How can I rebuild my mutual fund portfolio?

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I am 30 years old. I am investing through SIPs in:
HDFC Small Cap Fund
HDFC Equity Fund
HDFC Top 100 Fund
I also have invested in HDFC Mid-Cap Opportunities Fund (Rs 15,000), HDFC Low Duration Fund (Rs 10,000), HDFC Capital Builder Value Fund (Rs 5,000), HDFC Overnight Fund (Rs 10,000) and HDFC Liquid Fund (Rs 1.84 lakh). I have an LIC endowment plan of Rs 4 lakh. I am paying a premium of 1,600 every month. Now, I want to rebuild my portfolio. Please help.
-Archita Mukherjee

It seems, you are new to mutual funds and not very familiar with basics of investing. If so, you should seek the help of a mutual fund advisor near you. Ask your friends and colleagues for the reference. Find out a reliable advisor and invest through him for a few years, learn enough about mutual fund and gain confidence, before starting to invest on your own.

HDFC Equity Fund-Growth ★★★★★
  • -3.21%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 3.0 YearsTime taken to double money
  • -0.81%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 3.2 YearsTime taken to double money
First, all your investments are in a single fund house. It increases the risk as everything is tied to a single fund house.

Here are some pointers. You should do some basic personal finance planning. One, create an emergency fund that would be enough to take care of your living expense for six months to a year. This will help you if you lose jobs or falls sick, etcetera. You can keep the money for this in bank account and liquid/overnight funds.

Two, get a health cover for your and family.

Three, get a large life insurance cover if you have financial dependents.

Use a pure term cover to buy an adequate life insurance cover. Term insurance premiums are cheap. They help you to buy a a large life cover. Do not use endowment plans to buy insurance cover because they are very expensive, and you will never be able to buy a large life cover with them. They would also offer you poor returns.

Once the safety net is in place, you can consider investing for your various financial goals. Try to identify various financial goals. For short-term goals, you should stick to debt mutual funds that matches your investment horizon. For long-term goals, you should invest in equity mutual funds. Choose a category that matches your risk profile. For example, if you are a conservative investor, you may invest in large cap mutual funds. If your risk profile is moderate, you should choose multi cap mutual funds. As a rule, avoid high risk categories like mid cap, small cap, sector schemes, etcetera. They extremely risky and volatile and most new investors find it very difficult to cope with extreme variation in returns in them.

Reassess your risk profile and ensure that your schemes are in line with it. As said earlier, you must be careful about your investments in mid cap and small cap schemes. Do not choose random schemes and add them to your portfolio. Always opt for a goal-based investing and assign an investment to a future goal. This will hep you to focus on your goals and avoid obsessing about daily movements in the market.

Do not add too many schemes. Since you are investing a modest amount, you just need one or two schemes.
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