Want to invest in mutual funds but don't know how to go about it?

Get all your mutual fund related queries answered by our expert, Feroze Azeez, deputy chief executive officer, Anand Rathi Private Wealth Management, on our show Mutual Fund Corner.

Q: 30-year-old Ashok Kumar J writes to us from Tamil Nadu. I am investing Rs 2,000 each in ABSL FrontLine Equity, Kotak Standard Multicap Fund, L&T India Value Fund and Reliance Smallcap Fund through SIP for past one year on regular cum growth option. My goal is to create a long term wealth and planning to invest for around 15 years. What’s your view?

A: Instead of investing in Aditya Birla Frontline Equity, we would suggest you to invest in another fund of the same fund house – Aditya Birla Sunlife Equity Fund. If you see over the last 2, 3 and 5 year returns, ABSL Equity Fund has outperformed ABSL Frontline Equity Fund. ABSL Frontline Equity Fund is a pure large-cap fund, while ABSL Equity Fund is a multi-cap fund. The alpha generation of a multi-cap fund is higher than that of a pure large-cap fund.

With the total assets under management (AUM) of Rs 21,927 crore, Kotak Standard Multi-cap Fund is managed by Harsha Upadhyaya. The fund has been a consistent performer across all time-frames. You can continue to invest in the fund. L&T India Value Fund is a mid-cap fund. However, its performance has dipped in the last few years. We suggest you to invest in another mid-cap fund – Franklin India Prima Fund. Reliance Small-cap Fund has generated good returns. However, the standard deviation of the fund is high. We suggest you to hold your investments in the fund and review it on a regular basis.

Q: 30-year-old Ravi Teja Pabbisetty writes to us from Bengaluru. I have two major goals, please advise if I am on track.

Goal 1: Kid’s education by 2034 (Non-negotiable)

Corpus needed: Rs 2.2 crore (Inflation adjusted @ 10%)

Need to invest: Rs 28,000 per month @ 16% XIRR

Currently investing Rs 28,000 per month through SIP mode in the following funds: Rs 8,000 per month (Spouse) in Mirae Asset Tax Saver, Rs 8,000 per month (Self) in ABSL Tax Relief 96, Rs 4,000 per month in Mirae Asset Emerging Bluechip, Rs 4,000 per month in Canara Robeco Emerging Businesses, Rs 4,000 per month in DSP Mid Cap.

Goal 2: Retirement by 2038 (Negotiable)

Corpus needed: Rs 8 crore (Inflation adjusted @ 10 percent)

Need to invest: Rs 48,000 per month @ 16 percent XIRR

Plan to invest Rs 48,000 per month through SIP mode in the following funds: Rs 8000 per month in ABSL Pure Value, Rs 8,000 per month in Reliance Smallcap, Rs 12,000 per month in SBI Smallcap, Rs 12,000 per month in HDFC Smallcap and Rs 8,000 per month in Franklin India Smaller Companies.

Also, I have an emergency corpus for 10 months expenses (parked in liquid funds), Rs 10 lakh health cover and Rs 1 crore term plan life insurance.

A: Goal 1 – Kid’s education

With your current investments of Rs 28000, you will be able to accumulate close to Rs 1.8 crore, adjusting inflation. You have invested in two tax-saver funds – Mirae Asset Tax Saver and ABSL Tax Relief’96. We suggest you to invest in ELSS funds only if your aim is to save tax. You can continue to invest in Mirae Asset Emerging Bluechip and Canara Robeco Emerging Equities Fund. You can replace DSP Mid-cap Fund with HDFC Mid-cap Opp Fund. DSP has recently gone through a de-merger with DSP and BlackRock parting ways. Therefore, its better to wait until things are back on track.

Goal 2 – Retirement

As we have a look at your portfolio, majority of your portfolio is invested in small-cap funds. Small-cap funds can face volatility pressure, hence, it is very important to have a well-diversified portfolio among large-cap and mid-cap funds as well.

ABSL Pure Value Fund: The fund has not performed well in the last one year. Instead, we suggest you to invest in another fund of the same fund house – ABSL Equity Fund, which has been a consistent performer. You can continue to invest in Reliance Small-cap Fund and HDFC Samll-cap Fund. You can replace SBI Small-cap Fund and Franklin India Smaller Companies Fund with Kotak Standard Multi-cap Fund and Mirae Asset India Equity Fund. You can continue investing in a health cover and term insurance.

