Hello Sir, Hope this mail finds you well ! I will be getting around 10-15 lacs which I plan to invest for longterm. My plan is to divide this amount into 2 parts : I) 50% invest in Canara Robeco Banking & PSU fund for 3-5 yrs and make STP into Canara Robeco Bluechip fund for 3-5 yrs. 2) Remaining 50% invest in Nippon Corporate Bond fund for 3-5 yrs and make STP into Nippon Multicap fund for 3-5 yrs. OR alternatively I should purchase NIFTY BEES ETF every month with the same amount. Which investment will be better from Taxation & investment perpective. Let me know if there is any other better alternate investment option. I already have SIP's in Parag Parikh Flexicap (70K), Canara Flexicap (25K), SBI Midcap (30K), Kotak Emerging Equities (15K), Nippon Multicap (30K), Axis Small Cap (10K). Thanks for your advice.

Ans: (1) I don't like the below schemes,
- ABSL Pure Value
- Franklin India Smaller Companies
- UTI Flexi

(2) If you follow point one, you will have 1 focused, 1 mid & 1 small cap in your portfolio

(3) Split the 30K equally in the remaining 3 funds

Ans: Current Investment Overview

You are investing Rs 7,000 monthly in various mutual funds. Your goal is to accumulate Rs 20 lakhs in one year.

Assessment of Current Portfolio

SBI PSU Mutual Fund:
Focuses on public sector units. It's sector-specific and carries higher risk.
Quant Small Cap Fund Direct Growth:
Invests in small-cap companies. High risk with potential for high returns.
SBI Small Cap Fund:
Another small-cap fund. High growth potential but volatile.
Aditya Birla PSU Equity Fund:
Similar to SBI PSU fund, with sector-specific risk.
ICICI Infrastructure Fund:
Invests in infrastructure sector. Sector-specific risks apply.

Investment Strategy Adjustment

Balanced Portfolio:
Diversify investments into balanced funds for stability. This helps mitigate sector-specific risks.

Debt Funds:
Consider investing in debt funds for stability and lower risk. They provide more predictable returns.

Equity Funds:
Maintain some investment in equity funds for growth. Choose funds with a good track record.

Achieving the Rs 20 Lakh Goal

Lump Sum Investment:
Consider a lump sum investment in a balanced fund or debt fund. This could help you reach your goal with lower risk.

Increase SIP Amount:
Increasing your SIP amount will boost your savings. Focus on funds with consistent returns.

Short-Term Debt Funds:
Invest in short-term debt funds for better returns than a savings account or FD. They are less volatile.

Final Insights

Your current investments are sector-specific and high-risk. Diversifying into balanced and debt funds will provide stability. Increasing your SIP amount or making a lump sum investment in a balanced fund can help achieve your Rs 20 lakh goal in one year.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: For the next 10k, it's better to avoid index funds like Nifty Index 50 and Nifty Index 50 Equal Weightage. Index funds often offer average returns that track the market, which might not be ideal for long-term growth. Instead, focus on actively managed funds that a Certified Financial Planner can suggest, tailored to your risk appetite and financial goals. This can potentially offer better returns over the next 15 years.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Current Portfolio Assessment
Your portfolio has a mix of small-cap, large & mid-cap, ELSS, and thematic funds. Each category serves a different purpose.

Small-Cap Funds (Rs 12,000 per month): These funds have high growth potential but are volatile. A long-term horizon is needed.

Large & Mid-Cap Fund (Rs 2,500 per month): This balances risk and return. It provides stability with mid-cap growth.

ELSS Tax Saver Fund (Rs 3,000 per month): Helps in tax savings under Section 80C. It also has a three-year lock-in period.

Thematic/Energy Fund (Rs 3,000 per month): Sectoral funds are risky. They depend on the performance of a specific industry.

Your overall portfolio has a high allocation to small-cap and thematic funds. This increases risk. A more balanced approach is needed.

Issues in Current Portfolio
Overexposure to Small-Caps: Small-cap funds form a large part of your portfolio. This increases volatility.

Low Diversification: There is no exposure to Flexi-Cap or Multi-Cap funds. These provide stability.

Thematic Fund Allocation: Energy funds are cyclical. Performance may fluctuate based on government policies and global trends.

Low Large-Cap Exposure: Large-caps provide stability. You have no pure large-cap fund.

ELSS Fund Limitation: This is good for tax savings, but you need to check if your 80C limit is already met.

Suggested Changes to Existing SIPs
Reduce Small-Cap Allocation: Reduce one of the small-cap funds and shift the amount to a diversified fund.

Add a Multi-Cap or Flexi-Cap Fund: These funds invest across large, mid, and small-cap stocks. They provide diversification.

Reduce Thematic Fund Exposure: Limit sectoral funds to a smaller percentage of your portfolio.

Increase Large-Cap Allocation: This will add stability to your portfolio. Large-cap funds perform well in bear markets.

Continue ELSS If Needed: If you need more tax savings, continue. Otherwise, consider shifting to a diversified equity fund.

