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Where should I invest my proceeds from government bonds?

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Last Updated: Jan 31, 2019, 03.20 PM IST|Original: Jan 31, 2019, 03.20 PM IST
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Me and my wife have a mutual fund portfolio. We are investing Rs 3,000 per month in the following funds through SIP.

Mirae Asset Emerging Bluechip Fund - Regular Plan - G
Motilal Oswal NASDAQ 100Fund of Fund - Regular - G
Reliance Small Cap Fund - G
SBI Blue Chip Fund - G
ABSL Frontline Equity Fund - G
ABSL Tax Relief '96 Fund - G
Motilal Oswal Multicap 35 Fund - Regular - G

I have received Rs 2 lakh from matured government bonds. I want to invest this sum in mutual funds for a period of 10 years. Should I go fro NFO, ETF or increase the SIP amount in existing mutual funds?
--Anandha Natarajan

Gaurav Monga, director, PxG Consultancy, responds:


Currently you are doing SIP in seven different equity schemes. Higher number of schemes lead to over-diversification and under-performance of the portfolio. Ideally the number of schemes in the portfolio should not be more than four to five. Therefore, you should bring down the number of schemes. There are two large cap funds in your portfolio i.e. Aditya Birla Frontline and SBI Bluechip, so you can stop SIP in one. Further Motilal Oswal NASDAQ is an ETF investing into US markets. It’s a good scheme but liquidity is an issue in international ETF’s therefore, you can switch from this scheme to Franklin India Feeder US Opportunities Fund which is also investing in US markets.

You should invest Rs two lakh in the schemes which are already there in your portfolio. To avoid the risk of making lumpsum purchases, you can park the funds into liquid schemes of respective fund houses and from there you can start weekly STP towards the targeted equity schemes which are already there in your portfolio. My advice would be to keep things simple while investing. It is not necessary to add more scheme each time you invest more, instead keep adding into your existing schemes and build a portfolio.

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