It is good to see many investors take a long-term investment horizon, which is an absolute must while investing in equities. Not only does it help you to tide over volatility, it also helps you take a more aggressive position in your portfolio allocations. Investments in equity-oriented funds must be made with a long-term investment horizon, preferably not less than 5 years.
It is also good to see that many investors have opted for the SIP route, which is convenient and beneficial.
With a 15-year horizon for SIPs, how does my portfolio look?
- SBI Bluechip: Rs 2,000
- Mirae Asset India Equity: Rs 1,000
- BSL Equity: Rs 1,000
- L&T Emerging Businesses: Rs 2,000
- ICICI Pru B&FS: Rs 2,000
- Franklin India Prima: Rs 2,000
- DSPBR Small Cap: Rs 1,000
- Franklin India Smaller Companies: Rs 1,000
- Rajesh
You have 50% of your investment in small and mid-cap funds and another 16.7% in a sector fund. This is fine as you have a 15-year horizon, but do remember that it will bring in additional volatility in the short term. So be prepared to weather that.
Debt is absent in your portfolio. If you do have allocation into fixed income through other investments then its fine, but otherwise we would urge you to create some space for a couple of fixed income funds. This is specifically helpful for liquidity as well as diversification reasons. A 10-15% allocation in your portfolio should be sufficient.
Your fund selection is good. We don’t see a need to reallocate any of your funds as they are well managed strategies and fit in quite well with your time horizon.
You can read our analysts’ views on selected funds:
These are my SIPs over the past 3 years and an investment horizon of 15 years.
- Motilal Oswal Long Term Equity: Rs 5,000
- IDFC Tax Advantage: Rs 3,500
- Franklin Focused Equity: Rs 3,000
- Franklin Smaller Companies: Rs 2,000
- L&T Midcap: Rs 3,000
For Medium and short term goals
- HDFC Balanced: Rs 5,000
- Franklin Ultra short term bond: Rs 3,000
- Abhishek
Great job in making regular investments through SIPs and also having a long-term investment horizon; good tenets of an equity investor.
The funds that you have chosen are good options and we don’t see a need to change any of those.
Do increase your allocation towards small & mid cap funds, since you have just 20% exposure to them and your horizon is 15 years. If you don’t mind taking some additional risk, increase that to 30-35%. While these funds can be volatile in the short run, they are excellent wealth creators over the long term. You can either add more positions to your existing funds (Franklin Smaller Companies and L&T MidCap) or you can refer to this link to pick additional fund options.
You can read our analysts’ views on selected funds:
Please review my portfolio
- UTI Nifty NEXT: Rs 50-5K
- Reliance Small Cap: 2.5K
- L&T Emerging Businesses: 2.5K
- Invesco India Contra: 5K
- Axis Focused: 25-5K
- Sivaprasad
The total investment in your portfolio reflects a 25% allocation towards a Large cap index fund (UTI Nifty Next 50), a 25% allocation towards two small cap funds (Reliance Small Cap and L&T Emerging Business Fund, a 25% allocation towards a contra fund (Invesco India Contra Fund) and another 25% allocation towards a focused fund that follows a concentrated approach (Axis Focused 25 Fund).
If you are a high-risk taker, this strategy might work fine, but the ideal way to invest would be to diversify your portfolio across equity and debt schemes. For an aggressive portfolio we would recommend a 75% exposure to equity and 25% in debt schemes. Within equity schemes, the we would recommend diversifying across large cap, mid cap and small cap funds based on your risk appetite, return expectations and investment horizon.
Typically, contra funds may not work in a momentum driven market and you should be prepared to deal with the volatility that comes with investing in these types of funds. It is also important to understand how the fund manager defines and identifies contrarian ideas, especially in a market that’s witnessing a continuous uptrend. Focused funds are a great choice if you want to diversify your portfolio further. Do keep in mind that focused funds run a concentrated approach and tan take sizeable bets in a single stock. So this could also lead to some volatility, especially when their top holdings are impacted negatively.
Debt is absent in your portfolio. If you do have allocation into fixed income through other investments then its fine, but otherwise we would urge you to create some space for a couple of fixed income funds. This is specifically helpful for liquidity as well as diversification reasons.
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