Where to Invest the Additional Rs 30,000
You should allocate this amount to reduce risk and improve stability. Below is a suggested allocation.

Multi-Cap or Flexi-Cap Fund (Rs 10,000): This ensures diversification across market caps.

Large-Cap Fund (Rs 7,500): Adds stability and reduces overall portfolio risk.

Mid-Cap Fund (Rs 7,500): Mid-caps have high growth potential with moderate risk.

Balanced Advantage Fund (Rs 5,000): These funds adjust equity and debt allocation based on market conditions.

Why Avoid Index Funds and ETFs?
No Fund Manager Expertise: Actively managed funds can outperform index funds over long periods.

Higher Downside Risk in Bear Markets: Index funds mirror the market. Actively managed funds can reduce losses during downturns.

No Flexibility in Market Cycles: Fund managers in active funds can shift allocations based on market conditions.

ETF Liquidity Issues: Buying and selling ETFs depend on market demand. This can impact prices.

Why Invest in Regular Funds via an MFD with CFP Credential?
Expert Guidance: Certified Financial Planners (CFPs) provide tailored investment strategies.

Portfolio Monitoring: MFDs help in reviewing and rebalancing your portfolio.

No DIY Errors: Direct investors often make mistakes in fund selection and exit timing.

Behavioral Coaching: MFDs prevent panic selling during market crashes.

Convenience: MFDs handle paperwork, taxation, and portfolio adjustments.

Final Insights
Reduce small-cap and thematic fund allocation.

Add large-cap and multi-cap funds for stability.

Allocate the new Rs 30,000 in a diversified manner.

Avoid index funds and ETFs for better returns and risk management.

Use regular funds via an MFD with a CFP credential for expert advice.

This strategy will help you build wealth while managing risks.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

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

Ans: You have done a good job by consistently investing in mutual funds. Your investment horizon of more than 15 years is a big advantage. This long-term approach will help you build significant wealth.

Your current portfolio has a mix of small-cap, large & mid-cap, sectoral, and ELSS funds. However, a few adjustments can improve diversification and risk management. Below is a detailed assessment of your portfolio and investment strategy.

Assessment of Your Existing Mutual Fund Portfolio
Small-Cap Exposure: You have Rs 12,000 per month in small-cap funds. This is around 44% of your SIP portfolio. Small-cap funds can give high returns but also have high risk and volatility. Such a high allocation is not advisable for stability.

Large & Mid-Cap Exposure: Rs 2,500 per month in this category is good. Large & mid-cap funds provide a balance between growth and stability.

Sectoral Fund Exposure: Rs 3,000 per month is in an energy-focused fund. Sectoral funds are highly concentrated and risky. They perform well only when the sector is in a growth phase.

ELSS Fund for Tax Savings: You are investing Rs 3,000 per month in an ELSS fund. This is a good choice for tax-saving under Section 80C. However, ensure you are not over-investing just for tax benefits.

Changes Suggested in Your Existing Portfolio
Reduce Small-Cap Allocation: Reduce SBI Small Cap and Axis Small Cap allocation. You can shift some funds to diversified equity funds.

Exit Sectoral Fund: Energy sector exposure is very high-risk. Instead, move this amount to a diversified multi-cap or flexi-cap fund.

Increase Large & Mid-Cap Allocation: Your large & mid-cap investment is low. Increase allocation to this category for stability.

Where to Invest the Additional Rs 30,000 Per Month?
Instead of ETFs, invest in actively managed mutual funds. Active funds can outperform in the long run due to expert fund management. Below is a recommended SIP allocation for better diversification.

Large & Mid-Cap Funds (Rs 7,000) – These provide stability and reasonable growth. They perform well across different market cycles.

Flexi-Cap Funds (Rs 7,000) – These funds have the flexibility to invest in large, mid, and small-cap stocks based on market conditions. They help in managing risk better.

Mid-Cap Funds (Rs 6,000) – Mid-cap stocks have the potential to generate good returns. However, they carry moderate risk.

Balanced Advantage Fund (Rs 5,000) – These funds automatically manage asset allocation between equity and debt. This helps in reducing risk.

Debt Mutual Fund for Stability (Rs 5,000) – This will add stability to your portfolio. You can choose a short-duration or corporate bond fund.

Why Not Index Funds or ETFs?
Lower Flexibility: Index funds follow a fixed benchmark. They do not adapt to changing market conditions.

No Downside Protection: Actively managed funds adjust their portfolio in a market downturn. Index funds cannot do this.

Potential for Higher Returns in Active Funds: A good fund manager can outperform the index over long periods.

Final Insights
Reduce small-cap exposure for better risk management.
Exit the sectoral fund and move to diversified equity funds.
Increase large & mid-cap allocation for stability.
Invest new SIPs in flexi-cap, mid-cap, and balanced advantage funds.
Avoid ETFs and index funds, as actively managed funds offer better growth potential.
Add a debt fund to bring stability to the portfolio.
These changes will help you build a well-diversified portfolio. You will achieve wealth creation with controlled risk.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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