I am doing a monthly SIP of Rs 5,000 each in below mutual funds considering for long term (>10 years)/retirement. Please advice me if it is okay to continue with these funds? If not, can you please suggest in which funds should I stop my SIP and in which new funds should I start my SIP?
– Nippon India Large Cap fund (Direct growth)
– Nippon India Small Cap Fund (Direct growth)
– Franklin India Smaller Companies Fund (Direct growth)
– Mirae Asset Emerging Bluechip Fund(Direct growth)
– HDFC Midcap Opportunities(Direct growth)
– DSP midcap fund (Direct growth)
– L&T Emerging Business Fund (Direct growth)
— Bali Sriramulu
Harshad Chetanwala, Co-Founder of MyWealthGrowth a mutual fund advisory firm, based out of Mumbai responds:
Doing SIP in an equity diversified fund for long term goals is the correct strategy that you are following. If you have to look at market capitalization of your portfolio across all the funds, the allocation in mid and small cap companies appears to be on the higher side. It is likely that you have more than 70% of your portfolio invested in mid and small cap at present. Having higher allocation in mid and small cap increases the overall risk. I hope that is in line with your investment strategy. Ideally, you can have 25% to 35% of your portfolio in mid and small cap companies. I would suggest you to stop your SIPs in some of the small cap and mid cap funds and start investing in funds that have higher allocation in large cap companies.
You can consider stopping your SIPs in Franklin India Smaller Companies Fund, L&T Emerging Businesses Fund and HDFC Mid Cap Opportunities Fund. You can also consider stopping Nippon India Large Cap Fund, since the fund has under-performed its peers for a long time except for the last six months. You can start SIP in UTI Nifty Index Fund or HDFC Index Fund Nifty, Mirae Asset Large Cap Fund and Canara Robeco Emerging Equities Fund. These investments will help you reduce your exposure in mid and small cap companies and increase overall allocation in large cap making your portfolio more stable.