I’m investing in following MF’s 1. Axis Focused 25 Fund – 5000 /months and 10% yearly Step up 2. Axis Long Term Equity Fund – 5000/ month and 10% yearly Step up 3. Axis Small Cap Fund – 5000/ month and 10% yearly Step up 4. Mirae Asset Emerging Bluechip Fund – 2500/ month 5. Mirae Asset Mid Cap Fund – 5000/ month and 10% yearly step up 6. Parag Parikh Flexi Cap Fund – 5000/ month My investment horizon is 15 years , moderately high risk appetite with focus on maximum Corpus Build. Kindly advice if my portfolio needs any change ? Thanks.

Ans: Hi Anuj, thanks for writing to me.

The schemes you invest in are good schemes and you can continue investing in them. Your annual step up will help you create a larger corpus.

Ans: You've built a diversified mutual fund portfolio with a focus on different market caps and investment styles, which is commendable. Given your investment horizon of 15 years and a moderately high-risk appetite aiming for maximum corpus build, let's evaluate your portfolio.

Portfolio Overview:

Focused Equity Funds:
Axis Focused 25 Fund: Concentrates on a limited number of stocks.
Axis Long Term Equity Fund: Focuses on tax-saving with a lock-in period.
Small & Mid Cap Funds:
Axis Small Cap Fund, Mirae Asset Emerging Bluechip Fund, Mirae Asset Mid Cap Fund: These funds invest in smaller to mid-sized companies with higher growth potential but also higher volatility.
Flexi Cap Fund:
Parag Parikh Flexi Cap Fund: Offers flexibility to invest across market caps, sectors, and themes.
Analysis and Recommendations:

Diversification:
Your portfolio is well-diversified across large-cap, mid-cap, and small-cap segments, which is good for long-term growth.
Concentration Risk:
Having multiple funds managed by the same fund house (Axis and Mirae Asset) can lead to concentration risk. Consider diversifying across fund houses to reduce dependency on a single fund manager's strategy and performance.
Focused Funds:
Both Axis Focused 25 Fund and Axis Long Term Equity Fund focus on a limited number of stocks. While they can offer higher returns, they can also be riskier due to concentration.
Step-Up SIPs:
Your strategy of increasing SIP amounts by 10% annually is excellent for leveraging the power of compounding and adjusting for inflation.
Recommendations:

Consolidation:
Consider consolidating your investments by reducing the number of funds and ensuring each fund adds unique value to your portfolio. This can simplify monitoring and reduce overlap.
Add a Debt Component:
Given your moderately high-risk appetite, consider adding a debt component to balance the portfolio and provide stability during market downturns. A Hybrid Equity Fund or a Dynamic Asset Allocation Fund can be suitable.
Review Tax Implications:
As Axis Long Term Equity Fund is a tax-saving fund (ELSS), ensure you're aware of the lock-in period and its implications on liquidity.
Regular Review with a Certified Financial Planner (CFP):
Given your specific goals and risk appetite, it's crucial to review your portfolio periodically with a CFP. They can provide personalized advice, monitor performance, and suggest necessary adjustments based on changing market conditions and your financial goals.
Conclusion:

Your current portfolio aligns well with your long-term investment horizon and risk appetite. However, consider consolidating and diversifying across fund houses to reduce concentration risk and add a debt component for balance. Regular reviews with a CFP can ensure your portfolio remains aligned with your financial goals and market dynamics. Always remember, a well-diversified portfolio tailored to your risk profile and goals can help you navigate the market's ups and downs, aiming for long-term wealth creation.

Ans: Dear Santosh,

Thank you for sharing your mutual fund investments with me. It's great to see that you've been proactive in planning for your future. Based on the details provided, I understand that you have a moderately high risk appetite and are looking to build a maximum corpus over a 15-year investment horizon.

