Mutual fund investment: It is quite common to seek advice regarding your mutual fund portfolio. It is likely that whoever is reading this article currently may have a mutual fund portfolio but lacks guidance on which mutual fund scheme they should invest in to move towards their target, say, a Rs 1 crore corpus. Just like the investor whose query we picked for the day, other investors may have similar questions. First, take a look at some of the mutual fund queries the investor shared.
An investor on ‘Bano Apna Finance Minister’ on ET Now Swadesh shared her query on how she can build a portfolio of Rs 1 crore in just 12 years. Her current monthly investment in a systematic investment plan (SIP) is Rs 12,000. She also shared her portfolio, which includes mid cap, infrastructure and large mid cap fund. She is sceptical about whether she is investing in the right funds; whether she should continue with her monthly investment amount or raise it; and what the strategy should be.
Bringing you inputs from Aditya Shah, Chartered Financial Analyst (CFA), who shared his insights on the above queries. Take a look.
Investor investment strategy
- Investment period: 12 years
- Target corpus: Rs 1 crore
- Assumed annualised return: 12 per cent
- Monthly SIP investment: Rs 12,000
Investor mutual fund portfolio
- Motilal Oswal Midcap: Rs 4,000
- LIC MF Infrastructure: Rs 5,000
- MO Large and Midcap: Rs 3,000
Expert suggestion
According to the expert, Aditya Shah, the investor won’t be able to build a Rs 1 crore corpus with a Rs 12,000 monthly SIP and the current time horizon. The expert added that the investor would need to invest around Rs 32,000 through SIP, which is significantly higher than the investor’s current SIP amount.
Thus, the investor can either increase their time horizon, which could be a good option because by extending the time horizon, they may be able to move closer to their goal. The second option is to increase the SIP amount.
Read more: Rs 25,000 monthly SIP at 27: How to target Rs 5 crore by age 54? Expert recommends 3 mutual funds
Mutual fund recommendations by the expert
There is absolutely no need to invest in sectoral funds. In sectoral funds, investors need to time their entry and exit very carefully, and many retail investors are unable to time their entry and exit properly. So, it is better to stay away from sectoral funds, said the expert.
- HDFC Nifty 50 Index: Rs 8,400
- Parag Parikh Flexi Cap: Rs 6,300
- Motilal Oswal Midcap: Rs 4,200
- Bandhan Small Cap: Rs 2,100
The expert suggested a mix of active and passive funds and also introduced mid cap and small-cap funds into the portfolio. The expert further said that if the investor invests properly across all four funds, they may be able to reach their goal over a period of at least 12 to 15 years.
On the investment in infrastructure funds, the expert said that from 2008 to 2018, no infrastructure fund delivered meaningful returns for 10 years. However, from 2018 to 2026, many infrastructure funds have rallied significantly, and several of them are now trading at very high valuations.
Also read: Rs 3 crore corpus in 15-20 years? Expert recommends 4 mutual funds & 10% Step-Up SIP strategy
(Disclaimer: The above article is meant for informational purposes only and should not be considered as any investment advice. ET NOW DIGITAL suggests that its readers/audience consult their financial advisors before making any money-related decisions.)
