Hi Sir need ur help in reviewing my portfolio for long term15-20 years. Axis bluechip-5000 stepup10 % every year. Samco flexi cap-5000 Paragah parik flexi cap-3000 stepup 10 % every year Axis midxap-2000 Pgim India midcap opportunities...

Ans: Your SIP plan shows thoughtful diversification. You’ve selected a variety of fund categories. That’s a very good starting point. You have made the effort to start early with long-term goals. And you’re consistent across market segments. Let’s now assess your mutual fund portfolio thoroughly.

» Portfolio Composition and Allocation

– You are investing Rs. 6,500 per month across six funds.
– You have included large cap, mid cap, small cap, and flexi cap funds.
– Allocation is well spread but can be more focused.
– Monthly SIP amounts are relatively small but consistent.
– As your income grows, step up SIPs regularly by 10-15% annually.
– You have 2 small cap funds and 2 mid cap funds. That is too much overlap.

» Assessment of Large Cap Exposure

– One fund is in the large cap space.
– Large caps offer stability in the portfolio.
– Allocation of Rs. 1,500 is around 23% of your SIP.
– This is decent for now, but can be increased slowly.
– Large caps are less volatile and can act as a cushion in down markets.

» Evaluation of Mid Cap Exposure

– You have chosen two mid cap funds.
– Rs. 2,000 goes to mid cap category every month.
– Mid caps offer growth but are more volatile than large caps.
– Duplication in mid cap funds may cause redundancy.
– One well-managed mid cap fund is enough.
– Having two mid cap funds with similar strategy is unnecessary.

» Review of Small Cap Allocation

– Two small cap funds make up Rs. 2,000 SIP.
– This is a high-risk-high-reward segment.
– Too much small cap exposure increases volatility.
– For a conservative long-term approach, one small cap is enough.
– Small caps fall more in bear markets.
– Consider gradually reducing exposure to one fund only.

» Flexi Cap Fund Role in Your Plan

– You’ve added one flexi cap fund with Rs. 1,000 SIP.
– These funds allow fund managers to invest across categories.
– This adds balance and flexibility to the portfolio.
– Continue this allocation and consider increasing over time.
– Flexi caps can adjust based on market conditions.
– They support both stability and growth.

» Overlap and Redundancy Concerns

– Having six funds with Rs. 1,000 to Rs. 1,500 each creates unnecessary spread.
– This causes duplication in underlying stocks.
– Multiple mid cap and small cap funds will have same holdings.
– Excess diversification reduces overall impact.
– Fewer but stronger funds perform better in long run.
– 3 to 4 carefully chosen funds are enough at this stage.

» Suggestion on Streamlining Portfolio

– Keep one each from large, mid, small, and flexi cap.
– Exit one mid cap and one small cap fund after checking 3-year performance.
– Stick to consistent performing funds, not recent winners.
– Avoid theme-based or momentum-style funds.

» Long-Term Suitability and Growth Potential

– Your 15 to 20-year horizon allows compounding to work.
– Equity funds are suitable for such a timeframe.
– You may see market ups and downs, stay invested.
– Long-term SIPs in good funds beat most fixed-income returns.
– Patience is the key in equity investing.

» Step-Up SIP and Top-Up Advice

– Your current SIP total is Rs. 6,500.
– If possible, increase it by Rs. 500 to Rs. 1,000 each year.
– Use bonuses or increments to top-up.
– Regular step-up builds a larger corpus with minimal pain.

» On Choosing Between Direct and Regular Plans

– All your funds are direct plans.
– Direct plans seem cheaper due to lower expense ratio.
– But you miss personalised advice and periodic rebalancing.
– Monitoring fund performance needs skill and time.
– Mistakes in fund choice or timing can erode gains.
– A regular plan through a qualified CFP and MFD adds guidance.
– CFPs bring deep analysis, strategy, and handholding in downturns.
– They also suggest fund switches and portfolio consolidation when required.
– With MFD, you can track everything in one place.
– You’ll save more by avoiding wrong decisions than the 1% fee.

» Taxation Understanding for Long-Term Equity SIPs

– As per new rule, LTCG above Rs. 1.25 lakh taxed at 12.5%.
– STCG taxed at 20%.
– Equity SIPs become long term after 1 year holding.
– Plan redemptions strategically to reduce tax.
– Do not withdraw all at once. Use staggered exit.
– Tax planning should be part of long-term SIP journey.

» Additional Suggestions to Make Portfolio Stronger

– Have 1 emergency fund worth 6 months’ expenses in liquid or overnight fund.
– Ensure adequate term insurance based on income.
– Take separate health cover apart from employer’s policy.
– Avoid investing in traditional insurance or ULIP plans.
– Review your funds once a year, not more.
– Don’t stop SIPs during market crash; continue or increase if possible.
– Set clear goals like retirement, house, or child education.
– Link SIPs to those goals and track progress every year.

» Behavioral Discipline and Emotional Control

– Stay calm during market falls.
– Don’t switch funds based on short-term returns.
– Don’t compare funds monthly.
– Don’t try to time the market.
– SIP works because it removes emotion.
– Stay focused on long-term growth, not monthly NAV.

» Final Insights

– You have done a great job starting early.
– You’ve picked decent funds from all major categories.
– Too many similar funds will not give extra return.
– Simplify your plan with 3 or 4 funds max.
– Consider regular plans with CFP guidance for better strategy.
– Stay invested, review yearly, and keep increasing SIP.
– Over 15 to 20 years, this approach can build significant wealth.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment