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Ramalingam Kalirajan |11176 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 03, 2025

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 Visu on Aug 31, 2025Hindi

Ji, I have investment in HDFC balance advantage fund, and has unrealised profit. Is it okay to shift the unrealised profit from HDFC balance advantage fund to HDFC flexi cap fund for a long term perpetual corpus for 10 years Because the unrealised Profit remains ideal. Please suggest me shifting from balanced fund to flexi cap fund is okay

Ans: – You already invest in balanced advantage fund.
– You track profits and think long term.
– You are evaluating corpus creation for 10 years.
– This discipline and awareness is very impressive.

» Understanding Balanced Advantage Fund
– Balanced advantage funds invest in both equity and debt.
– They change allocation as per market valuations.
– They reduce volatility compared to pure equity funds.
– They are useful when you want moderate risk.
– They give peace of mind in falling markets.

» Understanding Flexi Cap Fund
– Flexi cap funds invest across large, mid, and small caps.
– They are actively managed with freedom of allocation.
– Fund managers shift money to right market segments.
– They aim for higher long-term growth than hybrid funds.
– They carry higher volatility compared to balanced advantage funds.

» Comparing Both Categories
– Balanced advantage is more defensive.
– It reduces equity allocation during high valuations.
– Flexi cap maintains high equity exposure at all times.
– For 10-year horizon, flexi cap gives higher potential.
– For risk-averse investors, balanced advantage feels safer.

» Unrealised Profit is Not Idle
– You feel unrealised profit remains idle in current fund.
– Actually, profit is still compounding inside the fund.
– As NAV rises, profit also compounds further.
– It is not lying idle like cash in savings account.
– Redeeming and shifting only triggers taxation.

» Taxation Impact While Shifting
– Selling units creates taxable event.
– If profit is long-term, tax is 12.5% above Rs.1.25 lakh.
– If profit is short-term, tax is 20%.
– After paying tax, your reinvested amount becomes lower.
– This reduces compounding benefit over next 10 years.

» Importance of Staying Invested
– Long-term wealth creation happens by staying invested.
– Frequent shifting reduces compounding.
– Market timing rarely works consistently.
– Remaining in a chosen fund for years builds wealth.
– Fund managers handle asset allocation on your behalf.

» When Shifting is Justified
– Shift is valid if your risk profile changed.
– If you are comfortable with more volatility, move to flexi cap.
– If your 10-year goal requires higher growth, consider flexi cap.
– If you want smoother returns, stay with balanced advantage.
– Decision must match risk appetite, not just profit booking.

» Actively Managed Fund Benefit
– Both balanced advantage and flexi cap are actively managed.
– They adjust portfolio for opportunities and risks.
– This is better than index funds which follow blindly.
– Active funds safeguard downside during market shocks.
– Over long term, active funds can deliver superior alpha.

» Regular vs Direct Plans
– If you hold direct plan, you track portfolio yourself.
– This needs time, skill, and market knowledge.
– Without guidance, mistakes may hurt your wealth.
– Regular plan through Certified Financial Planner gives review.
– CFP ensures timely rebalancing and emotional discipline.

» Portfolio Diversification Angle
– You don’t need to pick only one fund type.
– Balanced advantage and flexi cap can complement each other.
– Balanced advantage gives cushion in volatility.
– Flexi cap gives growth for long-term corpus.
– Keeping both reduces regret in any market cycle.

» Role of Goal Based Investing
– Every investment should link to a life goal.
– For retirement in 20–25 years, flexi cap is stronger.
– For 10-year goal like child education, balanced advantage is safer.
– Align each investment to goal horizon and risk need.
– This brings clarity in decisions like shifting.

» Importance of Periodic Review
– Markets and funds evolve with time.
– A fund suitable today may lose edge later.
– Annual review with CFP helps identify required changes.
– Review prevents unnecessary shifting every few months.
– This balance maximises growth and stability together.

» Emotional Behaviour and Money
– Sometimes investors feel unrealised profit is unused.
– But compounding works silently in background.
– Impulsive shifting may erode benefits.
– Patience is the key ingredient of wealth creation.
– Discipline matters more than chasing quick switches.

» Strategy for You
– Don’t shift only because profit looks idle.
– Decide based on risk tolerance and goal horizon.
– Keep some allocation in balanced advantage for stability.
– Increase allocation to flexi cap for long-term wealth.
– Make changes gradually, not in one shot.
– Always consider tax cost before moving.

» Finally
– You are on the right track already.
– Unrealised profit is not idle, it is compounding.
– Balanced advantage gives stability, flexi cap gives growth.
– Both can co-exist in a strong portfolio.
– Shift only if risk appetite and goal demand change.
– Avoid unnecessary taxation from frequent switching.
– Review plan annually with Certified Financial Planner.
– With patience and discipline, you will achieve your 10-year corpus.

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

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

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