iam having few mutual fund SIPs and the XIRR stays between 11 to 13 % , is that the normal XIRR to be expected or should the MFs be revaluated to give a more better XIRR. The question is at the rate of average 12% XIRR total are the funds performing well

Ans:

Ans: Your current SIPs in Kotak Blue Chip, Nippon India Small Cap, SBI Balanced Advantage, SBI Small Cap, and Edelweiss Mid Cap funds provide a mix of large-cap, small-cap, and balanced funds, offering diversification across market segments. However, it's crucial to review fund performance, consistency, and alignment with your risk profile and financial goals periodically. A Certified Financial Planner (CFP) can help you assess the suitability of these funds, recommend adjustments if necessary, and ensure they align with your long-term investment objectives and risk tolerance for the next 15 years.

Ans: A negative XIRR in SIP investments is common in the short term.

Equity markets can fluctuate, impacting returns temporarily.

SIPs work best when continued over long periods, averaging out market volatility.

Analysing Your Current Portfolio
You are investing Rs. 13,500 monthly across seven funds.

Allocation includes large-cap, flexi-cap, small-cap, mid-cap, and multi-cap categories.

This diversification is good but needs alignment with long-term goals.

Insights on Specific Fund Categories
Large-Cap Funds
Large-cap funds provide stability in volatile markets.

These funds typically deliver steady returns over time.

Flexi-Cap Funds
Flexi-cap funds balance large, mid, and small caps for flexibility.

These funds adapt to changing market conditions effectively.

Small-Cap Funds
Small-cap funds are high-risk but have high return potential.

Short-term volatility is common; hold for at least 7-10 years.

Mid-Cap Funds
Mid-cap funds offer better returns than large caps but lower risk than small caps.

These funds require patience for growth.

Multi-Cap Funds
Multi-cap funds diversify across all market capitalisations.

These funds reduce dependency on a specific market segment.

Key Observations and Recommendations
Overlapping Categories
Three small-cap funds (ICICI, Nippon, SBI) increase risk.

Reduce exposure to two small-cap funds for better balance.

Portfolio Consolidation
Too many funds dilute returns and increase tracking difficulty.

Limit to 4-5 funds for focused growth.

Direct Fund Disadvantages
Direct funds lack professional guidance from certified professionals.

Regular funds through an MFD with CFP credential provide better support.

Tax Implications for Mutual Funds
Long-term capital gains (LTCG) above Rs. 1.25 lakh are taxed at 12.5%.

Short-term capital gains (STCG) are taxed at 20%.

Plan redemptions to optimise tax liability.

SIP Strategy for the Long Term
Continue SIPs for at least 7-10 years for compounding benefits.

Do not stop SIPs during market downturns; they offer better units.

Building a Balanced Portfolio
Suggested Allocation
Large-Cap: 40% for stability and consistent growth.

Mid-Cap: 20% for moderate risk and decent returns.

Small-Cap: 10% for higher growth potential.

Flexi-Cap or Multi-Cap: 30% for flexibility and balance.

Review and Monitoring
Review portfolio performance annually.

Adjust funds if consistent underperformance is noticed.

Avoid frequent changes based on short-term market movements.

Emergency Fund and Insurance
Set aside 6 months’ expenses in a liquid fund or FD.

Ensure adequate health and life insurance coverage.

Finally
Negative XIRR now is temporary; focus on long-term goals.

Diversify wisely and reduce overlapping categories.

Stay consistent and disciplined with your SIP investments.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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

Ans: You have shown great discipline by investing consistently for 10 years.

Let us now analyse your situation in a simple and professional manner.

We’ll assess the fund, its style, structure, and what steps you should take next.

Fund Type and Portfolio Behaviour
This is a large cap mutual fund focused on top 100 companies

It follows growth-style investing with low risk in terms of volatility

Blue chip funds invest in established companies with high market capitalisation

These stocks usually offer stability, but limited return potential in bull markets

Suitable for conservative investors who want slow and steady growth

Direct Plan Consideration
Since you mentioned "Direct Plan", let us address the risk of holding it without guidance.

Direct funds don’t offer any advice or handholding during market fluctuations

No professional rebalancing is done as per your financial goals

SIPs in direct funds often lack review, tracking, or correction support

Investors often miss exit signals, goal re-alignment, and tax-saving windows

If your SIP was through a Certified Financial Planner under regular plan, performance would be tracked and reviewed

A regular plan through MFD gives goal-linked advice, not just scheme suggestion

Evaluating the Fund’s Past Returns
You mentioned an average XIRR of 17% over 10 years

This is excellent performance considering it is a large cap fund

The fund has delivered better than typical expectations from this category

Be proud of your consistency—it matters more than fund timing

However, future performance may not match past due to slowing in large cap space

Hidden Risks of Holding Only One Style
Having only one fund for 10 years builds style concentration risk

Large cap funds miss growth opportunities in mid and small caps

You may miss out on newer sectoral trends and evolving businesses

Inflation-adjusted growth could become low over next 5–10 years

Diversification reduces long-term portfolio fatigue and improves compounding

Should You Exit the Fund?
Not entirely. But continuing blindly without review may reduce your future returns.

