Hi All, I am planning to start a SIP of monthly 25k for long term 7-10 years. After various research and ratings of Value research, Morning star and ETMoney, I have come up with portfolio. I just want views/suggestions on this.
I was thinking about Index funds, but still i am not getting confidence on passively managed funds. So i came up with 2 options. Please provide your suggestion/views on each of the options
Option 1
TATA Nifty Fifty Index fund - 7k
Motilal Oswal Nifty Next Fifty Index fund - 6k
Motilal Oswal Nifty Midcap 150 Index fund - 3k
ICICI small cap 250 Index fund - 3k
Axis ELSS fund - 2k
Canara ELSS fund - 2k
DSP US equity fund - 1k
Option 2
Same as option 1 but with ETF’s
Option 3
Canara Large Cap Fund - 2k
Axis Large cap Fund -2k
Kotak Large cap Fund -1k
Canara Large and Mid cap Fund -1k
Axis Large cap and Mid cap Fund -1k
Kotak Large and Mid cap Fund -1k
Axis Mid cap -1k
Invesco Mid cap -1k
Axis small cap-1k
Canara small cap -1k
Parag parikh Flexi cap -1k
DSP Flexi cap-1k
UTI Flexi cap -1k
AXIS Flexi cap -1k
Canara Flexi cap-1k
Axis ELSS fund - 2k
Mirae ELSS fund - 2k
Canara ELSS fund -1k
DSP US Equity -1k
Franklin US -1K
Sundaram Financial opportunities thematic fund -1k
Damn. What exactly is the plan behind this over-diversification though?
You will lose end up losing more in TER and overlap between funds.
1 ELSS and 1 Flexi/ index fund. Do not overcomplicate things when there is no need. Too many funds in my opinion
Remember first to figure out how much tax deduction you want. Manage a single elss fund accordingly. Add an index fund, if you have a longer duration, pick an NN50 fund.
I’m not a financial advisor but in my opinion, an elss (if needed), an index fund and a flexi cap fund would do better.
Drop the midcap index fund mostly cause there is very less diff in return compared to NN50 with higher tracking error.
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Why did you choose 2 - 3 funds in the same category ?
That’s not really required, in my opinion it’s over-diversification.
Other than that, for 7-10 yrs, it’s your wish to go with ETFs or not. I don’t really see any big advantage of ETF over MF in 7 to 10 years.
“Why invest in multiple MFs when they have the same underlying/portfolio”
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@TradeXMaster The reason for choosing 2-3 funds in each category is for minor diversification. e.g., Axis ELSS avoids PSU’s whereas Canara ELSS gives preference to PSU’s like SBI
Also, portfolio of Small and Mid Caps varies around 40% with AMC’s. Though one might say this might behave like Index Fund at end, I am not much confident on Midcap 150 Index fund
Probably I can reduce large cap and large & Mid cap funds to reduce overlap
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Hello @Nathiarasan, you are buying whole market with such MF combos.
On an average 1 mf have 30 stocks and if they are overlapping then whats the point buying 2 and if they are not then why to overdiversify ? Also keep in mind the taxation, Exit load of each MF you will end up giving more.
I have my preference as below :
1 elss (80c)
1 N50 index
1 Flexicap
Risk taker - Add small cap
US exposure - Add S&P 500 index
Need stability - Add gold Index
Not getting satisfied with N50 - Add focussed/Large+Midcap fund
Need PSU - Add thematic fund after research (Don’t rely on fund to get psu exposure it can change with time)
Do as per your need but don’t overdiversify
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Tracking so many funds (and switching underperfroming funds ) would be hell of job
See my reply to your query
Its difficult to zero down and select a mutual fund which will outperform index consistently . if somone selects multiple funds, the outcome will be avaraged out (to somewhere near index )
you should have
Tax Saving
- ELSS : Fund of your choice
Core
- Nifty50 : Fund of your choice
- Nifty Next 50 : Fund of you choice
Stable
- Nifty Alpha Low Volatility 30 : Currently ICICI offers ETF and FoF. Nippon NFO may see light of day soon.
High Reward (comes with Risk )
- Nifty200 Momentum 30 : Currently only UTI offers this index fund
Once you have sufficient accumulation, as suggested by @akashtripathi you can add US Exposure and gold to stabilise investment.
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Having gone through your portfolio it looks like you have overcomplicated things even when there is no need. Whenever you make a portfolio you should never choose 2-3 funds in the same category. You should always consider the exit load whenever you make a portfolio. On average 1 mutual fund has 30 stocks and if they are overlapping then what’s the point of buying 2 and if they are not then why to over diversify. Taxation is also an important factor that an investor needs to keep in mind when making a portfolio as it may help him to manage the exit load. Looking at your portfolio I can suggest you one. My preferences are 1 ELSS (80c), 1 N50 index, and 1 Flexi Cap. If you are a risk-taker you can add 1 small-cap fund or if you need more stability you could add a gold index to your portfolio. There is also a midcap index fund in your portfolio which is of no need as there is very little difference in return compared to NN50 with a higher tracking error. Build your portfolio according to your needs just make sure you don’t over diversify it.
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