I have invested in following in mutual funds for last 2 years but these funds are not yielding the desired results. Please advise your views on the selection funds; where to shift these funds or any modification required:

Ans:  Funds that may be considered are

• Samco Flexi Cap fund Growth
• Motilal Oswal Focused 25 fund Growth
• Axis ESG Equity fund – Growth
• DSP Quant fund - Growth

Ans:

Ans: It's great that you have taken the initiative to invest in mutual funds. Understanding that you're not getting the desired returns, let's analyze your current investments and explore what steps you can take to improve your financial outcomes.

Reviewing Your Current Mutual Funds
Your current mutual fund investments include a flexicap fund, a bluechip fund, a midcap fund, and a small cap fund. Each of these funds serves different purposes in a portfolio.

UTI Flexicap Fund
Flexicap funds invest across large-cap, mid-cap, and small-cap stocks, offering flexibility and potential for growth. However, market conditions can affect performance.

ICICI Prudential Bluechip Fund
Bluechip funds invest in large, established companies. They offer stability but may have lower returns compared to mid and small-cap funds, especially in bullish markets.

Axis Midcap Fund
Midcap funds invest in mid-sized companies with potential for high growth. They are more volatile than large-cap funds but can deliver higher returns over time.

Nippon India Small Cap Fund
Small cap funds invest in smaller companies with significant growth potential. They are the most volatile but can provide substantial returns during market upswings.

Evaluating Performance
It's important to evaluate the performance of your funds against their benchmarks and peers. Underperformance can be due to market conditions, fund management, or economic factors.

Time Horizon and Market Volatility
Remember, mutual fund investments are subject to market risks. A two-year period is relatively short for equity investments. It’s essential to have a long-term perspective, especially for mid and small-cap funds.

Assessing Your Risk Tolerance
Reassess your risk tolerance. If market volatility makes you uncomfortable, you might need to rebalance your portfolio towards more stable investments.

Diversification Benefits
Your portfolio is diversified across different market caps, which is good. However, ensure that the funds you choose complement each other and don’t overlap significantly.

Considering Actively Managed Funds
Actively managed funds have professional fund managers who make investment decisions aiming to outperform the market. They can adapt to changing market conditions better than index funds.

Benefits of Regular Funds Over Direct Funds
Investing through a Certified Financial Planner in regular funds can offer expert guidance and ongoing portfolio management, ensuring your investments are aligned with your financial goals.

Reviewing Fund Managers and Their Strategies
Evaluate the fund managers' performance and their investment strategies. Consistent underperformance might indicate a need to switch to better-managed funds.

Aligning Investments with Financial Goals
Ensure your mutual fund investments align with your financial goals and time horizon. Different goals require different investment strategies.

Monitoring and Rebalancing
Regularly monitor your portfolio’s performance and rebalance it as needed. A Certified Financial Planner can assist in making timely adjustments based on market conditions.

Market Conditions and Economic Factors
Stay informed about market conditions and economic factors that can affect your investments. Understanding these can help manage expectations and investment strategies.

Exploring Alternatives Within Equity Funds
Consider exploring other equity fund categories if your current funds are underperforming. Sectoral funds, thematic funds, or multi-cap funds might offer better opportunities.

Leveraging Professional Guidance
Seek advice from a Certified Financial Planner to tailor your investments to your specific needs and risk profile. They can provide a comprehensive review and recommend adjustments.

Maintaining Financial Discipline
Continue your systematic investment plan (SIP) with financial discipline. Consistent investing through market cycles can yield substantial benefits over time.

The Power of Compounding
The power of compounding works best over the long term. Stay invested to allow your money to grow and benefit from the compounding effect.

Considering the Economic Outlook
Consider the economic outlook and its potential impact on your investments. Align your portfolio with sectors expected to perform well in the future.

Balancing Risk and Return
Balance the potential for high returns with the risk you are willing to take. Diversification across different types of funds can help manage this balance.

Evaluating Costs and Expense Ratios
Evaluate the costs associated with your funds, such as expense ratios. High costs can erode returns over time, so choose funds with reasonable fees.

Exploring Hybrid Funds
Hybrid funds, which invest in both equities and debt, can offer a balanced approach with moderate risk and steady returns. They might be suitable if you seek more stability.

Investing in Quality Companies
Ensure your equity funds invest in quality companies with strong fundamentals. This can provide more stable returns over time.

Conclusion
Investing in mutual funds requires patience and a long-term perspective. Review your current portfolio, assess your risk tolerance, and align your investments with your goals. Seek guidance from a Certified Financial Planner to optimize your investment strategy and achieve your desired returns.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in