A fund for retirees to beat inflation

Mutual fund investors often wonder how many and what type of funds they should buy. ET Wealth presents five fund portfolios to suit different sets of investors. These portfolios have been designed by Value Research for our television channel ET Now. Every week, we will analyse one portfolio in detail and provide an update on the rest. Go ahead and choose the portfolio that best suits your needs.

‘I want regular income’ Fund

This portfolio is designed for retirees looking for regular income from their investments. Unlike the other portfolios that invest in monthly instalments, this one withdraws Rs 20,000 every quarter from each of the four funds.

This portfolio will be especially useful for those who have already exhuasted their maximum limit of Rs 15 lakh invetsment in the Senior Citizens Savings Scheme. Since Rs 15 lakh of your retirement corpus is invested in fixed income, you need exposure to equity to protect you from inflation.

The investment has been divided equally across four funds. The first is the Franklin Templeton Dynamic PE Ratio Fund of Funds. This fund gives the portfolio a diversified equity allocation with lower risk.

The fund invests 40% in units of Franklin India Bluechip and Templeton India Income. Both are high-performing equity funds.

The two monthly income funds—HDFC Long-Term MIP and Reliance MIP—have been picked for their modest equity allocation, so that they give higher returns than fixed income returns. The two have been top performers in their category. Each invests nearly 20% in equities.

Finally, the inclusion of a balanced fund offers a stronger equity allocation. This fund invests a maximum of 70% in equity, taking the total equity allocation in this portfolio up to 40%.

We invested Rs 10 lakh in this portfolio 19 months ago and it has so far given us annualised returns of 14.5%. The funds invested in this portfolio remained insulated during the market volatility we witnessed last week, keeping the portfolio in the green.