Hi, My name is Ram aged 47 years.I have started investing Mutual Funds from One Year. My goal is to get 1 crore after 8 years Can you please suggest me any changes in the below funds?I want to increase my SIP Investment to 30k per month.Can you suggest me any small cap funds so that I can invest? Do you recommend to invest in SBI Mitra fund for 8 years? 1.Kotak Small Cap Fund-Growth(Regular Plan)-2000Rs 2.Kotak Emerging Equity Fund-Growth -2000Rs 3.Kotak Bluechip Fund - Growth (Regular Plan)-2000Rs 4. HDFC Top 100 Fund - Regular Plan - Growth-2000Rs 5. HDFC Capital Builder Value Fund - Regular Plan - Growth-2000Rs 6.ICICI Prudential Bluechip Fund-Direct Plan-Growth-500Rs 7.Mirae Asset Large Cap Fund - Regular Plan Growth-2500Rs 8.Mirae Asset Large and Midcap Fund (formerly Mirae Asset Emerging Bluechip Fund)-- Regular Plan-20000(Lumpsum) Regards, Ram

Ans: Hi Ram,

It's commendable that you have taken the initiative to start investing in mutual funds. Your goal of accumulating Rs 1 crore in 8 years is ambitious yet achievable with the right strategy. Let’s evaluate your current investments and see how you can optimize your portfolio to reach your goal.

Understanding Your Current Investments

You have a diversified portfolio that includes small-cap, large-cap, mid-cap, and value funds. This diversification helps mitigate risks and can lead to more stable returns. However, let's assess each fund and consider potential adjustments.

Kotak Small Cap Fund

Small-cap funds have the potential for high returns but also come with high risk. Since you are already investing in one, adding another small-cap fund may not significantly enhance your portfolio. It's important to balance the high-risk investments with more stable options.

Kotak Emerging Equity Fund

This fund focuses on mid-cap companies, which have a good balance of risk and return. Keeping a portion of your investment in mid-cap funds is a sound strategy, given their growth potential and relatively lower risk compared to small-cap funds.

Kotak Bluechip Fund and HDFC Top 100 Fund

Both these funds are large-cap funds, known for their stability and reliable returns. Large-cap funds are essential in a balanced portfolio as they offer a cushion against the volatility of small and mid-cap funds.

HDFC Capital Builder Value Fund

This value fund focuses on undervalued stocks. Value funds can offer good returns over the long term, although they may require patience as the market recognizes the true value of these stocks.

ICICI Prudential Bluechip Fund - Direct Plan

Direct plans have lower expense ratios compared to regular plans, but they lack the guidance provided by a Certified Financial Planner. Given your goal and the complexity of managing a diversified portfolio, regular plans with professional advice might be more beneficial.

Mirae Asset Large Cap Fund and Mirae Asset Large and Midcap Fund

These funds provide exposure to both large and mid-cap segments, offering a balanced approach. Mirae Asset is known for its strong fund management, which can be advantageous for your investment strategy.

Optimizing Your Monthly SIPs

You mentioned increasing your SIP investment to Rs 30,000 per month. This is a great step towards reaching your goal. Here’s a suggested allocation based on your current investments and risk tolerance:

Increase allocation in stable large-cap funds to ensure a steady growth trajectory.
Maintain a balanced investment in mid-cap funds for growth potential.
Keep a moderate allocation in small-cap funds to capitalize on high returns while managing risks.
Utilize regular plans to benefit from professional advice and better portfolio management.
Actively Managed Funds vs. Index Funds

Index funds passively track market indices, but actively managed funds aim to outperform the market. While index funds have lower expense ratios, they lack the potential for higher returns that actively managed funds can offer. Actively managed funds, with skilled managers, can adjust portfolios to take advantage of market opportunities, potentially providing better performance.

Regular Plans vs. Direct Plans

Direct plans have lower costs but lack professional guidance. Regular plans, despite higher expense ratios, offer the expertise of a Certified Financial Planner. This professional advice can be crucial in making informed investment decisions, optimizing your portfolio, and aligning with your financial goals.

Avoiding Specific Investment Structures:
SBI Mitra SIP is a structured investment method where you do SIPs for a few years and then switch to SWP withdrawals. While this might sound convenient, it's essentially a marketing strategy rather than a unique investment. Such structured schemes often limit flexibility and may come with higher costs. Instead, you can independently plan your SIPs and SWPs, tailoring them to your specific goals and risk tolerance. By doing so, you maintain control over your investment strategy, allowing for adjustments based on market conditions and personal financial changes.

Final Recommendations

Increase your SIP in stable large-cap and balanced mid-cap funds.
Limit additional investments in small-cap funds to manage risk.
Consider switching to regular plans for professional guidance.
Regularly review your portfolio with a Certified Financial Planner.
Your disciplined approach to investing and willingness to seek advice are commendable. With strategic adjustments and consistent investments, you are well on your way to achieving your financial goal.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in