sir, I have invested through SIP in Mirae Asset emerging blue chip fund,(current value 3.5 lakhs) Aditya Birla Sunlife 96 tax relief(current value2.50lakhs), Axis long term Equity fund(current value 1.8 lakhs), Canara Robeco Equity tax saver fund(current value 1.20 lakhs), Sundaram Diversified equity (Current value 1.lakh) and i have stopped SIP 3 years back in all these funds and not withdrawn any amount. suggest to keep the amount in these funds as it is or withdraw and invest lumpsum in some other funds

Ans: Too many funds, please consolidate it in 4 to 5 funds

Ans: Assessing Your Mutual Fund Investments and Planning for the Future

Your portfolio demonstrates a disciplined approach to mutual fund investing over the years. Let's evaluate your current holdings and chart a course for future investments.

Analyzing Existing SIPs

HDFC Top 200, ICICI Prudential Large & Midcap, and Bandhan Flexicap Funds have been part of your investment journey for several years. These funds offer exposure to different market segments, providing diversification benefits.

BSL Frontline Equity Fund, while stopped in 2020, has a long track record of performance. It's essential to review the reasons for discontinuing this SIP and assess whether it aligns with your current investment strategy.

Mirae Asset Bluechip Fund and HDFC Flexi Cap Fund, initiated more recently, contribute to diversification and may offer growth potential.

Evaluating Performance and Suitability

Review the performance of each fund relative to its benchmark and peer group. Assess whether the fund manager's investment approach and strategy align with your risk tolerance and investment objectives.

Consider the consistency of returns, risk-adjusted performance, and fund management quality. Additionally, evaluate the fund's expense ratio and turnover ratio to ensure cost-effectiveness.

Deciding Whether to Continue or Exit

Continue SIPs in funds with consistent performance, robust fundamentals, and alignment with your investment goals.

Consider exiting funds that consistently underperform their benchmarks or peers, have experienced significant changes in fund management, or deviate from your risk profile.

Planning Additional Investments

Given your intention to invest an additional Rs. 15,000, consider the following options:

Increase SIP amounts in existing funds with proven track records and growth potential. This approach maintains continuity and capitalizes on the strengths of your current portfolio.

Explore new funds that complement your existing holdings and provide exposure to underrepresented sectors or asset classes. Conduct thorough research and seek professional advice to identify suitable options.

Seeking Professional Guidance

As a Certified Financial Planner, I recommend conducting a comprehensive portfolio review to ensure alignment with your financial goals and risk tolerance. Regular monitoring and periodic adjustments are essential to optimize your investment outcomes.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Your dedication to investing and the discipline to not withdraw funds is commendable. Let's assess your current portfolio and make informed decisions about the next steps.

Current Portfolio Overview

You have invested in a mix of large-cap, tax-saving, and diversified equity funds. The current value of your investments totals Rs 10.2 lakhs. Stopping SIPs three years ago and holding onto these investments shows patience and long-term thinking.

Evaluating Existing Funds

Mirae Asset Emerging Bluechip Fund: This fund has a good track record and strong performance in the mid-cap segment.

Aditya Birla Sun Life Tax Relief 96: A well-established ELSS fund with consistent returns.

Axis Long Term Equity Fund: Another strong performer in the ELSS category with good returns.

Canara Robeco Equity Tax Saver Fund: Known for its balanced approach in the ELSS category.

Sundaram Diversified Equity Fund: Provides diversification but may not be performing as well as other funds.

Assessing Fund Performance and Strategy

Review the performance of each fund over the last three years. Compare them to their benchmarks and peer funds. Consider the following steps based on this assessment:

Continuing with High Performers

Keep the funds that have shown consistent performance and align with your risk tolerance. These include Mirae Asset Emerging Bluechip, Aditya Birla Sun Life Tax Relief 96, and Axis Long Term Equity.

Re-evaluating Underperformers

Funds like Sundaram Diversified Equity should be re-evaluated. If they consistently underperform, consider switching to better-performing funds.

Lump Sum Investment Strategy

If you decide to switch underperforming funds, invest the proceeds as a lump sum in well-performing funds. Consider the following options:

Diversifying with Large-Cap and Balanced Funds

Invest in large-cap and balanced funds for stability and steady growth. These funds provide less volatility and consistent returns.

Sectoral and Thematic Funds

While sectoral funds can offer high returns, they come with higher risk. Consider them for a small portion of your portfolio.

Advantages of Actively Managed Funds

Actively managed funds adapt to market changes and aim to outperform benchmarks. Professional management can enhance returns compared to passive index funds.

Disadvantages of Index Funds

Index funds merely track market indices and may not perform well during market downturns. They lack the adaptability of actively managed funds.

Benefits of Investing Through a Certified Financial Planner

A Certified Financial Planner provides tailored advice and professional oversight. This ensures your portfolio aligns with your financial goals and risk tolerance.

Disadvantages of Direct Funds

Direct funds have lower expense ratios but lack professional guidance. Investing through a certified planner ensures informed decision-making and portfolio management.

Periodic Review and Rebalancing

Regularly review your portfolio's performance. Rebalancing ensures your investments stay aligned with your financial goals and market conditions. This approach optimises returns and manages risks effectively.

Creating a Comprehensive Financial Plan

Consider other financial aspects like emergency funds, insurance, and tax planning. A holistic financial plan ensures a secure and well-rounded approach to wealth creation.

