Investing a lumpsum in an existing portfolio

By Morningstar |  12-07-19 | 
 

I am 68 years, negligible other income. I don't have any liabilities either. My portfolio is:

  • ₹30L - SBI Bluechip
  • ₹30L - Reliance Large Cap
  • ₹30L - Kotak Standard Multicap
  • ₹18 L - L&T India Value Fund
  • ₹20L - Motilal Oswal Multicap 35
  • ₹ 13L - L&T Infrastructure
  • ₹90L - debt funds, bank FDs

- Mohan

Your portfolio picks appear to fairly strong funds and adequately diversified. Is there a specific reason why you have invested in a thematic (infrastructure) fund though? We have a positive rating on most of the funds that you hold and rate these funds quite highly. Having said that we would urge you to think about portfolio allocation a little more. You are currently investing around 61% of your portfolio in equity related funds and remaining in debt and fixed deposits. Given that you are retired, a slightly lower risk strategy with an allocation of around 30-40% to equity and the remaining in debt would be ideal. Having said that, if you are investing with a specific goal in mind that drives your asset allocation pattern, do discuss this with an investment expert of your wealth adviser.

Read our analyst views here.

Here's my aggressive portfolio.  

  • ₹2,500--SBI Small Cap
  • ₹1,500--L&T Midcap
  • ₹500--Reliance Income Fund
  • ₹500--Reliance Equity Hybrid

- Shashi

Your asset allocation seems to be in line with your aggressive portfolio. However, we would also urge you to hold some amount in large cap funds, given that it will help diversify your portfolio and provide a safety net. Do also take into consideration your expected returns and use a SIP calculator in order to figure out the optimum amount of investments that you will need to make in order to achieve your investing goals.

Please find a link to Morningstar’s SIP calculator here.

I am a 32-year old aggressive investor with a horizon of 20 years. My portfolio:

  • ₹7 lakh: NPS in aggressive schemes with HDFC PMC
  • ₹ 1 lakh: Fixed deposit
  • ₹ 1 lakh: Cash
  • ₹ 3 lakh: Axis Long Term Equity
  • ₹ 1 lakh: ABSL TR96
  • ₹ 1 lakh: IDFC TAX

SIP Portfolio consists: HDFC Small cap, SBI small cap, L&T mid cap, Mirae Asset Emerging Bluechip, Kotak Multicap, Mirae Asset Hybrid Equity fund (4K each), Mirae Tax saver (2k).

- Anil

NPS is a government sponsored scheme and allows tax deduction under Section 80 CCD but investors can withdraw investments only at the time of retirement at 60.

Investment in ELSS qualifies for tax deduction under Section 80C.

You can see our analyst’s views on Axis Long Term Equity here.

Most of your investments are in small and mid-cap funds. They are excellent wealth creators over the long term, but also can be quite volatile in the short term. But if you do indeed have a long-term horizon, they can serve you well.

Do add a large-cap fund to your portfolio. Large cap funds should ideally form the core holding of any investors portfolio. While they may not be huge wealth creators such as small/Mid cap funds, from an asset allocation perspective, large cap funds add an element of stability to portfolios.

You can find a list of highly rated Large Cap funds here.

I am 30 years old. I started investing in mutual funds couple of months back for wealth creation. My investment period is till I retire.

  • ₹2K - Mirae Asset Large Cap
  • ₹1K - Mirae Asset Emerging Bluechip
  • ₹ 1K - Kotak Standard Multi Cap
  • ₹ 1K - ICICI Prudential Banking and Financial
  • ₹ 1K - L&T Midcap
  • ₹ 1K - SBI Small Cap

- Nandakishore

Mirae Asset Large Cap is an outstanding fund managed by Neleesh Surana. We have a lot of comfort around the manager and his research-intensive investment approach. The fund has a well-considered process, which has resulted in an above average performance, a trend we expect to endure. The fund witnessed change in the category but it not much of a concern given the fund’s historical large-cap tilt.

Mirae Asset Emerging Bluechip is again managed by Neelesh Surana. The manager has executed the strategy well outperformed most of its peers since inception due to its focus on quality stocks. The fund traditionally has been a mid-cap oriented fund, but is now positioned as a large and mid cap fund driven by the SEBI regulations. The change is however not dramatic as since inception the fund had a 25-30% allocation in large caps.

Do read our views here on Mirae Asset Large Cap and Mirae Asset Emerging Bluechip.

