Home > Money > Question
Need Expert Advice?Our Gurus Can Help
Ramalingam

Ramalingam Kalirajan  |8319 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 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
PRANJIT Question by PRANJIT on Aug 25, 2023Hindi
Listen
Money

Hi sir I'm from Assam and doing a job as Teacher, i m investing in various MF schemes from last 3yrs.My risk appetite is very aggressive. My portfolio is 1canara Robecco blue chip equity fund direct 2000/ month & emerging equity fund 3000/ month 2Mirae Assets emerging blue chip equity fund direct 3000/ month. 3 J m flexi cap fund 3000/ month 4Motilal oswal midcap fund 1500/month 5Pgim india midcap oppurtunities fund 2500/ month 6Quant small cap fund 2000/fud 7,Quant midcap fund 2000/ month 8 Quant flexi cap fund/2500.9 Hsbc value fund 2000/month. 10 sbi small cap fund 2000/ month 11 Tata digital india fund 1000/ month 12 Tata small cap fund 1000/ month

Ans: Assessing and Optimizing Your Mutual Fund Portfolio for Aggressive Risk Appetite

As a Certified Financial Planner (CFP), I'll evaluate your mutual fund portfolio and suggest potential optimizations to align with your aggressive risk appetite and long-term financial goals.

Analyzing Current Portfolio Allocation and Diversification

Your portfolio comprises a diverse mix of equity funds spanning various market capitalizations and sectors. While this diversification can potentially enhance returns, it's crucial to assess the overall allocation and ensure it aligns with your risk appetite and investment objectives.

Identifying Overlapping Holdings and Concentration Risks

Reviewing your fund selection, I observe potential overlap in holdings across funds, leading to concentration risks. Overlapping investments may increase portfolio correlation and susceptibility to market fluctuations, necessitating a reassessment of fund selection to achieve better diversification.

Assessing Fund Performance and Consistency

Evaluating the performance of individual funds over different time horizons can provide insights into their ability to deliver consistent returns. It's essential to identify funds that have demonstrated resilience across market cycles and outperformed their benchmarks and peers over the long term.

Considering Expense Ratios and Fund Costs

Expense ratios and fund costs impact overall returns and should be scrutinized to ensure they align with the value proposition offered by each fund. While lower expense ratios are desirable, it's essential to weigh them against other factors such as fund performance and portfolio management quality.

Exploring Opportunities for Optimization and Rationalization

Given your aggressive risk appetite, optimizing your portfolio to enhance potential returns while managing risks is paramount. This may involve consolidating overlapping holdings, reallocating investments towards high-conviction funds, and introducing exposure to emerging themes or sectors with growth potential.

Emphasizing the Importance of Regular Monitoring and Review

As a CFP, I stress the significance of regular portfolio monitoring and review to adapt to changing market dynamics and investor preferences. Periodic reassessment of fund performance, asset allocation, and risk exposure can help optimize your portfolio and capitalize on emerging opportunities.

Seeking Professional Guidance for Portfolio Optimization

I recommend consulting with a qualified financial advisor or Mutual Fund Distributor (MFD) with a CFP credential to conduct a comprehensive portfolio review and optimization exercise. Professional guidance can provide valuable insights and recommendations tailored to your specific risk profile and investment objectives.

Making Informed Investment Decisions for Long-Term Wealth Creation

In conclusion, optimizing your mutual fund portfolio for aggressive risk appetite requires a strategic approach that balances potential returns with prudent risk management. By conducting thorough analysis, seeking professional guidance, and maintaining a disciplined investment approach, you can work towards achieving your long-term financial goals.

Best Regards,

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

You may like to see similar questions and answers below

Omkeshwar

Omkeshwar Singh  | Answer  |Ask -

Head, Rank MF - Answered on Sep 08, 2021

Ramalingam

Ramalingam Kalirajan  |8319 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 28, 2025

Money
pl see my mf portfolio and advise, icici bluechip fund rs 5000/- parag flexi cap rs 5000/-, hdfc flexi cap rs 5000/-,m/o large and mid cap rs 5000/- and nippon india small cap rs 5000/-(all sip monthly )
Ans: You have selected five different mutual fund schemes.

Your SIP contribution is Rs 5000 each in all five funds.

Your total monthly SIP is Rs 25000.

Your portfolio is a mix of large cap, flexi cap, large and mid cap, and small cap funds.

This shows a healthy diversification across market capitalisations.

You have chosen a good combination of growth-oriented equity categories.

Very thoughtful and appreciable planning is visible in your fund selection.

Assessment of Asset Allocation

Your portfolio has strong exposure to large caps through the bluechip fund.

