit.

Ans:

Ans: Please continue with the portfolio and review it after 6 months. 

Ans: Hello & thanks for writing to me.

I notice that you are investing in ABSL Liquid Fund. Liquid funds are debt investments that invest in debt & money market securities expiring in 91 days. This SIP is not in line with your objective of long term wealth creation. You can consider stopping SIP in this fund, redeem the investment in the fund & invest in other equity schemes.

The other schemes you invest in are good schemes and you may continue your SIP's in those schemes. Note that periodic rebalancing is essential to ensure you are on track to achieve your goals.

Ans: Review and Recommendations for Your Mutual Fund Portfolio
Overview of Your Current Investments
You have a diversified portfolio with the following SIPs and a lump sum investment:

SBI Contra Fund: ?2,000/- per month
SBI Small Cap Fund: ?2,000/- per month
SBI Retirement Benefit Fund Aggressive Growth: ?2,000/- per month
SBI PSU Fund: Lump sum ?11,000/-
Quant Small Cap Fund: ?1,000/- per month
ICICI Prudential Infrastructure Growth Fund: ?500/- per month
Compliments on Your Investment Strategy
Your disciplined approach to investing through regular SIPs is commendable. Investing in a variety of funds shows your understanding of diversification. This strategy helps mitigate risks and enhances the potential for growth.

Analytical Review of Your Portfolio
SBI Contra Fund:

Contra funds invest in undervalued stocks, anticipating future growth.
These funds can offer high returns but come with increased risk.
Consider if this aligns with your risk tolerance and investment horizon.
SBI Small Cap Fund:

Small cap funds can generate significant growth over time but are highly volatile.
Ensure this fund aligns with your risk appetite and long-term goals.
SBI Retirement Benefit Fund Aggressive Growth:

This fund focuses on long-term growth for retirement.
It's a good choice for aggressive investors aiming for high returns over time.
SBI PSU Fund:

Investing in Public Sector Units can be beneficial but is sector-specific and carries concentration risk.
Regularly review this fund's performance and the overall sector outlook.
Quant Small Cap Fund:

Like the SBI Small Cap Fund, this fund offers high growth potential with high risk.
Diversifying within the small cap segment might not be necessary.
ICICI Prudential Infrastructure Growth Fund:

Infrastructure funds invest in infrastructure-related companies.
These funds can provide good returns during economic growth periods but are sector-specific and volatile.
Recommendations for Portfolio Improvement
Diversify Across Market Caps and Sectors:

Your portfolio has a significant focus on small cap and sector-specific funds.
Consider adding a large cap or a diversified equity fund to balance risk and stability.
Consolidate Small Cap Investments:

Holding multiple small cap funds may not be necessary.
You can consolidate into one fund to avoid overlap and simplify management.
Review Sector-Specific Funds:

Sector-specific funds like PSU and Infrastructure can be volatile.
Regularly monitor their performance and consider switching to more diversified funds if needed.
Consider Professional Management:

Direct funds have lower expenses but require active monitoring.
Investing through a certified financial planner can provide professional management and potentially better returns.
Steps for Continued Success
Regular Portfolio Reviews:

Periodically review your portfolio to ensure it aligns with your goals and market conditions.
Make adjustments as needed to stay on track.
Increase SIP Amounts Gradually:

As your income grows, consider increasing your SIP amounts.
This will help you build a larger corpus over time.
Maintain an Emergency Fund:

Ensure you have an emergency fund to cover unexpected expenses.
This prevents the need to withdraw from your investments prematurely.
Stay Informed and Educated:

Stay updated on market trends and financial news.
Continuous learning will help you make informed investment decisions.
Conclusion
Your current portfolio is well-diversified but has a significant focus on small cap and sector-specific funds. Consider balancing it with more stable large cap or diversified equity funds. Regularly review and adjust your investments to align with your goals and risk tolerance. Your disciplined investment strategy and thoughtful planning are commendable. With consistent efforts and regular reviews, you are well on your way to achieving your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Your discipline with long running SIPs deserves genuine appreciation.
Consistency across years shows patience and financial maturity.
You have avoided random chasing of short term trends.
That itself improves long term wealth outcomes.

» Overall Portfolio Structure Assessment
Your portfolio spans multiple equity styles and market segments.
This provides natural risk spreading across cycles.
You hold value oriented exposure.
You also hold growth driven exposure.
Flexi oriented strategies add adaptability during market shifts.
Large segment exposure provides relative stability.
Mid segment exposure adds long term return potential.
Overseas exposure offers currency and geography diversification.

This mix shows thoughtful allocation rather than accidental investing.
The holding period across funds is meaningful.
Most funds crossed initial volatility phases.
This gives useful performance visibility now.

The portfolio does not look cluttered.
However, overlap risk exists between certain categories.
This needs rationalisation, not panic exits.

» Value Oriented Strategy Evaluation
Your value style holding focuses on undervalued businesses.
Such strategies test patience during momentum markets.
Short term underperformance is common here.
Long term cycles often reward value exposure.

Two years is a short assessment window for value strategies.
Value funds need full market cycles to shine.
Exiting now may crystallise temporary underperformance.

