Should I surrender my Kotak Emerging Equity, Kotak Small Cap, Canara Robeco Blue Chip, Axis Bluechip, and HDFC Top 100 Funds?

Ans: You may continue with 4 & 5-Star rated ones and rest can be relooked. 

Multicaps: Suitable options considering quality and value for money are:

• Motilal Oswal multicap 35
• Axis Mutlicap
• Parag Parikh Long Term Equity Fund 

ELSS: Motilal Oswal Long Term Equity Fund 

Focused: 

• Axis Focused 25
• DSP Focused Fund

Midcaps: Suitable options considering quality and value for money are:

• Motilal Oswal Midcap 30
• DSP Midcap
• Kotak Emerging Equity Fund

Small Caps:

• Kotak Small Cap
• Axis Small Cap

Equity Value Funds:

• Tata Equity PE Fund
• UTI Value Opportunity Funds

Large Caps: 

• LIC MF Large Cap Fund - Growth
• Mirae Asset Large Cap Fund - Growth 

Large and Midcaps: 

• Axis Growth Opportunities Fund – Growth
• Tata Large And Midcap Fund - Growth 

Aggressive Hybrid Funds: 

• Mahindra Hybrid Equity Nivesh Yojana – Growth
• Axis Equity Hybrid Fund - Growth 

Ans: a - compounding will get affected but since performance of the funds which i have advised to stop , is now not good it makes sense in stopping sip and exiting when you get good profit
b - yes stop sip n exit form them
b - with proceeds you get after selling calculate with your CA tax payable and pay the tax and remaining amount you can invest in ppfas liquid fund and start STP in PPFAS flexi cap
c - for 5 crores to be achieved you need to increase your sip and / or top it with lumsum investmenst in MF

Ans: Your investment strategy looks well-diversified with a mix of large-cap, mid-cap, and small-cap funds. To achieve your goal of 1 crore in 10 years, consider the following suggestions:

SIP Step-up: Increase SIP amounts annually by 10-15% instead of 30% to maintain consistency and reduce the risk of overcommitting.
Fund Selection:
Large Cap: Consider adding a large-cap fund for stability.
Diversified: Add a multicap or flexi-cap fund for broader market exposure.
Lump Sum Investments: Continue with lump sum investments based on performance, but avoid high-risk strategies. Ensure proper research before investing.
Review and Rebalance: Regularly review your portfolio and rebalance if required to align with your financial goals and risk tolerance.
Consider consulting with a Certified Financial Planner for personalized advice tailored to your financial goals and risk profile.

Ans: Firstly, congratulations on diversifying your investments across various mutual funds. You’ve made a commendable effort to invest systematically, both through SIPs and lump sum. Your commitment to securing your financial future is truly impressive.

However, managing 21 different mutual funds can be overwhelming and counterproductive. It may lead to over-diversification, reducing the impact of potential gains and increasing complexity. Let’s explore how you can consolidate your portfolio into 5-6 high-quality schemes while maintaining a balanced and effective investment strategy.

Assessing Your Investment Objectives
Before streamlining your portfolio, let’s understand your investment goals. These goals could include:

Long-Term Growth:

Building wealth over a long period, focusing on high-growth potential.
Tax Saving:

Reducing tax liability while investing, typically through ELSS funds.
Balanced Approach:

Combining stability and growth through a mix of equity and debt.
Sectoral Exposure:

Investing in specific sectors to leverage industry-specific growth.
Capital Preservation:

Minimizing risk and preserving capital while generating modest returns.
Each of your existing funds might align with one or more of these objectives. It’s essential to retain funds that best fit your primary goals.

Understanding Over-Diversification
Having too many funds can dilute the benefits of diversification. Here’s why over-diversification may not be beneficial:

Redundancy:

Multiple funds may hold similar stocks, leading to overlapping portfolios and reduced diversification benefits.
Complex Management:

Tracking and managing numerous funds is time-consuming and can complicate performance evaluation.
Diminished Returns:

Spreading investments too thin can lead to average performance, as high-performing funds’ impact gets diluted.
To avoid these issues, it’s wise to focus on a select few, well-performing funds that align with your investment strategy.

Categorizing Your Existing Funds
Let’s categorize your 21 funds based on their types and focus areas. This will help in identifying redundancy and areas to consolidate.

