Look at your portfolio cohesively

By Morningstar |  25-03-19 | 

Morningstar recommends that readers consult their financial advisers. Below are just broad guidelines. You can view our fund analyst reports here and check performance of funds here.

I am 38-years old. For the past few months, I started investing in the following SIP's:

  • L&T India Value Fund: Rs 5,000
  • SBI Bluechip Fund: Rs 5,000
  • SBI SmallCap Fund: Rs 5,000
  • Tata Digital India Fund: Rs 5,000
  • L&T Midcap: Rs 10,000

- SS

Your current portfolio allocation:

  • Value Fund: 16.67%
  • Large Cap: 16.67%
  • Mid Cap: 33.33%
  • Small Cap: 16.67%
  • Sector – IT: 16.67%

Your portfolio has a huge skew towards mid and small cap stocks. We recommend reducing this exposure and increasing it to large-cap and multi-cap funds. Large-cap funds should form the core holding on an investor’s portfolio since they provide stability.

We recommend that you exit the technology fund. Ideally a sector/thematic fund should not be more than 5-10% of an investor portfolio and that too if they would like to express a specific view regarding a sector and are in position to take such a call, especially with respect to entry and exit. The other factor you must consider is that you work in the IT sector, so your variable pay/ stock options are linked to how the tech sector does. By investing into a technology fund, you further increase your dependence towards one sector.

14 days ultra short-term debt funds giving 19%+ rate of return. What are the risks?

- Arun Sawhney

The simple annualized return of debt funds over the short term can be misleading. Always consider the absolute returns of a fund for periods less than 1 year. Ultra Short Duration Funds maintain a duration between 3 to 6 months. They are ideal for an investment horizon up to 1 year.

Looking at the low interest rate two years back, I had invested almost 80% of my retirement corpus in ICICI Balance Fund. My average cost is around Rs 28. Please advise. I can hold for another 5 Years.

- N K Chandak

We are clueless regarding the constituents of your portfolio, but 80% into one single fund is not ideal. While ICICI Equity & Debt Fund (erstwhile ICICI Balanced Fund) is a well-managed strategy, it is important to note that the fund will invest between 65-80% of the portfolio into equities. Given that you’re a retiree, we would ask you to consider your risk-return profile and more importantly your liquidity needs. If you are relying on your investments to generate a regular income for monthly expenses, we would urge you to reallocate a significant portion of your portfolio towards fixed income funds (65%) where returns are less volatile, and the balance in equity (35%) for growth.

You can invest into a mix of Ultra Short Duration, Short Duration, Corporate Bond, Large Cap and Multi Cap funds.

I am 40 years old. I want to accumulate Rs 2 crore in 15 years. Please guide me to the appropriate funds and the amount required every month to achieve my goal. Can I do an SIP for my 13-year old child?

- Hitesh Sawlani

  • Corpus: 2 crore
  • Investment period: 15 years
  • Monthly SIP: Rs 40,000
  • Asset Allocation: Equity:Debt = 70:30
  • Fund Category Allocation: Large Cap/Multi Cap (40%), Mid cap (20%), Small Cap (10%), Short Duration/Corporate Bond (25%), Low duration (5%)
  • Yearly Increase in SIP: 10%

Yes, you can register a SIP for your child as a sole holder with you as the guardian.

I have been investing in SBI Bluechip and HDFC Hybrid Equity fund for the past 2 years. Which one must I stop?

- Subhadip

Both are well managed funds. SBI Bluechip is a large-cap oriented equity fund and has an excellent track record over the long term. HDFC Hybrid Equity invested 65-80% of the portfolio into equities with a large-cap bias and is an extremely well-managed strategy. Investing in equity can create significant wealth over the long run, but it is important for you to stay invested.

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Satyaranjan Nayak
Apr 13 2019 10:08 PM
I am 40 years old , my investment sips as...
1.mirae assets equity Rs.3000
2.mirae assets bluechip Rs.2000
3.sbi focused equity Rs.3000
4.reliance small cap Rs.2000
5.sbi small cap Rs.1000
6.sbi ultra short duration 3lk
Qn. How is my portfolio, asking for risk analysis
I can invest up to next 15 years
Goal. My retirement & son's study
Corpus. 50 lks
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