Too much overlap. Stick to max 2 of the 3, best is LM250 only.
According to Harry Markowitzâs Modern Portfolio Theory, investors seeking better risk-adjusted returns or more predictable returns should consider the LM250 index. This is because the correlation between different asset classes, such as Nifty 50 and Midcap 150, tends to be lower, leading to potential diversification benefits. Based on this theory, LM250 appears to be an optimal choice for long-term wealth creation.
However, some people argue that the weightage of the top 50 versus the last 50 stocks in the index does not justify investing in it for higher returns. This creates a contradiction between the theoretical perspective and public opinion. Now to take decision one has to decide what to believe and personal goal.
Please let me know if I am misunderstanding the threadâs discussion.
yes⌠this is also my view.
Correct. its highly personal decision. I do believe in Portfolio Theory and my long term investment Philosophy is aligned to it. One may choose to follow some other investment philosophy and may find LM250 is unsuitable.
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No need to discard. You will pay tax.
just stop more sips or investments in overlapping mutual funds.
If you donât mind paying tax atleast wait till all become long term (> 1 year) and then withdraw.
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Donât discard completely now. Just stop SIP/Lumpsum investment in it. If you take full exit then you have to STCG 15% tax, If holding period is <1 yr. If holding period is >1 yr then LTCG till 1 lac is exempt otherwise youâll have to pay 10% tax on gain on (actual gain - 1lac) amount. you can start/continue investment in LM250.
Perfect , thank you 