Dear Mr. Sunil Lala, I have been contributing 10,000 INR monthly to the Canara Robeco Emerging Equities Growth Fund for nearly seven years. Recently, I was advised that transferring investments from underperforming funds to better-performing...

Dear Mr. Sunil Lala, I have been contributing 10,000 INR monthly to the Canara Robeco Emerging Equities Growth Fund for nearly seven years. Recently, I was advised that transferring investments from underperforming funds to better-performing ones is a wise strategy. Following this advice, I switched to the Canara Robeco Blue Chip Fund. However, I've noticed that the returns are not as expected. Should I consider switching back to the previous fund, or would it be more prudent to retain my position in the Blue Chip Fund? Please note, I am not currently enrolled in a SIP for the Blue Chip Fund

Ans: Dear Mr. Sunil Lala,

It's commendable that you've been consistent with your monthly contributions to the Canara Robeco Emerging Equities Growth Fund for nearly seven years. Making informed decisions based on performance advice is crucial, but it's equally important to understand the bigger picture.

Switching to a better-performing fund can indeed be a sound strategy, but it's essential to give investments time to perform and align with market cycles. Short-term performance fluctuations are common, and knee-jerk reactions may not always yield desired outcomes.

Considering your concerns about the returns from the Canara Robeco Blue Chip Fund, it's worth evaluating a few aspects:

Performance Analysis: Compare the historical performance of both funds over various market cycles to gauge their consistency.
Fund Objectives: Understand the investment objectives of both funds. Are they aligned with your risk tolerance and investment goals?
Exit Load and Tax Implications: Be aware of any exit loads or tax implications before making a switch.
If the Blue Chip Fund's performance doesn't align with your expectations, switching back to the previous fund could be an option. However, before making any decisions, consider consulting with a Certified Financial Planner to gain insights tailored to your financial situation.

Remember, investment decisions should be based on thorough research, understanding of fund objectives, and alignment with your financial goals. A well-informed choice will ensure your investments work effectively towards achieving your objectives.

Ans: You have shown great discipline by investing consistently for 10 years.

Let us now analyse your situation in a simple and professional manner.

We’ll assess the fund, its style, structure, and what steps you should take next.

Fund Type and Portfolio Behaviour
This is a large cap mutual fund focused on top 100 companies

It follows growth-style investing with low risk in terms of volatility

Blue chip funds invest in established companies with high market capitalisation

These stocks usually offer stability, but limited return potential in bull markets

Suitable for conservative investors who want slow and steady growth

Direct Plan Consideration
Since you mentioned "Direct Plan", let us address the risk of holding it without guidance.

Direct funds don’t offer any advice or handholding during market fluctuations

No professional rebalancing is done as per your financial goals

SIPs in direct funds often lack review, tracking, or correction support

Investors often miss exit signals, goal re-alignment, and tax-saving windows

If your SIP was through a Certified Financial Planner under regular plan, performance would be tracked and reviewed

A regular plan through MFD gives goal-linked advice, not just scheme suggestion

Evaluating the Fund’s Past Returns
You mentioned an average XIRR of 17% over 10 years

This is excellent performance considering it is a large cap fund

The fund has delivered better than typical expectations from this category

Be proud of your consistency—it matters more than fund timing

However, future performance may not match past due to slowing in large cap space

Hidden Risks of Holding Only One Style
Having only one fund for 10 years builds style concentration risk

Large cap funds miss growth opportunities in mid and small caps

You may miss out on newer sectoral trends and evolving businesses

Inflation-adjusted growth could become low over next 5–10 years

Diversification reduces long-term portfolio fatigue and improves compounding

Should You Exit the Fund?
Not entirely. But continuing blindly without review may reduce your future returns.

Keep the existing investment as is—no need to withdraw immediately

Switch only the future SIPs into a diversified mix of active mutual funds

Don’t exit from this fund just to chase short-term high performers

Large cap should form only a part—not the whole—of your portfolio

Suggested Action Plan
Keep existing Rs 10 lakh in same fund (don’t redeem if no immediate need)

Stop SIP in this direct plan and reroute SIPs to diversified funds under regular plans

Select actively managed flexi-cap, mid-cap, and balanced advantage funds

Choose regular plans through a Certified Financial Planner, not through direct mode

Link every SIP to a specific life goal like retirement, child’s future, etc.

Why Not Index Funds?
Some investors move to index funds at this stage. That may not help much.

Index funds only mirror the market—there is no active decision-making

They underperform in falling markets since they can’t shift sectors or stocks

They overexpose you to heavyweight stocks like HDFC Bank, Reliance, Infosys

Sector-specific risks are not managed actively in index strategies

Actively managed funds respond better to economic and political events

Fund manager insights are valuable in uncertain market phases

Asset Allocation Perspective
Review if you have other equity fund categories in your portfolio

A proper mix of flexi-cap, mid-cap, and balanced funds is ideal

Don’t over-allocate to large caps even if performance has been good

Review allocation every 12 months with a Certified Financial Planner

Diversification protects not just returns—but also peace of mind

Taxation Factors (if you redeem)
If you withdraw, the new capital gains tax rules will apply.

Since you’ve held the fund for 10 years, it qualifies as long-term

Long-Term Capital Gains (LTCG) above Rs 1.25 lakh will be taxed at 12.5%

If gains are below Rs 1.25 lakh in a year, no tax is due

No need to redeem now unless you have a new allocation strategy

Switching SIPs doesn’t create tax—only redemptions do

What You Should Avoid
Don’t make hasty switches due to short-term fund rankings

Don’t move to index or direct funds thinking they are cheaper—they lack support

Don’t mix insurance and investment again—stay away from ULIPs and LIC policies

If you hold any old LIC, ULIP or endowment plans, consider surrendering and moving into mutual funds

Don’t assume past returns will repeat—market cycles change styles

Role of a Certified Financial Planner
At this stage, your fund is fine—but your plan may not be complete.

A Certified Financial Planner will map all goals to right asset mix

They track fund performance, review asset allocation, and optimise tax

They suggest fund rebalancing based on market condition and age profile

They review portfolio during market fall and recovery—not after damage is done

CFPs also consider cash flow, emergency fund, risk cover, and lifestyle goals

Next Steps
Keep your Rs 10 lakh investment untouched

Stop SIP in direct fund immediately

Start SIPs under regular plan via Certified Financial Planner in diverse active funds

Ensure you diversify across market cap and fund styles

Plan for each life goal—don’t leave funds without a purpose

Finally
Your fund has done well. But future growth needs better strategy, not just fund loyalty.

You don’t need to exit now. But change your SIP direction immediately.

Don’t depend only on large caps. Add flexi-cap and mid-cap exposure.

Avoid index and direct funds—they lack guidance when needed most.

Continue your journey with a broader, actively managed mutual fund strategy.

Take support from a Certified Financial Planner to keep your portfolio healthy.

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