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27-Year-Old With Marriage Savings Asks: How to Optimize ₹1 Lakh Monthly SIP Portfolio for ₹1 Crore Target?

Ramalingam Kalirajan |8044 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Feb 27, 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

Asked by Anonymous - Feb 23, 2025Hindi

I am reaching out to seek your guidance on my current investment portfolio. Below are the details: Personal Details: - Age: 27 years _ From :- Pune - Investment Horizon: Minimum 7 years - Risk Appetite: Moderate Current Holdings: 1. UTI Nifty 50 Mutual Fund: ₹2.5 Lakhs 2. Parag Parikh Flexi Cap Fund: ₹2.5 Lakhs 3. Fixed Deposit: ₹15 Lakhs (for marriage in the next 1 year) Current Mutual Fund Portfolio (Monthly SIPs of ₹1 Lakh): 1. Large Cap (UTI Nifty 50 Index): ₹10,000 2. Large & Mid Cap (UTI Nifty Next 50 Index): ₹10,000 3. Flexi Cap (Parag Parikh Flexi Cap): ₹20,000 4. Mid Cap (Kotak Emerging Equity): ₹15,000 5. Small Cap (Tata Small Cap): ₹10,000 6. Motilal Oswal Nasdaq 100 ETF: ₹5,000 7. ICICI Gold ETF: ₹8,000 8. Parag Parikh Conservative Hybrid Fund: ₹10,000 9. PPF: ₹5,000 10. NPS: ₹7,000 Financial Goal: To accumulate a corpus of ₹1 crore in the next 6-7 years. I would appreciate it if you could review my portfolio and provide any advice or suggestions to optimize it for achieving my goal. Additionally, please let me know if any adjustments are needed in terms of asset allocation, fund selection, or risk management.

Ans: I appreciate your effort in building a structured investment portfolio. You have a good mix of asset classes. However, some refinements can improve returns and risk management.

Key Observations
You have a strong SIP commitment of Rs 1 lakh per month.

Your investment horizon is 7 years, which is medium-term.

Your risk appetite is moderate, but some holdings may not align.

Index funds and ETFs may limit your portfolio’s growth potential.

Issues in Your Current Portfolio
1. Over-Reliance on Index Funds
Index funds provide average market returns.

Actively managed funds can outperform in a 7-year horizon.

Index funds limit downside protection in volatile markets.

2. High Exposure to International Markets
Investing in global ETFs increases currency risk.

Your portfolio already has enough diversification within India.

Removing international exposure can simplify taxation.

3. Overlap in Large-Cap Allocation
Large-cap index funds and flexi-cap funds create redundancy.

A better option is an actively managed large-cap fund.

4. Conservative Hybrid Fund Allocation
Hybrid funds are good for capital preservation, but not for growth.

Your investment horizon is long enough for a pure equity approach.

Reducing this allocation can improve overall returns.

Recommended Portfolio Adjustments
1. Replace Index Funds with Actively Managed Funds
Actively managed funds have historically outperformed index funds.

A well-managed large-cap and large & mid-cap fund will be better.

2. Reduce International Exposure
Exit from the international ETF.

Keep investments in strong Indian equity funds.

3. Optimise Large-Cap and Flexi-Cap Allocation
Replace index-based large-cap funds with top-performing active funds.

Continue flexi-cap investment but monitor fund performance.

4. Increase Mid-Cap and Small-Cap Allocation
Mid-cap and small-cap funds offer higher growth potential.

Increase allocation based on risk comfort.

5. Exit Hybrid Funds for Higher Growth
Shift hybrid fund allocation to mid-cap or flexi-cap funds.

This will ensure better long-term returns.

Suggested New SIP Allocation
Large-Cap Fund: Rs 10,000 (actively managed)

Large & Mid-Cap Fund: Rs 10,000 (actively managed)

Flexi-Cap Fund: Rs 25,000

Mid-Cap Fund: Rs 20,000

Small-Cap Fund: Rs 15,000

Gold ETF: Rs 5,000 (optional for diversification)

PPF and NPS: Continue existing contributions

This new allocation ensures higher growth while managing risk.

Final Insights
Replace index funds with actively managed funds.

Reduce international exposure to avoid currency risks.

Shift hybrid allocation to growth-focused funds.

Increase mid-cap and small-cap exposure for better returns.

Continue PPF and NPS as stable long-term investments.

This approach will improve returns while keeping risk moderate.

Best Regards,

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

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