I am currently investing in following mutual fund SIPs from given time periods: DSP Tax Saver Fund 5% of my monthly investment (3 years), Axis Long Term Equity Fund 10% (2 years), Kotak Flexicap Fund 10% (18 months), Mirae Asset Emerging Bluechip Fund 25% (18 months) ICICI Prudential US Bluechip Equity Fund 10% (10 month), Axis Bluechip Fund 20% (7 month), SBI Small Cap Fund 10% (2 month), L&T Emerging Businesses Fund 5% (3 years), and Nippon India Small Cap Fund 5% (1 year). I want to increase my investment. My timeframe is 20 years. In which fund should I increase my investment or some new fund needs to be added or some fund needs to be stopped.
Should I go with some sectoral fund like technology or infrastructure fund.
Rushabh Desai, an Amfi-registered mutual fund distributor based out of Mumbai responds:
Answer – You are invested in all good quality funds. Looking at your portfolio you don’t need 3 small cap funds and 2 tax saver funds. Your allocation towards the funds is a bit disbalanced, the ideal allocation you should have in each of your funds is anywhere between 10% to 20%. Since you have a 20 year-time frame you can let go the blue-chip fund in your portfolio.
I have reduced 3 schemes and have added Parag Parikh Flexi Cap instead of Axis Bluechip and Invesco India Contra since it is very important to diversify across different styles. The following is my recommendation for your monthly SIP’s along with their allocation – Parag Parikh Flexi Cap Fund (15%) (NEW), Mirae Asset Emerging Bluechip Fund (15%), Kotak Flexicap Fund (15%), SBI Small Cap Fund (15%), Invesco India Contra Fund (15%) (NEW), Axis Long Term Equity Fund (15%) and ICICI Prudential US Bluechip Equity Fund (10%).
I will not recommend you to venture in any sectoral / thematic funds via SIP route as these categories are highly cyclical in nature and require tactical bets. The recommended portfolio will give you ample diversification in various companies across market capitalizations both in India and abroad.