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MFs to Create LONG-TERM Wealth

By OMKESHWAR SINGH
August 09, 2021 08:54 IST
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'I am investing 60K per month via SIP in 10 mutual funds for the last 4-5 years.'
'Portfolio is divided between me and my wife. Both are aged 38.'
'The target is long term wealth creation and the horizon in 10-12 years away.'
'Please suggest funds to continue or discontinue with and also new schemes to switch to.'

Illustration: Uttam Ghosh/Rediff.com
 

Omkeshwar Singh, Head, Rank MF, a mutual fund investment platform, answers your queries:


SANDEEP RANA: I am 55 years old and I am looking to invest 40k every month with a horizon of 5-10years. Recently since last 2 months I have started investing in:

1-Mirae Asset Emerging Bluechip Fund Direct-IDCW Reinvestment Rs 2000/pm

2-Axis Bluechip Fund – Growth Rs 2000/pm

My wife Toshima Rana age 48 years too want to invest 50K for next 12 years. Please suggest.

Omkeshwar Singh:

Self:

  • EDELWEISS BALANCED ADVANTAGE FUND - GROWTH OPTION
  • CANARA ROBECO EQUITY HYBRID FUND GROWTH
  • MOTILAL OSWAL EQUITY HYBRID FUND-GROWTH
  • TATA BALANCED ADVANTAGE FUND GROWTH

Wife:

  1. Axis ESG Equity Fund – Growth
  2. Motilal Focused 25 Fund – Growth
  3. ICICI Pru US Bluechip Equity Fund – Growth
  4. UTI Flexi Cap fund – Growth
  5. DSP Quant Fund - Growth

Mayank Negi: I am investing 60K per month via SIP in 10 mutual funds for the last 4-5 years. Portfolio is divided between me and my wife. Both are aged 38. The target is long term wealth creation and the horizon in 10-12 years away. Please suggest funds to continue or discontinue with and also new schemes to switch to.

Wife's Portfolio SIPs (All are Direct Growth):

DSP Eqt & Bond - 6000

DSP Eqt Opp - 6000

DSP Midcap - 6000

DSP Top 100 Eqt – 6000

Omkeshwar Singh: Mid cap and Top 100 are good; the remaining 2 can be

  1. Axis ESG Equity Fund – Growth
  2. UTI Flexi Cap fund – Growth

My Portfolio SIPs (All are Direct Growth):

Franklin Focused Eqt - 7000

Franklin Prima - 6000

SBI Bluechip - 7000

SBI Focused Eqt - 6000

SBI Small Cap - 5000

Quantum LT Eqt Value - 5000

Omkeshwar Singh: SBI funds are good, for other you may consider

  1. Motilal Focused 25 Fund – Growth
  2. ICICI Pru US Bluechip Equity Fund – Growth
  3. DSP Quant Fund - Growth

Ankur Jain: I am investing in below funds and want to diversify the portfolio:

1. Axis Long TermEquity Fund - Direct Growth(ELSS) - 2500 Monthly

2. HDFC Mid Cap Opportunities -Regular Plan - Growth - 2000 Monthly

3. ICICI Prudential Bluechip Fund -Growth(Regular) - 2000 Monthly

4. ICICI Prudential Long Term Equity Fund (ELSS -Regular) - 2000 Monthly

5. ICICI Prudential Value Discovery fund (Regular-Growth) - 2000 Monthly

6. Mirae Asset Emerging Bluechip Fund - Direct - Growth - 2000 Monthly

7. UTI Transportation and logistic Fund - Regular - Growth - 1000 Monthly

I am thinking of taking one small cap category and want to merge any above listed MF if it is overlapping with each other. Can you please suggest the small cap fund which I want to invest for my kid's education currently he is 7 month old and my age is 33?

Omkeshwar Singh: Continue with 1, 2, 3 & 6 and for small cap you may choose between UTI Small Cap or Axis Small Cap.

Nishant Makkar: I am 29 years old and investing 20,000 on below MFs SIP. I wanted to know how much I can expect after 10 years of investing in sip from now. Also I wanted to add another 10k, so please suggest some MF which I can invest in.

