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Ramalingam Kalirajan |7101 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 07, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - May 07, 2024Hindi

I taken Quant small cap fund direct growth, quant flexi cap fund direct growth and motilol oswal midcap cap fund. I need good mutual funds for my portfolio. Which funds can I pick. If any funds better other than this I can shift to those mutual funds. I plan to take 1. small cap(Quant) 2. mid cap 3. flexi cap(Quant or flexi or both) 4. micro cap(Motilal oswal nifty microcap 250 index fund) Is this okay. 10+ years I'll hold mutual funds. Thank you in advance.

Ans: Building a diversified mutual fund portfolio is essential for long-term wealth accumulation. You've made a good start with your selections, but let's explore some additional options to enhance your portfolio:
1. Small Cap Fund (Quant): Quant Small Cap Fund has the potential for high growth but may also carry higher risk due to the nature of small-cap stocks. Since you already have exposure to this segment, it's wise to stick with it if you believe in its growth potential.
2. Mid Cap Fund (Motilal Oswal Midcap Fund): Mid-cap funds like Motilal Oswal Midcap Fund can offer a balance between growth potential and risk. It's a solid choice for diversification.
3. Flexi Cap Funds (Quant or Flexi or Both): Flexi-cap funds provide flexibility to invest across market capitalizations based on market conditions. Since you already have exposure to Quant Flexi Cap Fund, adding another solid performer in this category can further diversify your portfolio. Look for funds managed by experienced fund managers with a consistent track record of delivering returns.
4. Micro Cap Fund (Motilal Oswal Nifty Microcap 250 Index Fund): Micro-cap funds like Motilal Oswal Nifty Microcap 250 Index Fund can offer exposure to smaller companies with high growth potential. However, micro-cap stocks can be more volatile and risky. Ensure you have a long-term investment horizon and can tolerate fluctuations in this segment.
Considering your investment horizon of 10+ years, you have the advantage of riding out market volatility and benefiting from the potential growth of small and mid-cap companies. However, it's crucial to regularly review your portfolio's performance and make adjustments if necessary. Remember, investing through regular funds with the support of a Mutual Fund Distributor (MFD) can provide emotional support and guidance, especially during market downturns. Keep investing consistently and stay focused on your long-term goals. Good luck!

Asked on - May 07, 2024 | Answered on May 08, 2024

Thank you sir. I choosen Quant small cap fund, motilol mid cap fund and quant flexi cap fund. I plan to choose Motilal oswal nifty microcap 250 index fund. Generally how many funds should be needed for better growth. I already taken 3 funds. If its needed then I go for Motilal oswal nifty microcap 250 index fund otherwise I don't choose. In my portfolio any found is needed to shift then I'll shift. Please suggest me. I'm in confusion. Thank you in advance.

Ans: It's commendable that you're considering your investment portfolio and seeking guidance to make informed decisions. Let's address your concerns:
1. Number of Funds for Better Growth: The number of funds needed for better growth depends on various factors such as your investment goals, risk tolerance, and portfolio diversification. As you've already chosen three active funds (Quant Small Cap Fund, Motilal Oswal Mid Cap Fund, and Quant Flexi Cap Fund), you've established a diversified portfolio with exposure to different market segments. Adding more funds may not necessarily lead to better growth, as it could potentially increase complexity and overlap in your portfolio.
2. Considerations for Adding Motilal Oswal Nifty Microcap 250 Index Fund: While index funds offer low-cost exposure to market indices, they may not always outperform actively managed funds. One disadvantage of index funds is their inability to actively select stocks based on market conditions or company fundamentals, potentially limiting their ability to generate alpha (excess returns) compared to actively managed funds. Additionally, investing in a microcap index fund like Motilal Oswal Nifty Microcap 250 Index Fund may introduce higher risk due to the inherently volatile nature of microcap stocks. As such, it's essential to carefully evaluate the risk-return profile of this fund and consider whether it aligns with your investment objectives and risk tolerance.
3. Reviewing and Shifting Funds: Periodically reviewing your investment portfolio is crucial to ensure it remains aligned with your financial goals and risk tolerance. If you're considering adding or shifting funds, evaluate each fund's performance, consistency, and fund manager track record. If any fund consistently underperforms or deviates from its investment mandate, it may be prudent to consider replacing it with a better-performing alternative. However, avoid making frequent changes to your portfolio based on short-term market fluctuations, as this can disrupt your long-term investment strategy.
Ultimately, the decision to add Motilal Oswal Nifty Microcap 250 Index Fund or make any changes to your portfolio should be based on a thorough assessment of your investment goals, risk tolerance, and the merits of the available investment options. Consider seeking advice from a Certified Financial Planner (CFP) or financial advisor who can provide personalized guidance based on your specific financial situation and objectives. Remember to stay focused on your long-term investment strategy and avoid making impulsive decisions based on market noise or external factors.

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