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Ramalingam Kalirajan |7550 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 06, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by Anoop on May 06, 2024Hindi

I have been investing in parag parik 25000,hdfc index sensex 20000,sbi magnum midcap 5000,canara Robeco small cap 5000 for past 4 years and planning to invest for 10 more years.I would like to is it ok to continue on the same funds or need to change?

Ans: Continuing with your current investment strategy or making changes depends on various factors, including your financial goals, risk tolerance, investment horizon, and the performance of your existing funds. Here's a comprehensive perspective:

Review Performance: Start by evaluating the performance of your current funds over the past few years. Look at both short-term and long-term returns compared to relevant benchmarks and peers. If your funds have consistently outperformed their benchmarks and demonstrated resilience during market downturns, it may be a good indication to continue investing in them.
Assess Fund Objectives: Understand the investment objectives and strategies of each fund in your portfolio. Ensure that they align with your own financial goals and risk appetite. For example, Parag Parikh Flexi Cap Fund follows a flexible investment approach across market caps, while HDFC Index Sensex Fund tracks the performance of the BSE Sensex. Ensure that each fund serves a specific purpose within your overall investment strategy.
Diversification: Consider the diversification of your portfolio across different asset classes, sectors, and market caps. While Parag Parikh Flexi Cap Fund provides diversification across market caps, HDFC Index Sensex Fund focuses solely on large-cap stocks. Evaluate whether your portfolio is adequately diversified to mitigate risk and capture growth opportunities across various segments of the market.
Risk Management: Assess the risk profile of your current funds and ensure that it aligns with your risk tolerance. Funds like SBI Magnum Midcap and Canara Robeco Small Cap tend to be more volatile due to their exposure to mid-cap and small-cap stocks. If you're comfortable with the associated risk and have a long-term investment horizon, you may consider maintaining exposure to these segments for potential higher returns.
Fund Manager Track Record: Evaluate the track record and experience of the fund managers managing your investments. A consistent and experienced fund management team can contribute significantly to the long-term success of your investments. Review any changes in fund management and assess their potential impact on fund performance.
Cost Consideration: Take into account the expense ratios and other costs associated with your funds. Lower costs can enhance your overall returns over the long term. Compare the expense ratios of your funds with industry averages and consider switching to lower-cost alternatives if necessary.
Market Conditions: Consider prevailing market conditions and economic outlook while making investment decisions. Periodically review your portfolio and make adjustments based on changing market dynamics, emerging trends, and geopolitical factors.
Ultimately, the decision to continue with your current funds or make changes should be based on a thorough analysis of your financial situation, investment objectives, and market conditions. Consulting with a Certified Financial Planner or Mutual Fund Distributor with a CFP credential can provide personalized guidance tailored to your specific needs and goals. They can help you create a well-balanced and diversified portfolio aligned with your long-term financial objectives.

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.