I don’t have much knowledge in mutual funds. But i am investing in the following funds through monthly SIPs of Rs 5,000. And these funds were suggested by my broker/advisor. I would like to know if the investment I made are diversified enough. I am 28 years old and my investment plan is for long term for good returns. I am planning to invest at least for 10 years.
Aditya Birla Sun Life Equity Advantage Fund
Aditya Birla Sun Life Focused Equity Fund
Canara robbeco Equity diversified Fund
Edelweiss Multi Cap Fund
Franklin India Equity Fund
ICICI Prudential Equity & Debt
Nippon India Pharma
Principal Small Cap Fund
Sundaram Large & Midcap Fund
Tata Balanced Advantage Fund
ICICI Prudential Baking & Financial Services Fund
Nippon India Large Cap Fund
UTI Index Fund
-Devadas Shenoy KP
SR Srinivasan, Founder, SriNivesh, a financial planning firm, based in Bangaluru, responds:
You have primarily asked about the diversification in your portfolio. Considering your age and investment horizon, the portfolio is predominantly in equity funds. Presumably, you have a debt portfolio, too. Even for a 10-year horizon, debt products are an important part of the portfolio.
We would focus on the equity portfolio in this response. It is typically recommended to have a few categories of equity mutual funds, and have one or two funds from each category. A reasonably diversified portfolio can be achieved with this mix: two multi cap funds, one mid cap or specialized fund. Another model could be: Large cap index funds, one mid cap or specialized fund or an international fund. Yet another model could be: one or two Aggressive hybrid funds, one Balanced Advantage Fund.
Your portfolio is thin and looks overdiversified. In a way, you have “all the three” models that I have listed in the previous paragraph. You also have some sectoral funds. There is a lot of opportunity to simplify your portfolio. You may consider any of the three models suggested. You should consider your risk profile and choose accordingly.