Keep the existing investment as is—no need to withdraw immediately

Switch only the future SIPs into a diversified mix of active mutual funds

Don’t exit from this fund just to chase short-term high performers

Large cap should form only a part—not the whole—of your portfolio

Suggested Action Plan
Keep existing Rs 10 lakh in same fund (don’t redeem if no immediate need)

Stop SIP in this direct plan and reroute SIPs to diversified funds under regular plans

Select actively managed flexi-cap, mid-cap, and balanced advantage funds

Choose regular plans through a Certified Financial Planner, not through direct mode

Link every SIP to a specific life goal like retirement, child’s future, etc.

Why Not Index Funds?
Some investors move to index funds at this stage. That may not help much.

Index funds only mirror the market—there is no active decision-making

They underperform in falling markets since they can’t shift sectors or stocks

They overexpose you to heavyweight stocks like HDFC Bank, Reliance, Infosys

Sector-specific risks are not managed actively in index strategies

Actively managed funds respond better to economic and political events

Fund manager insights are valuable in uncertain market phases

Asset Allocation Perspective
Review if you have other equity fund categories in your portfolio

A proper mix of flexi-cap, mid-cap, and balanced funds is ideal

Don’t over-allocate to large caps even if performance has been good

Review allocation every 12 months with a Certified Financial Planner

Diversification protects not just returns—but also peace of mind

Taxation Factors (if you redeem)
If you withdraw, the new capital gains tax rules will apply.

Since you’ve held the fund for 10 years, it qualifies as long-term

Long-Term Capital Gains (LTCG) above Rs 1.25 lakh will be taxed at 12.5%

If gains are below Rs 1.25 lakh in a year, no tax is due

No need to redeem now unless you have a new allocation strategy

Switching SIPs doesn’t create tax—only redemptions do

What You Should Avoid
Don’t make hasty switches due to short-term fund rankings

Don’t move to index or direct funds thinking they are cheaper—they lack support

Don’t mix insurance and investment again—stay away from ULIPs and LIC policies

If you hold any old LIC, ULIP or endowment plans, consider surrendering and moving into mutual funds

Don’t assume past returns will repeat—market cycles change styles

Role of a Certified Financial Planner
At this stage, your fund is fine—but your plan may not be complete.

A Certified Financial Planner will map all goals to right asset mix

They track fund performance, review asset allocation, and optimise tax

They suggest fund rebalancing based on market condition and age profile

They review portfolio during market fall and recovery—not after damage is done

CFPs also consider cash flow, emergency fund, risk cover, and lifestyle goals

Next Steps
Keep your Rs 10 lakh investment untouched

Stop SIP in direct fund immediately

Start SIPs under regular plan via Certified Financial Planner in diverse active funds

Ensure you diversify across market cap and fund styles

Plan for each life goal—don’t leave funds without a purpose

Finally
Your fund has done well. But future growth needs better strategy, not just fund loyalty.

You don’t need to exit now. But change your SIP direction immediately.

Don’t depend only on large caps. Add flexi-cap and mid-cap exposure.

Avoid index and direct funds—they lack guidance when needed most.

Continue your journey with a broader, actively managed mutual fund strategy.

Take support from a Certified Financial Planner to keep your portfolio healthy.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: Your question reflects discipline and awareness. Investing Rs. 1 lakh in this fund and continuing SIPs is a good sign. Many investors stop when returns are low. You have chosen to review and assess. That shows maturity. Well done.

Now let’s look at this investment from a 360-degree lens.

» Fund Performance vs. Your XIRR

– Your XIRR of 6.97% is below expectations.
– PSU-themed funds have short bursts of performance.
– Long stretches may show average or low returns.
– Timing matters in PSU funds. You may have entered late.
– Or exited too early from earlier investments.
– PSUs perform well in some economic cycles.
– But they don’t have consistent growth always.
– A 6.97% return is not alarming but needs a review.
– It's still higher than traditional FDs or savings.
– But lower than diversified equity mutual funds.
– Review the investment horizon and goal linked to this SIP.

» Understanding PSU-Focused Funds

– PSU funds invest mostly in government-owned companies.
– These include sectors like oil, gas, power, banks.
– These sectors are often regulated and slow moving.
– Growth is dependent on government reforms and capex.
– Not always driven by innovation or disruption.
– Hence, these funds may underperform broader markets.
– You may see volatility and cyclical growth patterns.
– PSU stocks may give short-term rallies.
– But long-term consistency may not match other funds.

» What Might Have Gone Wrong?