SBI Blue chip: 5000

SBI small cap: 8000

L&T tax saver: 2000

Icici technology fund: 5000

Omkeshwar Singh: With 20,000 monthly investment a corpus of Rs. 50 lakhs is possible and with 30,000 monthly investment a corpus of Rs. 75 lakhs can be created in 10 years

For additional 10K, these 2 schemes can be considered

  1. Axis ESG Equity Fund – Growth
  2. UTI Flexi Cap fund – Growth

Venkat: I am 54 year age and looking for a regular income post my retirement from the age of my 60 year. Please give your kind advise for investment for the regular income of Rs. 20000/- month.

Investment avenues either in mutual fund or other.
I can invest up to Rs. 10000/- per month up to my age of 60 year.
Please advise risk free investment, as i am the only earning person in the family and have no other sources of income.

Thanks for your kind advise in advance

Omkeshwar Singh: Rs. 10,000 in 6 years can create a corpus of Rs. 11 lakhs; however that will not be sufficient for Rs. 20,000 withdrawal for long term.

If there is any corpus that will be available post retirement then the same can be planned, kindly provide the details

Aneket: Are NPS Tier 2 investments better or generic Mutual Fund schemes that are available in the market. Currently I have no MF or equity investment. Only some SIP in Tier1 NPS via my employer.

I need to invest 20 lacs lumpsum and can also start an SIP of 20k PM. My current investment horizon is for 4 years as of now which may get extended further as I don’t see a major outgo in next 10 years. I am 36 years.

What average return from equities/MFs can you forecast in next 5 years?

Omkeshwar Singh: Equity mutual funds provide better returns in long term.

It is difficult to forecast the returns in mutual funds as it is subject to market risks; however 12% to 14% can be expected in Equity mutual funds schemes.

Markets are at all time high level, it is better to stagger the investments in 18 to 24 months.

If the investment horizon is 10 years as disclosed in the query, equity mutual funds are good option.

Sunil Kale: This is my first time that I would be doing an investment in MF. My monthly budget is 10k per month so which funds would be good for me. My target is for 10 years and how much should I expect will I get after 10 years.

Omkeshwar Singh: You may consider these 2 schemes

  1. Axis ESG Equity Fund – Growth
  2. UTI Flexi Cap fund – Growth

Rs. 10K per month investment can create a corpus of nearly Rs. 25 lakhs

Vibhu Miglani: I have savings of 1 L per month almost static. Assume it to remain constant for next decade (adjusting salary hike with children school fee & rise in daily expenditure).

I do not aim to buy any property due to the fact that change in jobs results in change in location/home as well. So I might not have the fun of enjoyment of self-owned home.

Moreover, I am not certain or decisive of spending fortune on property and be in debt for several years burdened under home loan. I love gold investment (seeing cagr 12.2% value increase from last 20 year from 4.5L/kg to 50L/kg).

I am confused whether to begin sip in few mutual fund or divert in MF as well some safe esteemed companies shares and gold. 

What's your advice please. 

Omkeshwar Singh: You may allocate 10% to 15% in gold and remaining can be in equity mutual funds

Ankur Gupta: I have been investing in mutual funds for last 3-4 years and expanded/diversified portfolio very recently (February/March 2021) for myself and father.

Could you please provide your feedback if this is good to continue for next 5 years or if this needs a modification? All are monthly SIPs.

Father (60 yrs, 30K per month):

Canara Robeco Bluechip Equity Fund - Direct Plan 8000
Mirae Asset Emerging Bluechip Fund - Direct Plan 9000
Axis Focused 25 Fund - Direct Plan 7500
Kotak Small Cap Fund - Direct Plan 5500

Self (34 yrs, 50.8K per month):

Axis Bluechip Fund - Direct Plan 10000
Canara Robeco Emerging Equities Fund - Direct Plan 10000
Invesco India Contra Fund - Direct Plan 3600
Edelweiss Equity Savings Fund - Direct Plan 3600
Mirae Asset Tax Saver Fund - Direct Plan 4000
Nippon India US Equity Opportunities Fund - Direct Plan 4000
PGIM India Flexi Cap Fund - Direct Plan 8000
Axis Small Cap Fund - Direct Plan 7600

Omkeshwar Singh: Father’s portfolio is fine, please continue. Your portfolio schemes are decent and the same may be continued.

Kalyan: I have been a silent reader of your rediff column. I see that you have consistently recommended these 4 funds.

a) UTI Flexi Cap – Growth

b) Parag Parikh Flexi- Cap Growth

c) Axis ESG Equity Fund – Growth

d) DSP Mid Cap Fund – Growth

While 3 of the above 4 (except the ESG fund) have good track records now, on paper, I wonder how consistent it will be. If you take a look at the top funds in last 15 years, no group of funds that were the toppers remained in the limelight for long.