Q: 30-year-old Abhishek Soni writes to us from Mumbai. I have started SIP of Rs 6,000 last year. I have increased it to Rs 18,000 last month. My goals are my retirement, children education and their marriage. My questions are: How much I need to invest to achieve goals? Is my portfolio well diversified? Is there any changes required in portfolio for long term? I have invested Rs 3,000 each in Canara Robeco Emerging Equities - Direct Growth, Invesco India Contra Fund - Direct Plan Growth, Mirae Asset India Equity Fund - Direct Plan - Growth, Franklin India Prima Fund - Direct- Growth, Reliance Tax Saver Fund - Growth and Aditya Birla Sun Life Tax Relief 96 Fund - Growth.

A: In order to achieve all your goals, you need to gradually start increasing your SIP amount by at least 10 percent every year. You can continue to invest in Canara Robeco Emerging Equities Fund, Mirae Asset India Equity Fund and Franklin India Prima Fund. Replace Invesco India Contra Fund with ABSL Equity Fund. You have two ELSS funds in your portfolio. Invest in ELSS funds only if your aim is to save tax.

Q: 50-year-old Anuradha Srikanth writes to us from Chennai. I have invested in Aditya Birla Sunlife Focused Blue Chip Fund - Dividend, Canara Robecco Emerging equities - Regular - Dividend - SIP, DSP Equity & Bond Fund-regular plan - Dividend, DSP Small Cap Fund--Regular plan - Growth, Franklin India Focused Equity Fund - Dividend, Franklin India Prima Fund - Dividend, HDFC Balanced Advantage Fund - Regular Plan - Dividend, HDFC Equity Fund--Regular plan - Dividend, HDFC Mid Cap Opportunities Fund - Regular Plan - Growth, HDFC Top 100 fund--Regular plan Growth, ICICI Prudential Blue Chip Fund - Growth, ICICI Prudential Equity & Debt Fund - Monthly Dividend, ICICI Prudential Multicap Fund - Dividend, ICICI Prudential Value Discovery Fund - Growth, IDBI Midcap Fund --Regular plan - Growth, Kotak Balanced Advantage Fund - Regular plan, L&T Hybrid Equity Fund - Growth, L&T India Value Fund, Reliance Large Cap Fund, Reliance Vision Fund - Dividend, SBI Blue Chip Fund - Regular Plan - Growth, SBI Equity Hybrid Fund - Regular Dividend, Sundaram Equity Hybrid Fund - Regular Dividend, Sundaram Small Cap Fund Regular - Growth, Tata Large Cap Fund - Regular Plan - Dividend, UTI Master Share Unit Scheme - Regular - Dividend, UTI Mid Cap Fund Regular - Dividend and UTI Mid Cap Fund. I want to know whether they are performing well or is there a need to switch to some other mutual funds.

A: You have invested in 28 funds. That’s quite a lot of over-diversification. Over-diversification is not good for your portfolio. Also, it becomes very difficult to keep a track of so many funds, thereby making your portfolio complicated. One should not invest in more than 6-7 funds. We request you to increase your investment in Kotak Standard Multi-cap Fund, Mirae Asset India Equity Fund, Reliance Large-cap Fund, SBI Focused Equity Fund, HDFC Mid-cap Opp Fund, Franklin India Prima Fund, HDFC Small-cap Fund and exit all the other funds.

Q: 42-year-old Rajarshi Majumder writes to us from Bengaluru. I have a SIP of Rs 40,000 per month in HDFC Small Cap Fund - Regular Plan - Growth Option - (SIP), Axis Focused 25 Fund Growth - (SIP), Axis Bluechip Fund - Growth - (SIP), Canara Robeco Bluechip Equity Fund Regular Growth - (SIP) and Mirae Asset Emerging Bluechip Fund - Regular Plan - Growth Option - (SIP). What is your take on this? Too heavy on equity?

A: Since you are 42-year-old, you can invest in equity and debt in the ratio of 60:40. All your funds are performing well. You can continue to invest in the funds. For your debt investments, you can invest in Axis Credit Risk Fund and Kotak Credit Risk Fund.

