Hello sir, I have started investing recently through monthly SIPs of Rs.5000 in ICICI equity and debt fund, Rs.6000 in Bandhan Elss fund, Rs.7500 in UTI Nifty 50, Rs.5000 in Parag Parikh Flexi cap, Rs.2000 in Mirae Asset Large Cap and Rs.1500 in kotak Flexi cap Also, I have 300000 in PPF. And I am planning to invest 150000 yearly in it and 2.18 lakh already invested in ELSS funds since the last 3 years and their XIRR is 15.10% today. How much return I can expect in 15 years? What changes I should do in my portfolio?

Ans: Hello Biju Singh. Using your current sip and lump sum investment, you can achieve 30 lakh corpus in 8 years with an expected CAGR of 14%. As far as the amount is concerned, no modification is necessary.

In addition, I suggest that Axis Bluechip, HDFC Small Cap and Parag Parikh schemes be revisited with respect to their better peer schemes. I hope this resolves your concern.

Ans: Evaluating Your Current Portfolio
First of all, congratulations on achieving an impressive XIRR of over 20%! Your dedication to systematic investment planning (SIP) since 2018 is commendable. Let’s assess your current portfolio and suggest improvements for a balanced and growth-oriented strategy.

Diversification and Fund Allocation
Your portfolio consists of a mix of midcap, smallcap, flexicap, multi-asset, and bond funds. This shows a good understanding of diversification. However, there are some areas where you can optimize further:

Midcap Funds: Your major investments are in midcap funds, with significant contributions to HDFC Midcap Opportunities, HSBC Midcap, and Quant Midcap. This exposure is beneficial for growth, but ensure it aligns with your risk tolerance.

Smallcap Funds: Quant Smallcap and Nippon India Smallcap contribute to your portfolio's high-growth potential. However, smallcap funds are volatile, so keep an eye on performance and market conditions.

Flexicap Funds: Aditya Birla SL Flexicap, Quant Flexicap, and Parag Parikh Flexicap add flexibility and stability. Flexicap funds invest across market capitalizations, offering a balanced growth approach.

Multi-Asset and Bond Funds: ICICI Multi Asset and HDFC Corporate Bond provide stability and diversification across asset classes, reducing overall portfolio risk.

Suggested Improvements
Portfolio Streamlining
Consolidate Similar Funds: Having multiple funds in the same category can lead to redundancy. Consider consolidating your midcap and flexicap funds to a select few with consistent performance.

Review Underperforming Funds: The funds with minor amounts that you have stopped contributing to should be reviewed. If they continue to underperform, consider redeeming and reallocating these funds.

Balanced Allocation
Reduce Over-Exposure: Your portfolio is heavily tilted towards midcap and smallcap funds. While these offer high returns, they also come with high risk. Balance this with more large-cap funds for stability.

Increase Debt Allocation: Given the volatility of equity markets, a higher allocation to debt funds (like corporate bond funds or floating interest funds) can provide stability and regular income.

New Investment Strategies
Dynamic Asset Allocation Funds: These funds adjust the allocation between equity and debt based on market conditions, offering a balanced risk-return profile.

Hybrid Funds: Consider investing in balanced hybrid funds, which invest in a mix of equity and debt. These funds can provide growth potential with reduced volatility.

Reviewing and Rebalancing
Regular Portfolio Review: Schedule periodic reviews (at least semi-annually) to assess fund performance, market conditions, and alignment with your financial goals.

Rebalance Portfolio: Rebalancing ensures that your investment strategy remains aligned with your risk tolerance and market conditions. This might involve shifting from over-performing to under-performing assets.

Monitoring and Future Planning
Track Performance: Use investment tracking tools to monitor fund performance and make informed decisions.

Emergency Fund: Ensure you maintain an emergency fund equivalent to at least six months of expenses in a liquid or low-risk investment.

Long-Term Goals: Align your investment strategy with long-term goals like retirement, child’s education, and major purchases. Diversified and balanced investments will help achieve these goals.

Your disciplined approach to investing and maintaining a diverse portfolio is truly commendable. You have a strong foundation and a clear understanding of market dynamics, which is crucial for long-term success.

Conclusion
Your portfolio is well-structured but could benefit from slight adjustments for better risk management and optimization. Consolidate similar funds, rebalance your allocations, and consider adding dynamic asset allocation and hybrid funds. Regular reviews and strategic planning will ensure that your investments continue to grow effectively.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in