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Investing Advice: How can I improve my investment portfolio?

Ramalingam

Ramalingam Kalirajan  |9407 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 04, 2025

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 - Feb 01, 2025Hindi
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hi team, thank you for guiding on verious queries my current portfolio is distributed as below, can you please suggest for better improvement. Index funds 43.93% mid-cap 21.9% large & mid-cap 11.78% flexi cap 9.08% large-cap 7.07% sector technology 5.61% elss (tax savings) 0.3% global other 0%

Ans: Your portfolio has a good mix of equity funds. You have diversified across market caps. However, there is room for improvement. A structured approach can enhance returns and reduce risks.

Strengths of Your Portfolio
You have a strong allocation to mid-cap and flexi-cap funds. These have high growth potential.

Large-cap funds provide stability in your portfolio.

A sectoral fund can give additional growth in specific market cycles.

ELSS investment provides tax benefits. Even though allocation is low, it helps in tax savings.

Areas for Improvement
High Exposure to Index Funds
Index funds make up 43.93% of your portfolio. This is too high.

Index funds do not outperform the market. They only match it.

Actively managed funds give better returns over time.

Fund managers adjust holdings based on market trends. Index funds lack this flexibility.

Reducing index fund allocation can help improve returns.

Mid-Cap and Large & Mid-Cap Allocation
Mid-cap funds are 21.9% of your portfolio.

Large & mid-cap funds are 11.78%. This combination gives good growth.

These funds need long-term holding for better returns.

You can continue holding them, but periodic review is necessary.

Low Allocation to Large-Cap Funds
Large-cap funds are only 7.07%.

Large-cap stocks provide stability in downturns.

You may increase allocation to maintain a balanced portfolio.

Sectoral Fund Allocation
Technology sector fund is 5.61%.

Sectoral funds are high-risk. They perform well only in certain cycles.

If technology sector underperforms, it can drag your returns down.

Reducing exposure may help in risk management.

No Allocation to International Funds
Your portfolio has 0% in global funds.

International funds provide geographic diversification.

This helps in reducing risk from local market downturns.

A small allocation to international funds is recommended.

Suggested Portfolio Rebalancing
Reduce index fund exposure. Shift to actively managed funds.

Maintain mid-cap and flexi-cap allocations for long-term growth.

Increase large-cap allocation for better stability.

Reduce sectoral exposure to manage risk.

Add a small portion to international funds for diversification.

Risk Management and Portfolio Review
Equity investments need long-term commitment.

Review your portfolio every six months.

Rebalance if any fund underperforms consistently.

Ensure you have adequate health insurance for financial security.

Finally
Your portfolio is structured well, but small changes can improve returns.

Reducing index funds will enhance growth potential.

A better mix of large-cap and global funds can reduce risks.

Keep reviewing your investments and adjusting as needed.

A disciplined approach will help you achieve long-term financial goals.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |9407 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 11, 2024

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Hi, Can you please give feedback on my portfolio and advise on changes that could be worth considering? My horizon is 10+ years. Below are the SIPs (Monthly) Parag Parikh FlexiCap fund - Rs. 51,000/- Nippon India Multi Cap fund - Rs. 40,000/- Mirae Asset Large & Mid Cap fund - Rs. 25,000/- Mirae Asset Aggressive Hybrid Fund - Rs. 50,000/- Thanks, Sridhar
Ans: Feedback on your Mutual Fund Portfolio (10+ year horizon)
Strengths:

Diversification: Your portfolio has good diversification across asset classes with a mix of flexi-cap, multi-cap, large & mid-cap funds, and an aggressive hybrid fund. This helps spread risk and capture growth from different market segments.
Long-term Focus: A 10+ year horizon allows you to ride out market fluctuations and benefit from potential long-term growth in equities.
Areas for Potential Improvement:

Equity Weightage: Your portfolio has a significant allocation (around 70%) towards aggressive equity funds (Parag Parikh Flexi Cap, Nippon India Multi Cap, Mirae Asset Large & Mid Cap). While this can be good for growth potential, it also carries higher risk.
Debt Allocation: Consider including a dedicated debt fund to balance your portfolio and provide stability. This is especially important as you near retirement.
Aggressive Hybrid Fund: The Mirae Asset Aggressive Hybrid Fund invests in a mix of equity and debt. While it provides some stability, it might not offer the same growth potential as your pure equity funds. Consider if this aligns with your risk tolerance.
Recommendations (consult a CFP for personalized advice):

Review Asset Allocation: Analyze your risk tolerance and adjust your equity-debt ratio. A 10-year horizon allows for a more aggressive allocation, but consider adding a debt fund for stability (10-20% of your portfolio).

Evaluate Aggressive Hybrid Fund: Decide if the Mirae Asset Aggressive Hybrid Fund aligns with your goals. You could consider replacing it with a pure equity fund for potentially higher growth, or a more conservative hybrid fund for more stability.

Review Fund Performance: While diversification is good, monitor the performance of each fund within your portfolio. If a fund consistently underperforms its peers, consider replacing it with a better performing option.