Q: 40-year-old Samir Kumar Pandey writes to us from Bengaluru. Investing Rs 9,000 in Axis Focused 25 Fund – Direct Plan - Growth, Rs 9,000 in ICICI Prudential Bluechip Fund - Direct Plan, Rs 9,000 in Kotak Standard Multicap Fund - Direct Plan, Rs 9,000 in HDFC Mid-Cap Opportunities Fund - Direct Plan, Rs 9,000 in Mirae Asset India Equity Fund - Direct Plan and Rs 5,000 in Franklin India Feeder - Franklin U.S. Opportunities Fund - Direct Plan from the last 6 months. I want to continue these SIPs for at least 10-15 years as I am planning for retirement corpus of around Rs 3-4 crore. I want to know if this SIP amount will help me to achieve my goal in 15 years from now. Also suggest me if the following mutual fund plan are the best plan or I need to make some changes to my SIP portfolio.

A: All your fund selection are good. You can continue to invest in the funds. With your current investments, you will be able to accumulate close to Rs 3 crore in 15 years. However, we would suggest you to replace Franklin India Feeder – Franklin US Opp Fund. The dollar has appreciated against rupee recently. So, the fund performance might be looking good right now. However, in the long run, India mutual fund will outperform this fund. So, it's better to invest in a domestic fund than an international one. You can increase your investments in any of the above funds you have.

Q: 30-year-old Sudipta Chatterjee writes to us from Jharkhand. Investing in MFs for past 1 year or so. I am having a horizon of 10-12 years. I am a moderate risk taker. My Portfolio is as below. I have invested Rs 5,000 per month in SBI Bluechip, Rs 3,000 per month in Mirae Asset Emerging Bluechip, Rs 1,000 per month in Motilal Oswal Multicap 35, Rs 4,000 per month in Axis Long Term Equity Fund, Rs 1,000 per month in Reliance Small Cap Fund. Is my Portfolio fine in regards of diversification? Any changes that you recommend?

A: You can continue to invest in SBI Bluechip Fund, Mirae Asset Emerging Bluechip Fund and Reliance Small-cap Fund. Motilal Oswal Most Focused Multicap 35 Fund has 27 stocks currently, and 45 percent of its investment is in the banking sector, which makes the fund concentrated. Instead, we would suggest you to invest in Mirae Asset India Equity Fund, which has outperformed Motilal Oswal Multicap 35 in the last one year. Axis Long term Equity Fund is an ELSS fund. We suggest you to invest in ELSS fund only if your aim is to save tax.

Q: 29-year-old Pallaw Saraogi writes to us from Hyderabad. I am going to start my investment into mutual funds. I am late to start on investing, but knowing the fact the sooner the better will start now. Keeping in mind the upcoming elections what should be a good idea to invest in mutual funds. I have a monthly limit of Rs 10,000-12,000 and can increase as and when required. My goal would be getting to Rs 1 crore by the age of 42.

A: If you invest Rs 12,000 for the next 12 years, you will be able to accumulate only Rs 48 lakh, which is half your goal of Rs 1 crore. We suggest you to increase your investments every month in order to achieve your goal. You can invest in Mirae Asset India Equity Fund, Kotak Standard Multi-cap Fund, Franklin India Prima Fund and HDFC Small-cap Fund.

Q: 28-year-old Ranjan Mallick writes to us from Kolkata. I have invested in SBI Bluechip, ABSL Frontline Equity, Kotak Std Multicap, L&T India Value, HDFC Midcap Opp, Franklin India Focused Equity, HDFC & L&T Hybrid Equity and ABSL Tax Relief '96. I want to stop Franklin India Focussed Equity Fund and both Hybrid Funds and switch out to HDFC Midcap Oppo and L&T India Value funds respectively. The rest, I want to continue.

A: You can continue to invest in SBI Bluechip Fund, Kotak Standard Multi-Cap Fund, HDFC Mid-cap Opp Fund and ABSL Tax Relief’96 Fund. Instead of ABSL Frontline Equity, you can invest in another fund of the same fund house – ABSL Equity Fund, which has been a consistent performer. Instead of Franklin India Focused Equity, L&T India Value and both the other hybrid funds, you can invest in Mirae Asset India Equity Fund and Franklin India Prima Fund.

Disclaimer: The views and investment tips expressed by investment experts on CNBCT-V18 are their own and not that of the website or its management. CNBC-TV18 advises users to check with certified experts before taking any investment decisions.

First Published:Oct 9, 2018 3:06 PM IST