Should I cut down my stock allocation and invest more in mutual funds?

My risk appetite is moderately high and my investment horizon is 10 years. Please review my portfolio. I am investing in the following mutual fund schemes:

Largecap
SBI Bluechip Fund: Rs 3000 per month
Kotak Select Focus Fund: Rs 3,000 per month (not started yet)

Midcap
Aditya Birla Sun Life Pure Value Fund: Rs 3,000 per month
L&T Midcap Fund: Rs 3,000 per month

Smallcap
L&T Emerging Businesses Fund: Rs 2,000 per month
Reliance Small Cap Fund: Rs 2,000 per month

Balanced Fund
HDFC Balanced Fund: Rs 3,000 per month (not started)
ICICI Prudential Equity & Debt Fund: Rs 2,000 per month (not started)

ELSS
Axis Long Term Equity Fund: Rs 1,500 per month
L&T Tax Advantage Fund: Rs 2,500 per month

I am already investing in most of these mutual fund schemes. I will start investing in the rest by next month.

I have planned to invest Rs 20,000 in stocks. Should I cut down from my allocation in stocks and increase my allocation towards mutual funds?

-- Ratan Arya

Vishal Ramaswamy, a mutual fund advisor, responds:

You seem to be on the right track with the structure and the weightage for your portfolio.

After re-categorisation, Kotak Select Focus Fund has become Kotak Standard Multicap Fund. Even though the scheme invests across market caps, it focuses predominantly on largecap stocks. So, you don't have to sell it. HDFC Balanced Fund has also changed to HDFC Hybrid Equity Fund. You don't have to exit this scheme also.


I believe you have made the right allocation in mutual funds and stocks. You have to be careful when you are investing in mid- & small-cap stocks. They offer much higher returns but they also come with considerable risks.