A portfolio overview

By Morningstar |  29-06-18 | 

This is my portfolio. I am 33 years old. I am a very conservative investor. My investment horizon is 15 years. These are my monthly SIPs which total Rs 40,000.

  • SBI Magnum Multicap: Rs 7,000
  • Motilal Oswal Multicap 35: Rs 7,000
  • Mirae Asset India Equity: Rs 9,000
  • HDFC Hybrid Equity: Rs 9,000
  • Canara Robeco Emerging Equities Fund: Rs 5,000
  • Motilal Oswal MOSt Focused Long Term: Rs 3,000

 - Bikramji

While constructing a portfolio, the asset allocation mix (the mix of various assets such as equity, debt and gold) is considered as one of the key determinants of the portfolio’s performance in terms of its risk and return. A suitable asset allocation is typically based on one’s investment horizon, risk appetite and investment goal. Generally, longer the investment horizon and higher the risk appetite, higher would be the allocation to equity. For example, if the investment horizon is 10 years or above and risk profile is Aggressive, then 70% to 80% of the investment portfolio could be allocated to equity and 20% to 30% to debt. Given your age and a longer investment horizon, it is advisable that you consult a financial adviser to ascertain your risk profile, based on your risk tolerance and risk-taking ability.

You have stated that your risk profile is Conservative, which means the allocation to debt funds would be more than that to equity funds. Allocation to equity funds can be in the range of 20% - 30% and 70% - 80% of the portfolio can be in debt funds.

You will then have to decide the exposure to the type of equity funds and debt funds.

Up to 5% of the portfolio can be invested in gold instruments (Gold ETF, Gold Fund of Funds). In case you hold other debt investments in the form of fixed deposits, provident fund and PPF, then they would be part of the overall debt portion of your portfolio.

When selecting funds, it is advisable to consider their performance over at least the previous 3 to 5 years. This along with studying calendar-wise performance vis-à-vis benchmark indices and peer group would indicate consistency across time frames and market cycles. Additionally, you could consider the fund’s AUM (AUM should be greater than Rs 500 crore.) and period of existence (longer the better).

To evaluate mutual funds across categories, one can look at Morningstar’s star ratings and analyst ratings for funds.

One should consult his/her financial adviser before making investment in mutual funds.

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