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Ramalingam Kalirajan |10208 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Apr 27, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Kannan on Apr 27, 2024Hindi

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Hello sir, i am 32 years old and just started a SIP investment of 7K per month for the following funds for wealth creation for next 10 - 15 years. Core portfolio (60%) 1. Parag Parikh flexicap fund - 1.5K 2. JM Flexicap - 2K 3. Navi Nifty 50 - 0.5K Satellite portfolio (40%) 1. Kotak Emerging Equity Fund - 0.8K 2. JM Midcap fund - 1K 3. Tata smallcap fund - 0.7K 4. Edelweiss midcap 150 momentum 50 - 0.5K Could please review and advise me whether the above funds is to be considered good. Please provide some suggestions if changes required.

Ans: Your SIP portfolio seems well-diversified across various categories of equity funds, which is a good approach for long-term wealth creation. Let's review each fund and provide some suggestions:

Core Portfolio (60%):

Parag Parikh Flexicap Fund: This fund follows a flexible investment approach across large, mid, and small-cap stocks. It's known for its quality stock selection and has delivered consistent returns over the years.
JM Flexicap Fund: Another flexi-cap fund, providing exposure to companies across market capitalizations. Ensure you review its performance and consistency compared to peers.
Navi Nifty 50: Investing in an index fund like Navi Nifty 50 provides exposure to India's top 50 companies. It's a low-cost option with a focus on large-cap stocks.
Satellite Portfolio (40%):

Kotak Emerging Equity Fund: This fund focuses on emerging companies with high growth potential. Review its performance and ensure it aligns with your risk appetite.
JM Midcap Fund: Mid-cap funds like JM Midcap can offer higher growth potential but come with higher volatility. Monitor its performance and risk closely.
Tata Smallcap Fund: Investing in small-cap funds can provide exposure to high-growth companies. Ensure you're comfortable with the risk associated with small-cap investing.
Edelweiss Midcap 150 Momentum 50: This fund follows a momentum-based investment strategy, focusing on mid-cap stocks showing positive price momentum. Understand its investment approach and risk profile.
Suggestions:

Monitor Performance: Regularly review the performance of your funds and ensure they're meeting your expectations. Consider replacing underperforming funds with better alternatives.
Risk Management: Given the higher allocation to mid-cap and small-cap funds in your portfolio, be prepared for higher volatility. Ensure your risk tolerance aligns with the risk profile of these funds.
Review Fund Selection: Consider diversifying across fund houses to reduce concentration risk. Also, consider adding an international equity fund or a debt fund for further diversification.
Long-Term Perspective: Stay focused on your long-term investment horizon and avoid making knee-jerk reactions based on short-term market movements.
Overall, your SIP portfolio appears well-structured for wealth creation over the next 10-15 years. However, regularly monitoring and reviewing your portfolio's performance is essential to ensure it remains aligned with your financial goals and risk tolerance. Consider consulting with a financial advisor for personalized guidance based on your individual circumstances.

Asked on - Apr 27, 2024 | Answered on Apr 27, 2024

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Thanks for your valuable feedback sir, could you please provide suggestions for fund selection for international equity and debt exposure.

Ans: Here's a guide to selecting an international equity fund and a debt fund for your Indian portfolio:

International Equity Fund:

Know your goals: Are you saving for a child's education abroad or your own retirement? Long-term goals can handle more volatility, allowing for exposure to developed and emerging markets.
Consider the cost: Actively managed funds can outperform but have higher fees. Index funds offer a low-cost way to track a specific market.
Pick a theme (optional): Do you want broad global exposure or focus on a specific region like the US or Asia?
Here's how a CFP can help:

Risk assessment: They'll understand your comfort level with fluctuations and recommend funds that match your risk tolerance.
Diversification: They can help you choose funds with minimal overlap to avoid putting all your eggs in one basket.
Long-term view: A CFP will focus on building a portfolio for your future, not chasing short-term fads.
Debt Fund:

Investment horizon: Short-term goals (less than 3 years) might benefit from low-duration debt funds with minimal interest rate risk. Longer goals can handle slightly higher volatility with options like corporate bond funds.
Credit quality: Consider the creditworthiness of the issuers (companies or government) in the debt fund. Higher credit quality generally offers lower returns but more stability.
Remember: Diversification is key! Don't invest all your money in just one international equity or debt fund. A CFP can help you create a balanced portfolio that aligns with your goals and risk appetite.

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