Respected sir, Myself Arun, age 39, married, from last 1.5 years I am investing in mutual funds(SIP) every month i.e 2000 for quant smallcap, 2000 for quant multi asset fund, 2000 for kotak smallcap, 2000 axis midcap and 1000 for Nippon India smallcap.....so total investment monthly is 10000......Is this the right selection of mutual fund sir......

Ans: Arun! It's commendable that you have been consistently investing in mutual funds for the last 1.5 years. At age 39 and married, it's essential to ensure your investments align with your long-term financial goals. Let’s evaluate your current mutual fund portfolio and suggest any necessary changes for better growth and risk management.

Current Investment Portfolio
Your portfolio currently includes:

Quant Small Cap: Rs 2,000 per month
Quant Multi Asset Fund: Rs 2,000 per month
Kotak Small Cap: Rs 2,000 per month
Axis Mid Cap: Rs 2,000 per month
Nippon India Small Cap: Rs 1,000 per month
Total monthly investment: Rs 10,000

Evaluating Your Current Funds
Small Cap Funds: You have a substantial exposure to small-cap funds (Quant, Kotak, Nippon). Small-cap funds can offer high returns but come with higher risk and volatility.

Multi Asset Fund: Quant Multi Asset Fund invests in a mix of asset classes, providing diversification and some stability.

Mid Cap Fund: Axis Mid Cap Fund offers a balance between risk and return, with potential for good growth.

Recommendations for Better Growth
Diversify Across Market Capitalizations: Your current portfolio is heavily skewed towards small-cap funds. Adding large-cap and multi-cap funds will provide stability and diversify risk.

Reduce Overlap: Ensure that your funds do not have significant overlap in stock holdings. This helps in reducing risk and improving overall portfolio performance.

Include a Large Cap Fund: Large-cap funds invest in well-established companies, offering stability and steady returns. Adding a large-cap fund can balance your portfolio.

Suggested Portfolio Allocation
Large Cap Fund: Allocate Rs 2,000 per month. Large-cap funds provide stability and steady growth.

Mid Cap Fund: Continue investing Rs 2,000 per month in Axis Mid Cap Fund. Mid-cap funds offer a balance between risk and return.

Small Cap Fund: Maintain one small-cap fund (Rs 2,000 per month). Choose either Quant or Kotak Small Cap for high growth potential.

Multi Cap Fund: Allocate Rs 2,000 per month to a multi-cap fund. These funds invest across market capitalizations, providing diversification and growth.

Multi Asset Fund: Continue investing Rs 2,000 per month in Quant Multi Asset Fund. It offers diversification across different asset classes.

Investing for Your Child’s Future
For your child's future, consider a dedicated child-specific mutual fund or a balanced fund. These funds provide growth with moderate risk, ensuring a secure future for your child.

Suggested Fund for Child
Child-Specific Fund or Balanced Fund: Start with a Rs 5,000 SIP. These funds are designed to grow steadily while ensuring capital protection.
Importance of Regular Reviews
Periodic Review: Regularly review your investments to ensure they align with your financial goals. Market conditions change, and periodic reviews help in making necessary adjustments.

Rebalancing Portfolio: Rebalance your portfolio periodically to maintain the desired asset allocation. This helps in managing risk and optimizing returns.

Benefits of Actively Managed Funds
Actively managed funds aim to outperform the market through strategic decisions by professional fund managers. They offer the potential for higher returns compared to index funds, which merely track market performance.

Disadvantages of Direct Funds
Direct funds have lower costs but lack professional guidance. Investing through a Mutual Fund Distributor (MFD) with a CFP credential ensures expert advice and tailored investment strategies.

Conclusion
Your current investment strategy shows a good start, but it can benefit from further diversification and a balanced approach. Adding large-cap and multi-cap funds will reduce volatility and provide steady growth. For your child's investment, a dedicated child-specific or balanced fund is recommended. Regular reviews and rebalancing will ensure your portfolio remains aligned with your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in