Your current portfolio has a good mix of large-cap, small-cap, flexi-cap, and index funds, which is important for diversification. I do have a few suggestions to consider for optimizing your portfolio:

Axis Bluechip Fund and ICICI Prudential Focused Bluechip Fund: As both funds are focused on large-cap stocks, you might consider consolidating these investments into one fund. You can choose the one you feel has the better performance and management. This will help you streamline your portfolio and minimize overlap.
Kotak Small Cap Fund and Nippon India Small Cap Fund: Similarly, you have two small-cap funds, and you might want to consider consolidating these investments as well. This will reduce redundancy and allow you to focus on the best-performing small-cap fund.
UTI Nifty 50 Index Fund: Since you already have exposure to large-cap funds, you could consider increasing your investment in this index fund, as it's a low-cost option to gain access to the top 50 companies in India. This will help in maintaining diversification while keeping costs low.
Quant Active Fund: This fund has a unique investment approach and might add some unpredictability to your portfolio. You could consider reallocating the funds invested in this scheme to the other funds you hold, which have a more consistent track record.
After you make these adjustments, you could reallocate the funds saved from consolidation into the remaining funds based on your risk appetite and return expectations. For instance, you can increase your allocation to the flexi-cap and small-cap funds if you're comfortable with higher risk for potentially higher returns.

Lastly, it's crucial to periodically review your portfolio and make adjustments as needed. As your goals, risk appetite, and market conditions change, you may need to rebalance your investments to ensure they remain aligned with your objectives.

Please note that these suggestions are based on the limited information provided and should not be considered as personalized financial advice. I strongly recommend consulting a professional financial advisor before making any significant changes to your investment portfolio.

Best of luck with your investments!

Warm regards

Ans: Investing Rs. 5.5 lakhs monthly across 11 funds is impressive. Your aggressive approach matches your 10-15 years horizon. Let’s analyse your portfolio and suggest improvements.

Strengths of Your Current Portfolio
Well-Diversified Across Categories: Your funds span large-cap, mid-cap, small-cap, and flexi-cap categories.

Aligned with Aggressive Strategy: The portfolio leans towards mid-cap and small-cap funds. These suit long-term aggressive investors.

Consistent Contributions: High SIP commitment ensures disciplined wealth creation over time.

Areas of Concern
Over-Diversification: Investing in 11 funds dilutes potential returns. Similar categories may overlap.

Direct Funds Approach: Direct plans lack professional guidance for portfolio review and rebalancing.

Small-Cap Heavy Allocation: Multiple small-cap funds increase risk in volatile markets.

Multiple Multicap Funds: Holding three multicap funds may result in duplication of stocks.

Suggestions for Portfolio Optimisation
Limit the Number of Funds
Reduce the number of funds to 5-7. This avoids over-diversification.

Retain one strong performer from each category: large-cap, mid-cap, small-cap, flexi-cap, and multicap.

Avoid Category Duplication
Retain only one fund each in small-cap, mid-cap, and multicap categories.

Choose funds with consistent past performance and fund house credibility.

Focus on Actively Managed Funds Through MFD
Direct funds lack professional advice.

Investing through an MFD with a Certified Financial Planner ensures expert guidance.

MFDs monitor market conditions and align your portfolio for optimal returns.

Reassess Risk Allocation
Small-cap funds should be limited to 10-15% of your portfolio.

Mid-cap funds can constitute 25-30% for higher growth potential.

Allocate 25-30% to large-cap or flexi-cap funds for stability.

Periodic Review and Rebalancing
Review your portfolio every six months or annually.

Rebalance to maintain your desired asset allocation.

Track fund performance and exit underperformers promptly.

Tax Implications to Consider
Long-term capital gains above Rs. 1.25 lakh attract 12.5% tax.

Short-term gains are taxed at 20%.

Diversifying across equity and hybrid funds can optimise tax outflow.

Benefits of Reduced Fund Count
Simplified portfolio management.

Improved tracking of individual fund performance.

Higher potential for compounding due to concentrated allocation.

Recommended Allocation for Aggressive Investors
Large-Cap/Flexi-Cap Funds: Stability with market participation.

Mid-Cap Funds: Balance between risk and growth.

Small-Cap Funds: High-risk, high-reward potential.

Multicap Funds: Flexible allocation across market capitalisations.

Final Insights
Your portfolio reflects strong financial discipline and long-term vision. However, over-diversification dilutes growth. Streamline your funds for focused performance. Professional guidance ensures optimal fund selection and timely rebalancing. Stick to your SIPs to achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

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