I have nearly 2000 units of UTI mid cap fund. I want to transfer 300 units to UTI new NFO OFFER uTI BSE S&P HOUSING INDEX FUND. ISIT ADVISABLE?

Ans: It's essential to assess whether such a transfer aligns with your investment goals, risk tolerance, and overall portfolio strategy.

Transferring units from a mid-cap fund to a thematic fund focused on the housing index could significantly alter the risk profile of your portfolio. Thematic funds tend to be riskier due to their concentrated exposure to specific sectors or themes.

Before making this decision, consider the following:

Investment Goals: Determine if exposure to the housing sector aligns with your investment objectives and if you're comfortable with the associated risks.

Risk Tolerance: Assess whether you're prepared for the potentially higher volatility and fluctuations in returns that come with thematic investing.

Diversification: Evaluate how this transfer would impact the diversification of your portfolio. Ensure that your overall portfolio remains well-diversified across different asset classes and sectors.

Performance Outlook: Research the housing sector's performance outlook and consider whether you believe it will outperform the mid-cap segment in the future.

Tax Implications: Consider any tax implications of selling units from the mid-cap fund, such as capital gains taxes.

Professional Advice: If unsure, seek advice from a financial advisor who can provide personalized guidance based on your financial situation and objectives.

Ultimately, the decision should be based on a comprehensive analysis of your investment strategy and the specific characteristics of each fund involved.

Ans: Hello Vaman and thanks for writing to me. UTI Mid Cap Fund is an active fund and invests across multiple sectors while UTI S&P BSE Index Housing Fund is a passive fund and invests as per the composition of the index.

You need to keep in mind that the performance of the index will depend upon the performance of the housing sector and then take a decision on whether you wish to switch from the Mid Cap fund to the BSE Index Housing Fund.

Ans: It's excellent that you're investing in mutual funds through SIPs and lump-sum investments, which can help you build wealth over the long term. Let's assess your current portfolio and see if any reallocation is needed.

Your portfolio consists of a mix of actively managed funds and index funds, covering different market segments like contra, small-cap, and flexi-cap. This diversification is good, but it's essential to periodically review and rebalance your portfolio to ensure it remains aligned with your financial goals and risk tolerance.

Firstly, let's evaluate your actively managed funds. SBI Contra Fund, Quantum Small Cap Fund, and SBI Small Cap Fund are actively managed funds with varying investment strategies. It's crucial to monitor their performance and ensure they continue to meet your expectations. If any of these funds consistently underperform or deviate from their investment mandate, you may consider reallocating your investments to better-performing alternatives within the same category.

Regarding your lump-sum investments, Parag Parikh Flexi Cap Fund is known for its diversified approach across market caps and sectors, providing flexibility and potential for growth. However, it's essential to review its performance periodically to ensure it continues to deliver results.

Nippon India Nifty Small Cap 250 Index Fund and SBI Nifty Small Cap 250 Index Fund are passive funds tracking the Nifty Small Cap 250 Index. While index funds offer low-cost exposure to specific market segments, they may not outperform actively managed funds consistently. However, they provide diversification and can be a valuable component of a well-rounded portfolio.

There are some advantages to consider direct funds, and the cost savings can be significant in the long run. However, there are some potential benefits to using a regular MFD:
Advantages of Investing Through a Mutual Fund Distributor (MFD):
• Personalized Advice: MFDs can be helpful for beginners or those who lack investment knowledge. They can assess your risk tolerance, financial goals, and investment horizon to recommend suitable mutual funds. This personalized guidance can be valuable, especially if you're new to investing.
• Convenience: MFDs handle all the paperwork and transactions on your behalf, saving you time and effort. They can help with account setup, SIP registrations, and managing your portfolio across different funds.
• Investor Support: MFDs can be a point of contact for any questions or concerns you may have about your investments. They can provide ongoing support and guidance throughout your investment journey.

Consider your investment goals, risk tolerance, and time horizon when evaluating the need for reallocation. If any fund significantly underperforms or if your financial circumstances change, you may need to rebalance your portfolio accordingly.

It's advisable to consult with a Certified Financial Planner who can provide personalized advice based on your specific financial situation and goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: If your horizon is 5+ years from here onwards then I feel you should stay invested in the current fund(Mirae Asset Large and Midcap fund).

You may think about migration if your targeted time horizon is close. If this is so then you may consider transfer as proposed.

You may use partial profit to clear the LTCG liability incurred due to this transfer.