All investments in green? Here’s how to realign your mutual fund portfolio

Choosing the right mix of mutual funds and knowing when to rebalance can play a crucial role in long-term wealth creation. While many investors focus on picking winning schemes, portfolio review and timely reshuffling are equally important to maintain the right asset allocation and risk balance.

This is the same with Irin, who is an investor and a viewer of The Money Show on ET Now. Her mutual fund portfolio has delivered healthy gains across schemes. Her holdings include HDFC Children’s Fund, UTI Nifty 50 Index Fund, SBI Contra Fund, and Canara Robeco Small Cap Fund—all currently in profit.

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With a total investment that has grown significantly over time, she is now looking to rebalance her portfolio, book profits where needed, and start systematic investment plans (SIPs) in select schemes.

Responding to the query, market expert Harshvardhan Roongta highlighted that the investor has built a decent corpus through lumpsum investments. He also pointed out that maintaining separate portfolios for lumpsum and SIP investments is not necessary, as both strategies can be executed within the same schemes and folios for better simplicity and tracking.

“While it seems that she is maintaining separate folios for lump sum investments and a separate portfolio for SIPs. But the first point is that you can do an SIP and do a lump sum in the same schemes in the same set of folios as well. You do not need to maintain separate portfolios for each of them,” the expert said.

Looking at the portfolio composition, Roongta said that the name of schemes in which she is making SIPs is not known but the name in which she is making lumpsum investments is shared. So checking on those schemes, the expert noted a key gap—lack of exposure to midcap funds.

While the existing schemes are fundamentally sound, he recommended a strategic reshuffle to improve diversification. Specifically, he advised switching out of the Canara Robeco Small Cap Fund, not due to concerns about the fund itself, but to address the imbalance in allocation.

“You had one Canara Robeco Smallcap Fund. The scheme is fine. So, no complaints on that part. It is just that with the fund allocation that you have in your portfolio,” the expert said.

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According to him, instead of holding a pure small-cap fund, the investor could consider reallocating to either a multicap or midcap fund to achieve a more balanced portfolio. He suggested options such as Nippon India Multicap Fund or WhiteOak Midcap Fund as potential alternatives to fill the gap.

The broader takeaway from the discussion is that even well-performing portfolios need periodic review. Investors should not only focus on returns but also ensure that their allocation across market segments—large cap, midcap, and small cap—remains aligned with their financial goals and risk appetite.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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