– Possibly entered during a PSU rally phase.
– SIP works better in long-term consistent performers.
– PSU funds don’t follow that structure always.
– They may move sideways for years.
– And suddenly jump when reforms come.
– Hence SIPs here need timing awareness.
– You may also be over-exposed to one theme.
– A thematic fund should be less than 10-15% of portfolio.
– Have you done that allocation? Important to check.

» Should You Continue the SIP?

– Continuing is okay if this is a satellite fund.
– If PSU exposure is below 10% of your total equity, continue.
– If PSU fund is your only SIP, it’s risky.
– Then you must diversify to more consistent categories.
– A core portfolio should be based on diversified funds.
– You may stop fresh SIPs and retain existing units.
– Or shift SIP amount to diversified equity funds.
– This will balance out your portfolio return.

» Should You Increase the SIP Amount?

– Not in this fund. Not at this stage.
– Increasing exposure to a fund with 6.97% XIRR is unwise.
– First, check why performance is low.
– Then evaluate where your current SIPs are going.
– If core funds are lacking, shift increased SIP amount there.
– SIP increase must go to well-diversified categories.
– Large and flexi-cap funds offer more stability.
– You can later re-enter PSU when momentum builds up.
– But now is not the time to increase this SIP.

» What Should You Do Instead?

– Pause future SIPs in PSU fund.
– Do not redeem existing corpus yet.
– Hold current Rs. 1 lakh till PSU cycle improves.
– Redirect Rs. 5,000 SIP into more reliable funds.
– Use diversified flexi-cap or large-mid cap categories.
– These categories offer better long-term consistency.
– Monitor the PSU fund’s sectoral exposure regularly.
– If it becomes concentrated in a few sectors, be cautious.

» What About Your Overall Allocation?

– Check how many SIPs you run across funds.
– Is PSU fund more than 15% of your equity SIPs?
– If yes, reduce exposure.
– If no, keeping it as a satellite fund is fine.
– Diversify SIPs across styles like flexi-cap, mid-cap.
– Ensure you have at least 4-5 different fund categories.
– Don’t cluster SIPs into thematic styles only.

» Other Aspects to Consider Before Switch

– Taxation comes in if you redeem this fund.
– For equity funds, LTCG above Rs. 1.25 lakh is taxed at 12.5%.
– Short-term gains are taxed at 20% now.
– Check if your Rs. 1 lakh is short term or long term.
– If it’s short term, wait till it becomes long-term.
– This saves tax and gives time for performance recovery.
– If already long term and still low return, switch slowly.

» Role of Asset Allocation

– SIPs alone don’t create returns.
– Asset allocation does.
– Maintain 60–75% in equity depending on your goal.
– Keep 20–30% in debt for stability.
– Use PPF, EPF, and debt funds for fixed returns.
– If you already have good exposure to debt, focus on equity.
– But make sure it is well-diversified equity.
– Don’t keep more than 20% in any one category or theme.

» Avoid Chasing Past Performance

– Don’t shift to a fund just because it’s doing well now.
– Past 1-year or 3-year returns don’t assure future results.
– Select funds based on consistency over 5+ years.
– Review risk-adjusted returns and fund manager history.
– PSU funds don’t always top the charts long term.
– So limit exposure and stay diversified.

» Avoid These Mistakes

– Don’t redeem in panic. Wait if possible.
– Don’t switch entire amount in one go.
– Don’t add more to underperformers without review.
– Don’t increase SIPs in sector funds unless you understand the sector deeply.
– Don’t get carried away by past 1-year performance alone.
– Don’t neglect rebalancing. Do it once a year.

» When Will PSU Funds Perform Again?

– When government boosts infrastructure spend.
– When interest rates stabilize or reduce.
– When global markets show PSU sector preference.
– When reforms trigger valuation re-rating.
– Till then, they may stay flat or give low returns.
– Keep track of macro signals to understand the cycle.
– But don’t time the market too aggressively.

» Should You Exit This Fund Completely?

– No. Full exit is not needed now.
– If amount is small, retain and monitor.
– If corpus becomes too large with poor return, consider phased switch.
– Use STP (Systematic Transfer Plan) to move to better funds.
– Exit over 6–12 months in parts to manage taxation and timing.

» Final Insights

– Good job tracking XIRR. Most ignore this.
– 6.97% XIRR shows you’re being alert.
– But fund choice may need review.
– PSU funds are thematic and cyclical.
– Treat them as satellite investments, not core.
– Don’t increase SIP here.
– Reallocate SIPs to better-diversified equity funds.
– Keep current Rs. 1 lakh investment and monitor.
– Use annual reviews to check fund consistency.
– Focus more on asset mix than fund returns alone.
– A Certified Financial Planner can help review your entire portfolio for balance.
– Ensure goals, horizon, and risk match with your SIPs.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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