Continuation is sensible if volatility tolerance exists.
Gradual review is better than abrupt exit.
Allocation weight should remain moderate.

» Mid Segment Exposure Review
Mid segment investing adds growth fuel to portfolios.
Returns come with higher volatility phases.
Your holding period here is reasonable.
Two to three years is early but acceptable.

Performance often appears uneven year to year.
That behaviour is normal for this segment.
Staying invested improves outcome probability.

However, mid exposure should not dominate total equity.
Risk rises sharply if allocation becomes excessive.
Balancing through flexi strategies helps.

Continuation is advisable with allocation control.

» Flexi Style Holdings Assessment
Flexi strategies allow dynamic market cap movement.
They adjust between large, mid, and selective themes.
This provides stability during corrections.
It also captures upside during recoveries.

Holding more than one flexi strategy may cause overlap.
Overlap increases concentration risk unknowingly.
Performance differences reduce over long periods.

Keeping one strong flexi exposure is sufficient.
The second can be reviewed gradually.
Exit need not be immediate.
Future SIPs can be redirected instead.

This reduces tax impact and emotional stress.

» Large Segment Exposure Evaluation
Large segment strategies add foundation strength.
They smooth volatility during market stress.
Returns may appear modest during rallies.
Risk control remains the core benefit.

Your long holding period here is appropriate.
This acts as portfolio anchor.
Continuation is strongly recommended.

Allocation should align with risk comfort.
It suits investors needing stability with growth.

» Overseas Exposure Review
Overseas equity exposure brings geographic diversification.
It also brings currency movement benefits.
Global leaders add structural growth exposure.

However, this exposure tracks an overseas index.
Index based strategies follow markets blindly.
They cannot avoid expensive stocks.
They cannot reduce exposure during bubbles.

Index strategies suffer during prolonged corrections.
They lack downside protection mechanisms.
Expense ratios remain despite passive nature.

Active global strategies manage risks better.
They rotate sectors and valuations actively.
They control drawdowns more effectively.

Your existing overseas holding should be capped.
Avoid increasing exposure further.
Gradual profit booking can be considered later.
Immediate exit is not mandatory.

» Active Versus Index Strategy Perspective
Index strategies mirror markets without judgement.
They buy expensive stocks automatically.
They sell quality only during index reshuffles.

Active strategies assess valuations continuously.
They avoid overheated sectors early.
They protect capital during downturns.

Long term Indian investors benefit from active management.
Market inefficiencies still exist locally.
Skilled managers exploit these gaps.

Your portfolio largely uses active strategies.
That is a strong positive.

» Regular Plan Holding Evaluation
You hold regular plans consistently.
This supports disciplined investing behaviour.
You receive professional monitoring support.
Portfolio reviews improve decision quality.

Direct plans save costs but lack guidance.
Self decisions often trigger panic exits.
Timing mistakes erode saved expense ratios.

Regular investing through MFD with CFP credential adds value.
Behavioural coaching improves outcomes significantly.
Asset allocation discipline stays intact.

Staying with regular plans is sensible.

» Exit Versus Continue Decision Framework
Exit decisions should follow logic, not emotions.
Ask whether original purpose changed.
Ask whether risk tolerance reduced.
Ask whether allocation became excessive.

Performance alone should not drive exits.
Short term returns mislead often.
Consistency and suitability matter more.

For your portfolio:
– Continue value oriented exposure with patience
– Continue mid exposure within controlled allocation
– Retain one flexi strategy actively
– Review second flexi through SIP redirection
– Continue large segment holding confidently
– Cap overseas index exposure gradually

» Tax Efficiency Considerations
Equity exits within one year attract higher tax.
Exits after one year enjoy lower tax rates.

Avoid unnecessary churn.
Tax leakage reduces compounding power.

Gradual rebalancing is tax efficient.
SIP redirection helps avoid capital gains.

Debt tax rules do not apply here directly.

» Risk Management and Behaviour Control
Market volatility is unavoidable.
Investor behaviour determines outcomes.

Regular reviews prevent emotional reactions.
Rebalancing maintains risk balance.

Avoid frequent fund switching.
Avoid reacting to media noise.

Stay aligned with long term goals.

» Goal Alignment Check
Ensure equity exposure matches goal timelines.
Longer goals suit higher equity allocation.
Near term goals need reduced volatility.

If goals are long term, continue equity SIPs.
If goals are near, reduce risk gradually.

Portfolio suitability depends on goals, not returns.

» Liquidity and Emergency Planning
Equity should not fund emergencies.
Ensure separate liquid reserves exist.

Avoid forced redemptions during corrections.
This preserves compounding benefits.

» Review Frequency Guidance
Annual reviews are sufficient.
Avoid monthly performance tracking.

Markets reward patience.
They punish impatience.

» Finally
Your portfolio shows maturity and balance.
It does not require drastic exits.
It needs fine tuning and monitoring.

Continue most holdings with confidence.
Reduce overlap slowly and logically.
Avoid emotional decisions.

Long term wealth creation stays on track.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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