Large cap funds are generally more stable and less volatile.

Flexi cap funds offer diversification across large, mid, and small companies.

Large and mid cap category bridges the gap between stability and higher growth.

Small cap exposure can give potential high returns over the long term.

Small caps are risky but rewarding if you stay invested patiently.

Your asset allocation is balanced towards growth with moderate risk.

Diversification Analysis

You are spreading investments across different market segments.

This is a smart way to balance risk and reward.

You are not overexposed to a single market capitalisation.

Flexi cap funds automatically adjust between different sizes based on opportunities.

It reduces your need to constantly track and rebalance.

Your approach reflects a strong understanding of portfolio construction.

This will help during different market cycles.

Fund Selection Quality

All selected funds belong to reputed fund houses.

Fund houses with a strong track record are always preferable.

The selected schemes are managed by experienced fund managers.

Experienced fund managers can navigate market volatility better.

Your selection of actively managed funds is excellent.

Actively managed funds outperform index funds in India due to inefficiencies.

Index funds often just mirror the market and do not beat it.

Active funds can take advantage of opportunities and protect against downturns.

Hence your preference towards active management is well appreciated.

SIP Strategy Evaluation

You are investing Rs 25000 monthly, which is Rs 3 lakh annually.

SIP method is highly beneficial as it averages cost across market ups and downs.

SIPs encourage disciplined investing without timing the market.

Your regular SIPs will help you build substantial wealth over the years.

Continuation of SIP during market corrections will add great advantage.

You are on the right track with your consistent approach.

Risk Assessment

Small cap funds bring higher risk but also higher potential returns.

Small caps are volatile in the short term but rewarding over 7 to 10 years.

Your portfolio has limited exposure to small caps, which is prudent.

Majority of your investments are in large and flexi cap categories.

This keeps your portfolio volatility under control.

Your risk appetite seems suitable for the portfolio you have built.

Gaps or Missing Elements

One point to highlight is sector diversification within funds.

Most flexi caps and large-mid caps internally manage sector exposure.

You need not add more sector-specific funds to this portfolio.

You have rightly avoided thematic or sectoral funds which are risky.

Global diversification is missing but optional depending on your goals.

For now, it is acceptable to focus on Indian growth story.

Taxation Impact

Equity mutual fund taxation needs careful understanding.

Short-term capital gains within one year are taxed at 20%.

Long-term capital gains above Rs 1.25 lakh are taxed at 12.5%.

If you redeem after one year, you benefit from long-term tax rates.

Keep this taxation aspect in mind while planning redemptions.

SIP units are treated separately for tax based on their holding period.

Sustainability and Future Readiness

Your SIP amount of Rs 25000 monthly is good but review it yearly.

As your income or savings increase, step-up your SIP amount.

Step-up SIPs ensure that your investments match inflation and life goals.

Monitor fund performance once a year but do not churn frequently.

Give your funds enough time to perform over complete market cycles.

Importance of Investing Through Certified Financial Planner

Regular plans through MFDs with CFPs add tremendous value.

Direct plans require you to do all research, monitoring, and rebalancing.

Regular plans offer expert advice, portfolio reviews, and emotional counselling.

Investors often make mistakes like selling during market falls without guidance.

CFPs ensure discipline, goal mapping, risk profiling, and tax efficiency.

The additional cost of regular plans is very minimal compared to the benefits.

You have made the right decision to invest through an expert channel.

Additional Recommendations for Better Portfolio Health

Maintain an emergency fund separately in liquid funds or savings account.

Emergency fund should be at least six months of monthly expenses.

This ensures that SIPs are not interrupted due to cash flow issues.

Continue SIPs even during market downturns without stopping.

Avoid booking profits too early from equity funds.

Rebalancing can be done once a year to maintain original allocation.

Review your financial goals annually and align investments accordingly.

Insure yourself adequately with pure term insurance, if not already done.

Avoid mixing insurance and investments like ULIPs or endowment plans.

Final Insights

Your mutual fund portfolio is well designed with a good mix.

You have selected quality funds across different market capitalisations.

SIP mode is the right approach for steady wealth creation.

Active fund selection gives you better potential than passive index investing.

Your risk profile matches your current portfolio.

Regular monitoring with the help of a Certified Financial Planner is key.

Stay invested with patience and discipline for long-term success.

Avoid unnecessary changes based on short-term market movements.

Increase SIP amount gradually in line with income growth.

Keep separate provisions for emergencies, insurance, and short-term needs.

You are on a solid path towards achieving your financial goals.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

Latest Questions
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.

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x