Portfolio Planning: As the market is showing signs of recovery within the last hour of trading, there are several questions that come to the minds of investors. This is where one can clearly understand a trend, as mutual funds take time to recover compared to stocks. While stocks recover quickly, mutual funds take time to recover. In this article, we will go through some of the fund recommendations by the expert Vishwajeet Parashar, who spoke exclusively to ET Now Swadesh, where he answered queries by investors and also suggested them funds for further portfolio planning. Take a look.
Investor portfolio
- Parag Parikh Flexicap Fund: Rs 3,000
- HDFC Midcap Fund: Rs 3,000
- Bandhan Small Cap Fund: Rs 3,000
- Tata Gold ETF: Rs 3,000
- ICICI Pru Multi Asset Fund: Rs 2,500
- SBI Contra Fund: Rs 2,500
- Black Rock Flexi Cap Fund: Rs 2,500
- Tata Silver ETF Fund: Rs 2,500
- ICICI Metal ETF Fund: Rs 2,500
- ABSL transportation & Logistic: Rs 2,000
- PPF and Sukanya Samriddhi
- Health and term insurance
The investor plans to invest for 25 years with a 10 per cent annual step-up. The investor wants to know if his portfolio is suitable.
According to the expert, the investor has done well in terms of protection through insurance and overall diversification. However, the investor portfolio comprises around 10 mutual funds, which is slightly over-diversified. It is suggested that investors need to consolidate and keep only one flexi cap fund, preferably Parag Parikh.
Moreover, it is suggested that BlackRock investments be merged into this fund. It is also suggested that excess investments in metals and commodities be reduced, apart from gold, as it is a hedge.
For the long-term strategy, it is suggested by the expert that, as Gaurav has a 25-year investment horizon, it is excellent. Moreover, a 10 per cent step-up SIP is a very powerful strategy. It is suggested that if a person invests Rs 2,500 per month through a SIP for 25 years and steps up by 10 per cent, assuming a 12 per cent CAGR, it will reach around Rs 10.42 crores.
Regarding thematic funds, such as the transportation and logistics fund, the expert advises close monitoring since these are riskier. Exits should be made when gains are satisfactory, and the proceeds can be reinvested into core funds.
On metals and commodities, the investor currently holds gold, silver, and a metal ETF. The expert suggests that too much exposure is unnecessary because mutual funds already include metal stocks. However, his current holdings can be maintained for now.
- Parag Parikh Flexicap Fund
- SBI Contra Fund
- Nippon Midcap Fund
- HDFC Smallcap Fund
- ICICI Large & Midcap Fund
The expert notes that the portfolio is well-diversified, and no major changes are needed. It is advised to continue the SIP. With a Rs 15,000 monthly SIP and a 10 per cent annual step-up over 15 years, the portfolio could grow to approximately Rs 1.24 crore.
- Motilal Midcap Fund: Rs 6,000
- Bandhan Small Cap Fund: Rs 4,000
- Parag Parikh Flexicap Fund: Rs 3,000
- SBI Largecap Fund: Rs 3,000
- SBI Focused Equity Fund: Rs 2,000
- SBI Index Fund: Rs 2,000
The investor wants Rs 40 lakh in 10 years.
The expert suggests that there is excessive overlap in SBI mutual funds, especially between index and large cap funds. It has been suggested that excessive duplication should be removed, and mid cap investment should be slightly reduced, after which investment should be made in flexi-cap and focused funds. Using a step-up strategy, it has been suggested that the corpus amount could reach Rs 65 lakh.
While planning for goals such as education, it is necessary to take inflation into consideration. If inflation is expected at 10-12 per cent, then an amount of Rs 40 lakh currently would translate into Rs 55-60 lakh after 10 years. If inflation is not considered, then there is a likelihood of underestimating requirements.
For another investor targeting Rs 3.5 crore with a SIP and step-up strategy, the expert suggests reducing duplicate mid cap funds while continuing gold and silver ETFs for diversification. Gold acts as a hedge during periods of uncertainty. Assuming a 12 per cent CAGR, this goal could be achieved in about 17 years.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
