Recently I have started putting money randomly into MFs w/o much guidance and study.

These are the current active MF(s):

• Tata Digital India Fund Direct Growth -- 7500
• ICICI Prudential Nifty Smallcap 250 Index Fund Direct -- 5000
• SBI Ret Benefit Fund Aggressive Plan Direct Growth -- 5000
• Axis Nifty smallcap 50 Index Fund Direct Growth -- 5000
• Parag Parikh Tax Saver Fund Direct Growth -- 5000
• Motilal Oswal Nasdaq 100 FOF Direct Growth -- 2500
• ICICI Pru US Bluechip Equity Direct Plan Growth -- 5000
• Edelweiss Greater China Equity Offshore Direct G -- 2500
• ABirla Sunlife Nifty 50 Equal Weight Index Direct G -- 7000
• Axis Gold Direct Plan Growth -- 5000
• ICICI Pru S&P BSE Sensex Index Fund Direct Growth -- 7000
• ICICI Pru Pharma Healthcare and Diag Fund Direct G -- 4000
• Quant Infrastructure Fund Direct Growth -- 5000
• Invesco India Infrastrucuture Fund Direct Growth -- 5000
• Parag Parikh Flexi Cap Fund Direct Growth -- 5000
• Aditya Birla Sunlife Tax Relief 96 Growth -- 3000
• DSP Tax Saver Fund Regular Plan Growth -- 3000
• Aditya Birla Sunlife Pure Value Fund Growth -- 3000
• HDFC smallcap Fund Regular Growth -- 3000
• Aditya Sunlife MNC Fund Growth -- 3000

Most of above funds I have been running for minimum 2 year now, a few for more than 5 years.

I have been managing the money for short term goals, but the long term goal from these investments is to have surplus for retirement and medical emergency in future.

Please suggest the correction and guidance to manage the portfolio.

Ans: Too many funds; please continue with 1, 3, 4, 5 and 11.

Keep the lumpsums invested.

Ans: Too many funds for any meaningful long-term outperformance.

Continue with Tata large and mid-cap, SBI Focused Equity Fund, Axis Bluechip Growth Fund, Canara Emerging, Mirae Emerging,

Ans: This is fine; we can review it post 1 year

Ans: Your MF portfolio is diversified across large-cap, mid-cap, small-cap, gold, and index funds, which is good. However, it leans heavily towards small and mid-cap funds, which are riskier. Consider rebalancing to include more large-cap or balanced funds to reduce risk. To aim for 5 crores in 15 years, you'd need an annualized return of approximately 12-15%, which is ambitious but not impossible given market history. A Certified Financial Planner can help optimize your portfolio for this goal.

Transferring 10 lacs from FD to MFs could potentially yield higher returns over the long term, but ensure you maintain an emergency fund. Keeping 10 lacs in FD for emergencies is prudent. Consult a Certified Financial Planner for personalized advice tailored to your needs and goals.

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