Please help me broaden my investment portfolio. I am new to mutual funds. I started two tax-saving SIPs (Reliance Tax Saver (ELSS) fund; and Axis Long term Equity—both direct growth) of Rs2,000 each from April 2015. I want to start investing towards wealth creation over the next 3-5 years, with further SIPs of Rs6,000 a month.I have done a bit of research about Kotak Select Focus fund and Mirae Asset Emerging Blue-chip fund—both with direct growth option. Is that a good choice?
—Yogesh Padwal
You are presently investing Rs4,000 in an all-equity portfolio consisting of two tax-saving funds. You are seeking to expand it to a Rs10,000 per month SIP portfolio that would also be an all-equity portfolio by adding two equity funds. This would make for an aggressive SIP portfolio. The funds that you are seeking to add are both good funds, but one of them is a diversified fund (the Kotak fund), and the other is a mid- and small-cap fund that invests in the most high-growth, high-risk part of the market. If you are investing for the real long-term (greater than 7-10 years) and you are okay with taking on so much risk, you can stay with this portfolio. Else, here are a few alternative paths you can consider. One would be to replace the diversified fund with a large-cap fund (Kotak 50 would be a good choice here) and the other would be to replace the mid-cap fund with a balanced fund (Birla Sun Life ’95 would be a good option). Either or both these moves would lower the risk profile of your portfolio from where it is now. A third option would be to further reduce the risk of your portfolio by replacing one of your equity funds with a debt fund. For example, you can replace the large-cap fund with a short-term debt fund such as HDFC Regular Savings fund. At the end of the day, portfolio design is about matching an investor’s profile and needs with specific investment options, and you can choose the path that you are comfortable with.