Kotak Standard Multicap is the largest fund in its category. We think portfolio manager Harsha Upadhyaya is a very efficient stock-picker and has executed this strategy with a lot of finesse. His stock-picking leads him to remain loosely aligned to the benchmark. The manager has been buying into a few mid-cap stocks more recently but has retained its large cap bias. We have a positive rating on this fund.

ICICI Prudential Banking and Financial fund, we typically aren’t big advocates of Sector/Thematic funds. We believe a portfolio of good diversified funds does a pretty good job of creating wealth. Managers will anyways take their active calls on sectors/themes which they believe will be the growth drivers going forward. That said, banking and financial is one theme that many fund managers are betting on over the last few years and continue to do so as the valuation looks attractive. The portfolio managers have increased weightage to private banks while moderated their exposure to PSU banks and NBFCs. Given this backdrop you can maintain 5-10% of your overall portfolio towards this theme.

L&T Midcap and SBI Small Cap should be invested in with at least a 7-10 year investment horizon. Small and mid-cap stocks are excellent wealth creators over the long term, but also can be quite volatile in the short term. 2018 is a classic case in point, whereby small and mid cap stocks have fallen quite significantly and so have these funds. But if you have a long-term horizon, these funds can serve you well. If these funds meet your investment objective and is a fit in your portfolio, then you may consider holding on to it.

Please help me to evaluate my monthly SIP portfolio.

  • ₹ 10,000 - Mirae Asset Emerging Bluechip
  • ₹ 3,000 - Kotak Standard Multicap
  • ₹ 2,500 - HDFC Top 100
  • ₹ 2,500 - Axis Bluechip
  • ₹ 2,500 - Mirae Asset Large Cap

- Sulabh

The funds in your portfolio are well managed and you can continue your investments in them.

However, if you have the requisite risk appetite, you should consider adding some dedicated mid and small cap funds to your portfolio. Currently your portfolio has a huge large-cap bent.

You can check our Morningstar Analyst Rating on mid and small cap fund which would help you understand the investment proposition offered by them.

Ideally large cap funds should have higher allocation in the portfolio as they tend to be more stable during market downturn; but a reasonable allocation to mid and small cap funds is also important as they can be a huge wealth generator over the long-term, notwithstanding short-term hiccups. However, if you don’t have the risk appetite for the volatility and risk that come along with investing in mid/small cap funds, then large caps are best suited for you.

Note that investments in equity-oriented funds should be made for a long-term horizon, which is not less than 5 years.

I want to invest Rs 10 lakhs and stay invested for 10 to 15 years. I've already invested in HDFC Midcap, HDFC Small Cap, Kotak Multicap, ICICI Value Discovery. I am fine in taking risks and this will be leveraged for wealth creation.

- Gowthaman

A long-term perspective and the right asset mix is a must. You should diversify your portfolio across equity and fixed income investments. The asset allocation helps to cushion the portfolio when one asset class is witnessing a downturn. Since you mentioned that you are fine with taking risk and have a long-term investment horizon, you can consider investing 80% of assets in equity funds and 20% in debt funds.

On the equity side, you should diversify your portfolio across market segments such as large, mid and small cap funds. Here the allocation can be 55-60% in large caps and the balance in mid and small cap funds. Large cap allocation should ideally form the anchor portion of the portfolio as it provides much needed stability to the portfolio during market downturn. Mid and small cap exposure on the other hand provides kicker to the portfolio during market upturn. They can be volatile over the shorter-time frame but are good wealth creators over the long-term.

The funds already in your portfolio are good funds and you can continue investing in them. However, as of now your portfolio lacks diversification and you have to work on it. For instance, you don’t have a dedicated large cap fund in your portfolio, so you should consider adding that. You can consider diversifying your portfolio across fund houses/ fund managers as well and have funds within a category which are run with contrasting styles so that they can complement each other. For instance, from the large cap category you can consider investing in HDFC Top 100, Aditya BSL Frontline Equity/Mirae Asset Large Cap as they are run with different investment styles. Similarly, you can add mid and small cap funds in the portfolio from different fund houses.

On the fixed income side, you can consider investing in funds from categories such as ultrashort bond, low duration bond and short-term bond.

You can check our Morningstar Analyst Rating to view our recommended funds across categories.

Post your query by accessing the Ask Morningstar tab. Our team will endeavor to answer queries ONLY related to mutual funds and portfolio planning from our registered readers.

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