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Am I investing in good mutual funds?

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Last Updated: Feb 18, 2020, 11.11 AM IST
I am currently investing Rs 1,000 each in the following schemes:
SBI Banking & Financial Services Fund
Tata Banking & Financial Services Fund
Axis Long Term Equity Fund
SBI Small Cap Fund
I have an investment period of at least 20 years in mind. Are these schemes good?
-Bishal Das

You are currently investing in two thematic schemes, a tax-saving scheme, and small cap scheme.

Though your two thematic schemes are performing well, we do not recommend thematic schemes to retail investors as sectors and themes can get in and out of fashion in different phases in the economy. However, banking and finance theme is a prominent theme in the Indian stock market and almost every mutual fund scheme has significant investments in it. You should be aware about the extra risk you take while betting on a scheme that is dedicated exclusively to a theme or sector.

Small cap schemes are extremely risky and they can also be very volatile. That is why these schemes are recommended only to investors with a very high risk appetite. Make sure that you have the necessary risk appetite to continue with the schemes.

You may continue with the tax-saving scheme if you are investing in it to claim tax deductions under Section 80C of the Income Tax Act.

You should assess your risk profile and build a mutual fund portfolio in line with it. Seek the help of a mutual fund advisor if needed.
(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)

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