Should I add more schemes to my mutual fund portfolio?
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Reliance Small Cap Fund-Rs 7,000 per month
Mirae Asset Emerging Bluechip Fund - Rs 8, 000 per month
Axis Bluechip Fund - Rs 8,000 per month
HDFC Mid-Cap Opportunities Fund - Rs 10,000 per month
I am 36 years old. I have a stock portfolio for the past four years. Apart from stocks, I also have some investment in gold and also have my own home with 25% of the flat value in bank loan.
My intention is to create wealth and hopefully I won't need any of these funds for the next 10 to 15 years. I intend to keep small cap funds for more than 15 years.
I want to buy more funds and can invest additional Rs 17,000. I was planning to buy any of the following funds to add to my mutual fund portfolio: SBI or HDFC small cap, Reliance Large Cap Fund, ICICI Prudential Banking and Financial Services Fund, Tata Digital India Fund.
Can you please suggest if i should buy any new funds or sell any of my existing funds?
Deepali Sen, Founder, Srujan Financial Advisors, responds:
Most of the funds you have invested (and planning to invest) have a good performance record. In addition, limiting your choice to a few AMCs makes sense. However, exposure to mid and small cap mutual fund is very high (52%) and looks like you are keen on investing more. Look at containing the exposure to mid and small cap funds/ stocks to 20-25% of the total equity portfolio, including direct stocks held). Also, do not exceed your exposure to sector or thematic funds beyond 5 to 7% of the total equity exposure.
Expedite squaring off the loan. Interest is a sunk cost. It makes sense to increase the EMI (so that the tenure is reduced) rather than increasing the investments. Also, be open to prepaying the outstanding loan by part selling your stocks/MFs keeping in mind the quality of the assets held and the tax payable on redemption.