Monitoring Market Trends

Stay informed about market trends and economic factors. This knowledge helps you make timely adjustments to your investments, maximising returns and mitigating risks.

Conclusion

Your disciplined investment strategy and diversified portfolio are commendable. With regular review and professional guidance, you can optimise your investments and achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: You’ve taken a thoughtful step by assessing the need for tax-saving investments. Since you no longer require tax rebates, you've stopped SIPs in tax-saving funds. You now face the decision of whether to leave your investments in these funds or reallocate them.

Your current portfolio includes a diversified mix of large-cap, flexi-cap, mid-cap, and small-cap funds. This is a solid foundation. Let’s explore the best course of action for your discontinued tax-saving funds.

Should You Continue Holding the Tax-Saving Funds?
Performance Evaluation
The first step is to evaluate the historical performance of the tax-saving funds you've stopped. These funds are equity-linked savings schemes (ELSS) and, like other equity funds, their performance can vary.
If these funds have consistently performed well and aligned with your long-term financial goals, there may be no immediate need to withdraw. Even without the tax benefit, they could still contribute positively to your portfolio.
However, if the performance has been subpar, holding them could mean missed opportunities for better returns elsewhere.
Liquidity and Lock-In Period
ELSS funds typically come with a three-year lock-in period. Since you’ve been investing for more than a year, some of your units may be locked in.
Consider whether the liquidity of these funds aligns with your financial needs. If you don’t need immediate access to these funds, holding them might not be a concern.
If liquidity is important, especially in case of any upcoming financial needs, you might consider withdrawing the units that have completed the lock-in period.
Alignment with Financial Goals
Evaluate whether these funds still align with your current financial goals. Since your need for tax rebates has changed, your investment strategy might also need adjustment.
If your focus has shifted to growth-oriented funds, and these tax-saving funds do not fit that strategy, it may be wise to reallocate.
Reallocating to Better Opportunities
Diversifying Further
Your current portfolio includes large-cap, flexi-cap, mid-cap, and small-cap funds. This is a well-rounded approach, but there is always room for fine-tuning.
Consider reallocating the corpus from your tax-saving funds into funds that match your current risk appetite and financial goals. Actively managed funds can offer better returns compared to passive index funds, especially in a market where active management can capture alpha.
Funds focusing on emerging sectors, thematic funds, or sector-specific funds could add a new dimension to your portfolio, provided they align with your goals and risk tolerance.
Reviewing Current Portfolio Overlaps
With multiple funds in your portfolio, check for any overlaps in holdings. Often, different funds may invest in similar stocks, which can reduce the diversification benefits.
If your tax-saving funds have significant overlap with your existing funds, reallocating might be the right move to avoid concentration risk.
Regular vs. Direct Funds
Since you mentioned that you’re not using index funds, it’s essential to highlight the potential drawbacks of direct funds. While direct funds have lower expense ratios, they require active monitoring and decision-making.
Investing through a regular plan via a Certified Financial Planner offers the benefit of expert guidance. This ensures your investments are regularly reviewed and adjusted according to market conditions and personal circumstances.
Strategic Reinvestment Options
Large-Cap Funds
Large-cap funds provide stability and consistent returns, making them an essential part of any balanced portfolio. They invest in established companies with strong market presence.
Reinvesting in a large-cap fund could be a prudent choice, particularly if you prefer stability with moderate returns.
Flexi-Cap Funds
Flexi-cap funds provide the flexibility to invest across large, mid, and small-cap stocks. This flexibility can offer a balanced risk-return profile.
If you’re looking for a fund that adapts to changing market conditions, reinvesting in a flexi-cap fund could be advantageous.
Mid-Cap and Small-Cap Funds
Mid-cap and small-cap funds offer higher growth potential but come with increased volatility. They are ideal for investors with a higher risk tolerance and a longer investment horizon.
If your financial goals align with higher returns and you can withstand short-term fluctuations, these funds can be excellent candidates for reinvestment.
Tax Considerations on Withdrawal
Capital Gains Tax
When withdrawing from your ELSS funds, remember that capital gains tax will apply. Long-term capital gains (LTCG) over Rs. 1.25 lakh are taxed at 12.5% without indexation benefits.

Assess the tax implications of withdrawing your funds. If you decide to withdraw, consider spreading out the withdrawals over a few financial years to minimize your tax liability.
Tax Efficiency in Reinvestment
Consider the tax efficiency of the funds you plan to reinvest in. Some funds may offer better post-tax returns compared to others, especially in the case of debt-oriented funds.
ELSS funds themselves are tax-efficient, but without the need for tax rebates, your focus should shift to funds that provide optimal post-tax returns.
Final Insights
Your decision to stop SIPs in tax-saving funds aligns with your current needs. However, whether to continue holding these funds or reallocate depends on multiple factors. It’s crucial to evaluate the performance of these funds, consider their alignment with your financial goals, and assess any liquidity needs. If you find that these funds no longer fit your strategy, reallocating to funds that offer better growth potential and align with your risk profile could be the right move. Your existing portfolio is already well-diversified, but there’s always room for optimization. Whether you choose to stay invested in these tax-saving funds or move to other opportunities, ensuring that your portfolio remains aligned with your financial goals and risk tolerance is key.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in