Mutual Fund Investment Strategy: In today’s fast-changing world, managing money is no longer optional; it is essential. With rising expenses, changing lifestyles, market volatility, and digital investing, every individual faces one important question: “How do I make my money work smarter for my future?”. In this article, we will go through insights shared by Aditya Shah from Hercules Advisors on fund recommendations and investor portfolios. At ET Now’s The Money Show, he answered some of the queries raised by the investors. Here’s what might interest you.
Investor 1: The investor asked for suggestions regarding his daughter’s portfolio. She is 31 years old and currently invests:
- Rs 5,000 per month in Bandhan Small Cap Fund
- Rs 5,000 per month in Motilal Oswal Mid Cap Fund
- Rs 5,000 per month in Nippon India Large Cap Fund
According to the expert, if the investor continues investing Rs 15,000 per month for five years and earns approximately 10-12% annual returns, the investor will accumulate only around Rs 12–16 lakh, which is significantly below the Rs 50 lakh target.
To build Rs 50 lakh in five years, the investor would need to invest approximately Rs 55,000–Rs 60,000 per month, assuming similar returns.
So, the SIP amount must increase substantially.
Regarding the Bandhan Small Cap Fund, the expert believes it is a good fund. If you evaluate it using risk-adjusted measures such as the Sharpe Ratio, it performs well.
However, the expert also recommends investing in small-cap funds if your investment horizon is only five years. For a five-year goal, a Flexi Cap Fund and a Mid Cap Fund would be more appropriate.
- The expert suggested investing Rs 10,000 in a Flexi Cap Fund, such as the Parag Parikh Flexi Cap Fund
- Continue Rs 5,000 in Motilal Oswal Mid Cap Fund
- Discontinue the Nippon India Large Cap Fund, as the Flexi Cap Fund already provides large-cap exposure.
If the investment horizon can be extended to 10 years, then continue both the Bandhan Small Cap Fund and the Motilal Oswal Mid Cap Fund.
The longer your investment horizon, the more risk you can comfortably take.
Over five to ten years, Parag Parikh Flexi Cap Fund has consistently ranked among the better-performing funds.
It has a strong large-cap orientation with selective exposure to mid-cap opportunities, making it suitable for investors with a five-year investment horizon.
Investor 2: A senior citizen and long-term investor asks about his investments
Senior citizens should ideally keep only 10-20% of their portfolio in equities, depending on their risk profile.
Within equities, they should primarily invest in large-cap or Flexi Cap Funds.
Suitable options include:
- Parag Parikh Flexi Cap Fund
- HDFC Flexi Cap Fund
So, if you have a similar portfolio with the same goal, you can consider the suggestions by the expert.