It all began with the Reliance funds, then HDFC top 100/Equity fund, then for a while ICICI Value Discovery and ABSL frontline, then came the ICICI wave and then came the AXIS wave and now Parag Parikh wave without performance in NASDAQ funds, this fund is bound to gain.

Now, let us rewind this to Oct 2020; not very far back, just 9 months ago.

ABSL Frontline Equity has 3 years return of 1.5 % and 5 years return of 5.3 %

HDFC Top 100 has 3 years return of 1.3 % and 5 years return of 4.7 %

ICICI Value Discovery has 3.4 % for 3 years and 4.4 % for 5 years

Note that these were the apple’s eye of the finiancial planners 5 years back and they pushed these schemes for most people.

So, the point I am making is that I have ended up with 20 odd funds, due to all this and each of them were top funds, in some era. The curse of Indian MF industry is that there are no consistent winners. Except for Mirae Emerging bluechip and SBI Smallcap, there are no consistent winners. How does one keep on switching, if you are a long term investor like me? Do you keep ruthlessly booking profits and moving it all to the latest limelight funds?

Omkeshwar Singh: It's better to select mutual funds schemes with good quality portfolio of stocks at good margin of safety.

Quality with good margin of safety should be the deciding criteria, therefore the portfolio needs review to check if the quality and margin of safety is consistent, then the changes of making decent risk adjusted returns i.e. fall less in market fall and give decent returns in uptrend.

If we eliminate the subjective biases that comes with brand, MF name and concentrate on the portfolio of the schemes then the chances of making right decision is much higher.

Further track record is not the right way to look at while selecting the schemes; it’s better look at the quality of the portfolio, because the investors of today will get returns on that portfolio and not based upon past track records, that way at appropriate time portfolio can be rebalanced, i.e. lots of new funds with great quality scheme portfolio are there i.e. Axis ESG, DSP Quant etc, don’t miss the rising star or hidden gems.

murali rajaraman: I am 58 yrs old. Only now I am in a position to invest up to Rs. 10000/- in MF. Kindly advice how i should proceed?

Omkeshwar Singh: Need further details about the objectives of these investments.

Purushotham Jangala: My investment horizon is 10 years with a goal of 1Cr. assuming 8% returns. Below are my monthly SIP details:

Axis long term equity fund - G - 20000/-

ICICI Prudential Nifty Index fund - G - 15000/-

UTI Flexi Cap fund G - 20000/-

Could you please suggest if the portfolio requires any changes?

Omkeshwar Singh: With investment of Rs. 55 K per month the corpus that can be created is Rs. 1.4 crs, the returns that may be expected can be 12% to 14% in equity mutual funds.

The schemes are decent, please continue

SP Gupta: I am a great fan of your suggestions and try to learn about investing. You are doing a great service to society this way.

I am 43 year old and wish to make 1 Crore in next 15 years. Started investing SIP in following funds, kindly correct in case of switch required to better funds:

1. Mirae asset emerging blue chip fund (Growth) -1000

2. Axis small cap fund (Growth) - 1000

3. Parag Parikh Flexi cap fund (Growth) - 1000

4. Axis Focused 25 Fund (Growth) - 1000

5. UTI Flexi cap fund (Growth) - 1000

Wish you good health and warm regards,

Omkeshwar Singh: All are very good schemes, kindly continue. Wish you and all readers to stay safe, stay healthy and happy!

Suresh Kumar Sah: I wish to create a wealth of 2 cr in the next 10 yrs. What amount SIP would be required and what all MF should I invest in?

Omkeshwar Singh: The monthly investment that would be required to create a corpus of Rs. 2 crs in 10 years is Rs. 80,000 /- (@13% annual return)

The schemes that you may consider are as under:

  1. Axis ESG Equity Fund – Growth
  2. Motilal Focused 25 Fund – Growth
  3. ICICI Pru US Bluechip Equity Fund – Growth
  4. UTI Flexi Cap fund – Growth
  5. DSP Quant Fund - Growth

If you want Mr Singh's advice on your mutual fund investments, please mail your questions to getahead@rediff.co.in with the subject line, 'Ask MF Guru', along with your name, and he will offer his unbiased views.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.

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OMKESHWAR SINGH / Rediff.com