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I am 19 years old and currently saving Rs 2,100 per month. I have an aggressive risk profile. I don’t need the money for 10 years, at the least. My SIPs are in Axis Mid Cap (Rs 1,000) and ICICI Prudential US Bluechip Equity (Rs 100). I want invest another Rs 1,000 as SIP – should it be multi-cap or index fund? My lumpsum investment is in Axis Banking and PSU Debt (Rs 5,000) and MOSL Nasdaq 100 FoF (Rs 1,000)
It’s commendable that you have started investing at such an early age.
Having said that, your investments need some makeover. Though you are a high-risk investor, but any investment exercise would yield desired results only if it’s executed with a prudent financial planning exercise.
Its important to have a right asset allocation mix in the portfolio along with the best fit funds. Considering your long-term investment horizon and high-risk appetite, you can invest in a mix of 80-85% of assets in equities and 15-20% of assets in fixed income mutual funds. Fixed income mutual funds buffer the portfolio during testing times in the equity markets.
Of the equity portion, you can have 60% of investments in large cap funds, 25% in mid cap funds and 15% in small cap funds. This includes your global investments as well. That said, global investments are typically used for the purpose of diversification and can account for 5-10% of the overall portfolio.
You need to have an Indian large-cap fund in your portfolio. This will give stability to your overall portfolio and a provides a foundation of sorts. Start an SIP there.
You also have a sector/thematic fund in your portfolio. I believe that you comprehend the investment proposition offered by them and have the desired skills or expertise at your end to make the most of the opportunity there. If not, then you will be better off investing in a conventional mutual fund scheme.
I am 34 years old. Moderately high-risk appetite. What do you think of these equity funds? Mirae Asset Emerging Blue Chip Fund (Rs 5,000), Mirae Asset Large Cap (Rs 12,500), HDFC Equity Fund (Rs 3,000) and L&T India Value Fund (Rs 3,000)
The funds you have named are fairly well managed strategies and we have a fair amount of conviction on their prospects.
Mirae Asset Emerging Bluechip, traditionally a mid-cap oriented fund, is positioned as a large and mid cap fund post SEBI categorisation. The fund has displayed above average returns over the long term and we have a high conviction on the fund manager – Neelesh Surana. The fund manager’s distinctive stock-picking ability and skilled execution are the defining factors of this fund.
Mirae Asset Large Cap has undergone some change however, no change in the features of the fund. The fund witnessed changes in the category, but it's not much of a concern given the fund’s historical large-cap tilt. The fund also saw restructuring in the team. It was earlier managed by Neelesh Surana and Harshad Borawake but since January 2019, Gaurav Misra has taken the reins as the lead manager along with Borawake. A change in the lead manager needs monitoring, but we’re confident that this fund stacks up well compared with most peers.
We have a very high conviction on HDFC Equity Fund. The fund is managed by Prashant Jain, who is an extremely skilled and experienced investor. Notwithstanding short-term blips, Jain has demonstrated considerable skill in navigating the fund through varying market conditions over the years. The valuation conscious approach may cause the fund to lag peers in momentum-driven markets, but we are confident of its long-term performance.
L&T India Value fund has a Morningstar Analyst Rating of Neutral. The fund is managed by an experienced fund manager Venugopal Manghat but we are wary of changes in the investment team and a long portfolio tail.