Overall, your portfolio has a good foundation for a long-term investment strategy. Consulting a Certified Financial Planner (CFP) can provide a more personalized assessment and recommendations based on your specific financial goals and risk tolerance.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Ramalingam

Ramalingam Kalirajan  |9407 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Dec 03, 2024

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Subject: Portfolio Review Request Hello Sir, I am a 29-year-old male and a beginner in mutual fund investing. I have created a portfolio of seven funds, considering an investment horizon of 30 years. My preferred allocation to large-cap, mid-cap, and small-cap funds is 30%, 35%, and 35%, respectively. My portfolio details are as follows: Monthly SIP: ?24,000 Tata Nifty 200 Alpha 30 Index Fund: ?2,000 Parag Parikh Flexicap Fund: ?3,000 Kotak Multicap Fund: ?3,000 Quant Midcap Fund: ?4,000 Motilal Oswal Midcap Fund: ?4,000 Tata Smallcap Fund: ?5,000 Bank of India Smallcap Fund: ?3,000 Kindly review my portfolio and advise if any changes are required. Thank you in advance! Best regards, Abhishek
Ans: Your portfolio reflects a thoughtful approach to diversification. As a beginner, focusing on equity funds is excellent for long-term wealth creation. Let us assess and refine your portfolio for better alignment with your goals.

Review of Your Current Portfolio
Strengths
Clear Asset Allocation: Allocating 30% to large-cap, 35% to mid-cap, and 35% to small-cap is commendable.
Equity-Focused Approach: A diversified equity portfolio suits a 30-year horizon.
Regular SIPs: Systematic investing ensures discipline and reduces market timing risks.
Areas of Improvement
Overlapping Exposure: Multiple funds in the same category could lead to redundancy.
Excessive Small-Cap Allocation: Small-caps have higher risk, which might not be sustainable.
Index Fund Inclusion: Actively managed funds often outperform index funds in Indian markets.
Detailed Fund Category Analysis
Large-Cap Allocation (30%)
Your current allocation here is less diversified. Large-cap funds offer stability and steady growth.
Active large-cap funds outperform indices during volatile phases. Consider shifting from index to an active fund.
Mid-Cap Allocation (35%)
You have allocated a significant portion to mid-caps, which is suitable for higher growth potential.
However, holding multiple mid-cap funds might create overlapping portfolios. Consider consolidating.
Small-Cap Allocation (35%)
Small-cap funds add growth potential but carry higher risks.
A 35% allocation to small-caps is aggressive. Reducing this to 25% is advisable for better balance.
Suggestions for Portfolio Restructuring
Reduce Fund Overlap
Multiple funds in the same category create unnecessary duplication.
Consolidate mid-cap and small-cap funds to avoid excessive diversification.
Adjust Asset Allocation
Large-Cap Funds: Increase allocation to 40% for stability and predictable returns.
Mid-Cap Funds: Retain 30% allocation for balanced growth.
Small-Cap Funds: Reduce to 25% to lower volatility.
Consider Actively Managed Funds
Index funds like the Nifty 200 Alpha Index Fund lack the flexibility of active management.
Actively managed funds can outperform due to dynamic allocation strategies.
Opt for Regular Plans with a Certified Financial Planner
Direct funds may appear cost-effective but lack guided expertise.
Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner ensures better fund selection.
Tax Efficiency and Withdrawal Planning
Tax Implications of Equity Funds
Long-term capital gains above Rs 1.25 lakh are taxed at 12.5%.
Short-term capital gains are taxed at 20%.
Plan redemptions to minimise tax liability over the years.
Align SIPs with Long-Term Goals
Review portfolio performance every 3-5 years.
Redirect SIPs to outperforming funds or categories as required.
Best Practices for a 30-Year Investment Journey
Stay Disciplined
Continue SIPs regardless of market fluctuations.
Avoid panic selling during market corrections.
Periodic Portfolio Review
Evaluate fund performance every 1-2 years.
Ensure funds meet your expectations and long-term goals.
Build an Emergency Fund
Set aside 6-12 months’ expenses in a liquid fund.
This will safeguard your equity investments during financial emergencies.
Final Insights
Your portfolio demonstrates a great start for wealth creation. With minor adjustments, it can perform better over the next three decades. Focus on reducing redundancy, increasing large-cap exposure, and leveraging active management. Stay committed, review periodically, and seek guidance from a Certified Financial Planner.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

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

..Read more

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I have got amrita blr campus eee, 9814 rank in comedk. I might get CSD in DSCE or any other branch through comedk. My hs is WB soni might take admission in cse in techno mains . What should i choose?
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recommendation
Given assured admission, strong EEE infrastructure, and higher placement stability, recommendation is Amrita Bengaluru EEE. If you prioritize core CS specialization in design and AI, pursue Techno India Kolkata CSE (AI & ML). Avoid DSCE CSD due to rank constraints. All the BEST for Admission & a Prosperous Future!

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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