Equity Funds:

Focus on growth through investments in stocks.
Debt and Balanced Funds:

Aim for stability and regular income by investing in a mix of equity and debt.
Tax-Saving Funds (ELSS):

Provide tax benefits under Section 80C along with growth potential.
Sectoral and Thematic Funds:

Invest in specific sectors or themes to leverage industry growth.
Identifying Redundant Funds
By comparing funds within each category, we can pinpoint overlapping investments. Here’s how we categorize your existing funds:

Equity Funds:

Aditya Birla Sun Life Flexicap Fund, Canara Robeco Bluechip Equity Fund, ICICI Prudential Bluechip Fund, IDFC Sterling Value Fund, Kotak Multicap Fund, Kotak Small Cap Fund, Parag Parikh Flexicap Fund, PGIM India Flexicap Fund, PGIM India Midcap Opportunities Fund, Sundaram Select Midcap - Regular Plan.
Balanced and Debt Funds:

Nippon India Balanced Advantage Fund, IDFC Dynamic Equity Fund.
Tax-Saving Funds (ELSS):

Axis ELSS Tax Saver Fund, HDFC Tax Saver - Regular Plan, ICICI Prudential Long Term Equity - Tax Saving Fund, Mirae Asset ELSS Tax Saver Fund, Nippon India Tax Saver - ELSS Fund.
Sectoral/Thematic Funds:

Aditya Birla Sun Life Digital India Fund, ICICI Prudential Commodities Fund, Nippon India Value Fund, Kotak Emerging Equity Scheme.
Selecting 5-6 Core Funds
To streamline your portfolio, choose funds that offer:

Diversification Across Market Caps:

Include large-cap, mid-cap, and small-cap exposure.
Sectoral and Geographical Diversification:

Ensure a mix of sectors and international exposure, if possible.
Balanced Risk and Return:

A combination of high growth and stable funds.
Based on these criteria, here’s a selection process for your core portfolio:

Equity Funds
Large-Cap Fund:

Choose a fund focusing on blue-chip companies for stability and consistent growth.
Flexi-Cap Fund:

Opt for a fund that invests across market caps based on opportunities.
Mid/Small Cap Fund:

Select a fund focusing on mid or small-cap stocks for higher growth potential.
Balanced Fund
Balanced Advantage Fund:
Retain a fund that adjusts the equity-debt mix dynamically based on market conditions for balanced risk and return.
Tax-Saving Fund (ELSS)
ELSS Fund:
Pick one ELSS fund that offers good historical performance and tax benefits.
Recommendations for Core Funds
Based on your existing investments and the criteria above, here are 5-6 funds to consider:

Large-Cap Fund:

ICICI Prudential Bluechip Fund: Offers exposure to large-cap companies, providing stability and steady growth.
Flexi-Cap Fund:

Kotak Flexi Cap Fund: Provides diversification across large, mid, and small-cap stocks, capturing market opportunities.
Mid/Small Cap Fund:

PGIM India Midcap Opportunities Fund: Focuses on mid-cap stocks with strong growth potential.
Balanced Advantage Fund:

Nippon India Balanced Advantage Fund: Balances risk and reward by adjusting equity-debt allocation dynamically.
ELSS Fund:

Mirae Asset Tax Saver Fund: Provides tax-saving benefits along with potential long-term growth.
Implementing the Switch
To transition smoothly:

Evaluate Performance:

Compare the past performance, risk metrics, and portfolio holdings of the selected funds.
Check Fund Objectives:

Ensure the new funds align with your financial goals and risk tolerance.
Plan the Switch:

Gradually switch your existing investments into the chosen core funds. Avoid large, sudden shifts to mitigate market timing risks.
Monitor and Adjust:

Regularly review your consolidated portfolio. Make adjustments as needed based on performance and changing goals.
Ensuring a Balanced Portfolio
After consolidating your portfolio, maintain a balanced approach:

Diversify Within the Funds:

Each selected fund should have a well-diversified portfolio across sectors and stocks.
Align with Goals:

Ensure your investments are aligned with your long-term goals, risk appetite, and financial plan.
Stay Informed:

Keep yourself updated on market trends and fund performance. This helps in making informed decisions.
Managing Risks and Returns
While reducing the number of schemes simplifies your portfolio, it’s essential to manage risks effectively:

Avoid Over-Concentration:

Ensure no single stock or sector dominates your portfolio.
Assess Risk Levels:

Consider the risk levels of each fund and how they fit into your overall risk tolerance.
Balance Growth and Stability:

Include funds that provide both growth and stability to cushion against market volatility.
Planning for the Long-Term
To ensure your investment strategy supports your long-term goals:

Focus on Consistency:

Choose funds with a consistent track record of performance across different market cycles.
Reinvest Dividends:

Opt for growth options to benefit from compounding returns over the long term.
Review Periodically:

Regularly review and rebalance your portfolio to stay aligned with your financial objectives.
Final Insights
Streamlining your mutual fund portfolio from 21 schemes to a focused selection is a wise move. Here’s a summary of your next steps:

Consolidate Smartly:

Choose a balanced mix of funds that provide diversification and align with your goals. Opt for stability in large-cap, growth in mid/small-cap, and balanced exposure.
Simplify Management:

Reducing the number of funds makes it easier to track performance, manage investments, and achieve desired outcomes.
Monitor Regularly:

Keep an eye on your consolidated portfolio. Adjust as needed to ensure it meets your long-term financial goals.
Seek Professional Advice:

If needed, consult a Certified Financial Planner to refine your strategy and ensure optimal fund selection.
By focusing on a streamlined, high-quality portfolio, you position yourself for better returns, easier management, and more peace of mind.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in