A regular follower of your column. Please visit my investments in mutual funds. I am 40 started investing in 2020. I have SIPS in five MFS (in italics) of 1000 each for an infinite period. Please help me rebalance for optimum output.

Fund	Plan
HDFC Index Nifty 50	Direct Plan
Nippon India Index Fund - Sensex	Direct Plan
HDFC Overnight Fund	Direct Plan
Mirae Asset Large Cap Fund	Direct Plan
Parag Parikh Flexi Cap Fund	Direct Plan
Tata Dividend Yield Fund	Direct Plan
Kotak International REIT FOF	Direct Plan
ICICI Prudential Bluechip Fund	Direct Plan
Axis Gold Fund	Direct Plan
Aditya Birla Sun Life Gold Fund	Direct Plan
Axis Bluechip Fund	Direct Plan
Quant Liquid Fund	Direct Plan
SBI Blue Chip Fund	Direct Plan
HDFC Mid-Cap Opportunities Fund	Direct Plan
SBI Equity Hybrid Fund	Direct Plan
HDFC Top 100 Fund	Direct Plan
DSP Overnight Fund	Direct Plan
DSP Global Allocation Fund	Direct Plan
Motilal Oswal Nasdaq 100 Fund of Fund	Direct Plan
Motilal Oswal S&P 500 Index Fund	Direct Plan
Sundaram Global Brand Fund	Direct Plan

Ans: You may continue with 4 and 5 star rated funds; for remaining you may consider from below:

Equity - Value Fund:

• Tata Equity PE Fund - Growth
• UTI Value Opportunities Fund - Growth Plan

Equity - Multi Cap Fund:

• UTI Equity Fund – Growth
• Axis Multicap Fund – Growth

Equity - Large Cap Fund:

• UTI Mastershare Unit Scheme - Growth Plan
• LIC MF Large Cap Fund-growth

Equity - Mid Cap Fund:

• MOSL Midcap 30 Fund – Growth
• DSP midcap – growth

Equity - Small Cap Fund:

• Kotak Small Cap Fund – Growth
• Axis Small cap Fund - Growth

Ans: However, it's important to consider the risk associated with each category and ensure it aligns with your investment goals and risk tolerance. Mid-cap and small-cap funds, for example, tend to be more volatile but offer higher growth potential, while large-cap funds provide stability.

Given your current portfolio, you might want to review the performance of each fund and assess if any adjustments are needed. Consider factors like fund manager expertise, track record, expense ratios, and portfolio holdings.

Additionally, it's always a good idea to periodically rebalance your portfolio to maintain your desired asset allocation and risk profile.

Lastly, consider consulting with a Certified Financial Planner who can provide personalized advice tailored to your financial goals and circumstances.

With careful monitoring and strategic adjustments, you can optimize your mutual fund portfolio for long-term growth and stability.

Ans: You have a diversified portfolio covering various categories like ELSS, bluechip, multicap, small cap, and sector-specific funds. To rebalance, assess your asset allocation to ensure it aligns with your risk tolerance and investment goals. Consider adjusting allocations if any fund exceeds its target percentage by a significant margin.

For future investments of Rs. 20,000 p.m., focus on areas where your portfolio is underrepresented or where you see potential growth. Maintain a balance between large-cap, mid-cap, and small-cap funds to spread risk. Consider adding international or sectoral funds for further diversification. Regularly review and adjust your portfolio to stay aligned with your financial goals.

Ans: You have taken a great step by wanting to consolidate and balance your mutual fund portfolio. Since you are managing it yourself, it is essential to have a structured approach.

Below is a detailed guide to help you refine your investments.

Understanding Your Current Portfolio
You have multiple investments across different fund categories.
There is a mix of large-cap, mid-cap, small-cap, flexicap, multicap, and balanced advantage funds.
You also have exposure to thematic and sectoral funds.
Index funds are present, which are passively managed.
Now, let’s assess and create a balanced, simplified approach.

Disadvantages of Index Funds
They do not offer protection in a falling market.
They include all stocks in an index, even the underperforming ones.
Actively managed funds have the potential to outperform and deliver better long-term returns.
Fund managers in active funds adjust portfolios based on market conditions, which helps in downside protection.
You should reduce reliance on index funds and allocate more to actively managed funds.

Disadvantages of Direct Plans
You miss out on expert guidance from a Certified Financial Planner.
Market conditions change, and fund performance needs regular tracking.
A Certified Financial Planner helps in portfolio rebalancing, risk assessment, and taxation strategies.
Investing through an MFD with CFP credentials ensures better financial planning support.
Shifting to regular plans with the right advisor can optimize returns.

Key Issues in Your Portfolio
Too Many Funds: Managing multiple funds can be complex and lead to overlapping investments.
Sectoral Fund Exposure: Investing in sector-based funds increases risk.
Index Fund Exposure: They do not offer active risk management.
Need for Consolidation: Fewer funds with well-defined objectives will help optimize performance.
A balanced approach ensures you get the best from actively managed funds.

Steps to Balance Your Portfolio
1. Reduce the Number of Funds
Holding many funds does not mean better diversification.
Reduce overlapping funds that invest in the same market segment.
A well-diversified portfolio with fewer funds is easier to manage.
2. Focus on Actively Managed Funds
Move away from passive funds to benefit from fund manager expertise.
Active funds provide better downside protection during market corrections.
The right funds with experienced fund managers can outperform index funds over time.
3. Reduce Sectoral and Thematic Funds
Sectoral funds depend on industry performance and can be highly volatile.
They are not suitable for long-term wealth creation.
It is better to focus on diversified equity funds instead.
4. Maintain a Proper Asset Allocation
Large-Cap Funds: Stability and consistent growth.
Mid-Cap & Small-Cap Funds: Growth potential with higher risk.
Balanced Advantage Fund: Dynamic asset allocation for risk management.
Flexicap & Multicap Funds: Exposure across market segments.
Each category serves a purpose and should be included in the right proportion.

How to Consolidate Your Portfolio
Step 1: Retain a Few High-Quality Funds
Keep one large-cap fund for stability.
Have one or two flexicap/multicap funds for diversification.
Include one mid-cap and one small-cap fund for high-growth potential.
Retain a balanced advantage fund for market protection.
This reduces overlap and creates a well-balanced structure.

Step 2: Exit Unnecessary Funds Gradually
Sell underperforming and duplicate funds in a phased manner.
Avoid exiting everything at once to manage tax implications.
Invest in a few well-performing funds for better long-term results.
Step 3: Rebalance Portfolio Annually
Once a year, check if your asset allocation matches your risk tolerance.
Adjust investments based on market conditions and personal financial goals.
Ensure your portfolio remains aligned with your objectives.
Taxation Impact While Restructuring
Equity Funds (Held for Less than 1 Year): 15% short-term capital gains tax.
Equity Funds (Held for More than 1 Year): 10% tax on gains exceeding Rs. 1 lakh.
Balanced Advantage Funds: Taxed as equity.
Selling in a phased manner can reduce the tax burden.

Long-Term Portfolio Strategy
Keep a core portfolio of diversified funds.
Avoid unnecessary churning of investments.
Increase SIP amounts in well-performing funds over time.
Focus on long-term wealth creation rather than short-term market movements.
By simplifying and optimizing your portfolio, you can achieve better growth and stability.

Finally
You have already built a strong investment habit through SIPs.

Now, consolidating and refining your portfolio will help maximize returns.

Focus on active fund management, asset allocation, and long-term consistency.

A streamlined portfolio ensures better wealth creation with lower complexity.

If you need further insights, feel free to ask!

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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