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Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Sep 09, 2020

Mutual Fund Expert... more
Ajeet Question by Ajeet on Sep 09, 2020Hindi
Money

I am investing around 30k in below mentioned mutual funds and my plan for this investment for minimum 5 years and for few funds I am planning for long term investment as well like 10+ years. Please check and let me know if the fund selection is right or not. Thanks

Ans:
Name of the Fund Category Recommendations
Ajeet Singh    
Axis Long Term Equity Fund: - 3,000 Equity - ELSS  Continue
Axis Mid Cap Fund: 2,000 Equity - Mid Cap Fund Continue
Aditya Birla 96 Tax Saver: 3,000 Equity - ELSS  Continue
Dsp Mid Cap Fund: 3,000 Equity - Mid Cap Fund Continue
HDFC Mid cap opportunities:- 3,000 Equity - Mid Cap Fund Continue
ICICI Prudential Large Cap. : - 2,000 Equity - Large Cap Fund SmartSwitch to Axis Bluechip fund -Growth
Kotak Emerging Fund : 2,000 (equity) Equity - Mid Cap Fund Continue
Kotak Multicap Fund : 2,000 Equity - Multi Cap Fund SmartSwitch to UTI Equity Fund - Growth
Mirae Large Cap Fund : 2,000 Equity - Large Cap Fund Continue
Nippon Small Cap Fund : 2,000 Equity - Small cap Fund SmartSwitch to Axis Small Cap Growth
SBI Blue Chip Fund: 3,000 Equity - Large Cap Fund SmartSwitch to Axis Bluechip fund -Growth
SBI Small Cap Fund : 3,000 Equity - Small cap Fund continue
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

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Hi, I am 36yrs old and investing in mutual fund from 2017 onwards. I invest 4k sip in Franklin Templeton Prima fund, 2k in Canara robecco flexi cap fund, 3K in Axis long term Equity(ELSS) and had 90k of lumpsum in BOI AXA tax advantage fund. Let me know if my choice of funds are wise to create long term wealth.
Ans: Your choice of funds demonstrates a balanced approach with exposure to different categories like large-cap, flexi-cap, and ELSS. Here are some points to consider:

Diversification: You have a good mix of funds across different categories, which can help in reducing the overall risk.

Fund Performance: Regularly monitor the performance of each fund against its benchmark and peers. Ensure that they are meeting your return expectations.

Costs: Check the expense ratios of the funds. Lower expense ratios can have a positive impact on long-term returns.

Review and Rebalance: Periodically review your portfolio to ensure it aligns with your financial goals. Rebalance if necessary, especially if any fund is consistently underperforming or if there's significant overlap.

Lumpsum Investments: For the lumpsum investment in BOI AXA tax advantage fund, monitor its performance relative to the ELSS category and consider its tax-saving benefits.

Overall, your fund selection seems reasonable for long-term wealth creation. However, regular reviews and staying updated with the market and fund performance are key to ensuring you're on track to meet your goals. Consulting a financial advisor for a personalized review can also be beneficial.

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My name is Shankar. I' m investing 10,000 Per Month thru SIP. One is in Motilal Oswal Midcap 30 Fund for 5000. Second one is in SBI Countra Find for 5000 each month in phone pe I had invested. It's been two month I had started. First my concern is here can I go for these two funds for longer period like 10 years, I need suggestion for that. Second one is how much return can I expect for 10 years. I am planning to start one more mutual fund for mid cap for 5000 I need to know which fund is best for long run.
Ans: Dear Shankar,

Firstly, congratulations on taking a significant step towards your financial goals by starting your investments. It is heartening to see individuals like you take proactive steps towards securing their future.

You mentioned investing Rs 5,000 per month in the Motilal Oswal Midcap 30 Fund and another Rs 5,000 in the SBI Contra Fund. Both funds have their merits, but let's delve deeper to assess if they align with your long-term goals.

Evaluating Your Current Funds
Motilal Oswal Midcap 30 Fund

This fund focuses on mid-sized companies with potential for growth. Mid-cap funds can be quite rewarding, especially in a growing economy like India. However, they also carry higher risk compared to large-cap funds. It's commendable that you are willing to take on some risk for potentially higher returns.

SBI Contra Fund

This fund follows a contrarian strategy, investing in undervalued stocks. This approach can be beneficial during market corrections and downturns, as these stocks may bounce back strongly. It provides a good balance to your portfolio by diversifying your investment style.

Long-Term Viability
For a ten-year investment horizon, these funds could be suitable, provided you are prepared for the market's ups and downs. Long-term investments in equity mutual funds generally yield better returns, as they smooth out short-term volatility. Staying invested for ten years can help you benefit from compounding and market growth.

Expected Returns
Estimating returns can be tricky as they depend on various factors, including market conditions, economic growth, and fund management. Historically, mid-cap funds have delivered 12-15% annual returns over the long term. Contrarian funds, while less predictable, can also yield substantial returns if their strategy pays off.

However, it is crucial to remember that past performance does not guarantee future results. Keeping realistic expectations and staying invested through market cycles is key.

Adding a New Mid-Cap Fund
Your interest in starting another Rs 5,000 monthly SIP in a mid-cap fund is a wise decision, given your long-term horizon. Mid-cap funds can be an excellent addition to your portfolio, offering potential for higher growth.

Benefits of Actively Managed Funds
Since you are considering mid-cap funds, it is essential to highlight the benefits of actively managed funds over index funds. Actively managed funds can adapt to market conditions and invest in promising companies, whereas index funds simply replicate a market index. This flexibility can lead to better performance, especially in the mid-cap segment where stock selection is crucial.

Recommendations for Mid-Cap Funds
Selecting the right fund requires thorough research. Here are some factors to consider when choosing a mid-cap fund:

Fund Performance: Look at the fund’s performance over different market cycles.
Fund Manager’s Track Record: An experienced and skilled fund manager can make a significant difference.
Expense Ratio: Lower expense ratios can improve net returns.
Fund House Reputation: Choose funds from well-established and reputable fund houses.
Considering these factors will help you make an informed decision. Consulting a Certified Financial Planner (CFP) can also provide personalized advice based on your risk tolerance and financial goals.

General Investment Tips
Diversification
Diversification is crucial to manage risk. Your current investments in mid-cap and contrarian funds provide a good mix. However, you might want to consider adding large-cap or multi-cap funds in the future for better balance.

Regular Review
Periodic review of your investments is essential. Market conditions and personal financial goals can change, requiring adjustments to your investment strategy.

Staying Informed
Keep yourself informed about market trends and economic indicators. This knowledge can help you make better investment decisions.

Emotional Discipline
It’s easy to get swayed by market volatility. Maintaining emotional discipline and staying invested during market downturns is vital for long-term success.

Potential Pitfalls of Direct Funds
Direct funds might seem attractive due to lower expense ratios, but they have some disadvantages. Direct funds require continuous monitoring and management, which can be time-consuming and challenging. Investing through a CFP can provide professional management, regular reviews, and tailored advice, ensuring your investments align with your goals.

Final Insights
Your current investment strategy is promising, with a good mix of mid-cap and contrarian funds. These funds have the potential to deliver substantial returns over a ten-year period, provided you stay invested and maintain discipline.

Starting another mid-cap fund is a prudent decision, given your long-term horizon. Carefully selecting an actively managed mid-cap fund can further enhance your portfolio's growth potential.

Remember to diversify, review your investments regularly, and consult a Certified Financial Planner for personalized advice. Your commitment to investing Rs 10,000 monthly through SIPs is commendable, and with the right strategy, you can achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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