Mutual Fund Portfolio Management Tips for New Investors
Last Updated : Oct. 5, 2019, 3:24 p.m.
Case Study – Suppose you are new to the mutual fund industry and want to create wealth in a span of 7 years and above. Your risk appetite is moderate and you are investing in say Mirae Asset Emerging Bluechip Fund. You prefer investing via SIP and can invest around ₹ 10,000 monthly. Shall you stick to one fund or add some to the portfolio?
Since you possess a moderate risk appetite, you are perhaps not on the right track by choosing Mirae Asset Emerging Bluechip Fund. The reason being, it’s a large and mid cap fund that goes in sync with investors who can afford high risks on their investments. You would be better off choosing a pure large cap fund that will align with your moderate risk appetite. As you are new to mutual funds , you must know that a large-cap fund invests in the stocks of top 100 companies according to market capitalization. These companies generally post good performance, irrespective of what happens in the market.
We have listed out a few large cap funds that have delivered maximum SIP returns to investors in a span of 5 and 10 years.
Large-cap Funds with Impressive SIP Returns
| Large-cap Funds | 5-year Return | 10-year Return |
|---|---|---|
| ICICI Prudential Bluechip Fund | ||
| Axis Bluechip Fund | ||
| Mirae Asset Large Cap Fund | 9.57% | 14.22% |
| SBI Bluechip Fund |
Note – The return data is sourced from Value Research as on October 4, 2019. The returns are calculated taking into account the assumption that the SIP is made on the first of every month.
Give a hard look at the list and choose the one for you. If you want us to choose for you, then it’s a tight call between Mirae Asset Large Cap Fund and Axis Bluechip Fund as their numbers are neck and neck. You can choose any of the two.
Shall You Exit Mirae Asset Emerging Bluechip Fund?
The advice would be to stick there but invest a maximum chunk in any of the two – Axis Bluechip Fund or Mirae Asset Large Cap Fund – that you choose. As you have expressed that you can invest a maximum of ₹10,000 a month via SIP, it will be better to put ₹7,500 (75% of your monthly portfolio) in Mirae Asset Large Cap Fund and the rest in your existing fund.
How Much Corpus You’re Likely to Generate Investing ₹10,000 (Monthly SIP) for 10 Years?
Our calculation says that you could land up with a corpus worth around ₹23.23 lakh, nearly double the sum on a total investment of ₹11.23 lakh (approx.), at an assumed annual return rate of 12%.
Now see whether that’s the corpus you want to have in 10 years. If you want more, you should increase the investment tenure by a few years. Another option is to increase the outflow of SIP every year. This is possible thanks to the step-up SIP feature. The extent of increase would depend on your goal amount and the appreciation you have in your income year after year.