MF queries answered by Jignesh Shah, Founder of Capital Advisors

I am 38 and had started investing Rs 5 lakh in two SIP through STP route: a) Rs 8,000 per month for 25 months in Mirae Asset Cash Management Fund to Mirae Asset India Opportunities Fund with a horizon 3-5 years and b) Rs 10,000 per month for 30 months in Motilal Oswal Ultra Short-term Bond Fund to Motilal Oswal Most Focused Multicap 35 fund with a horizon of 3-5 years. I seek good returns from both funds, Please advise if I need to change my investment pattern.

Both these funds have done well in recent times and going by their investment strategy, it is most probable that they may perform well in future. Motilal Oswal Most Focused Multicap 35 Fund is a little concentrated than other funds in the category. We generally suggest 5-6 equity funds with allocation of 2/3rd investments into large-cap and multi-cap and 1/3rd into mid-cap / small cap / thematic funds. Knowing that mid-caps and smallcaps have run up faster, we shall suggest to add into SIP or STP into these categories in gradual manner. Also, we shall suggest to add one more fund from largecap category and one more from multicap category and have a basket of 5-6 equity funds. We prefer Kotak Select Focus Fund, SBI Bluechip Fund and Aditya Birla Sun Life Frontline Equity Fund among largecap categories. We like Aditya Birla Sun Life Equity Fund, SBI Magnum Multi Cap Fund and Franklin Prima Plus Fund among multicap category. And we like Franklin India Smaller Companies Fund, Mirae Asset Emerging Bluechip Fund and Kotak Emerging Equity Fund in the smallcap and midcap space.

I would like to invest into ELSS mutual funds in order to save tax under Section 80C. My inclination is towards Aditya Birla Sun Life Tax Relief 96 and Reliance Tax Saver Fund. Please suggest a couple of good funds.

--Dhaval

Both are reasonably good. Based on our criteria of fund selection, we generally suggest investors to look at Axis Long Term Equity Fund, besides Aditya Birla Sun Life Tax Relief 96 among ELSS schemes.

I will have Rs 7 lakh in the second week of December, when my existing FDs mature. I am a senior citizen and pensioner and have interest income of Rs 2.5 lakh per annum. My investment horizon is 3-5 years. Please suggest suitable options for me.
--Cp Kulkarni

As you are a senior citizen and pensioner, we suggest that you should have conservative wealth profile where almost 70 per cent or more is invested into debt (fixed income) products and may be less than 30 per cent is invested into equity. Directly approaching investments probably at this juncture considering your profile we would suggest you look at mix of Arbitrage Funds (which gives tax-free monthly dividend pay-outs), Short-Term Debt Funds (high quality and low expense ratio) and bank FDs. These suggestions are just as a substitute of your fixed deposits investments. If you do not have any other equity component within your portfolio, smaller portion of assets into equity may help you to beat inflation over prior of time. Among short-term debt funds, we prefer Aditya Birla Sun Life Short Term Debt Fund, HDFC Short Term Opportunities Fund and IDFC SSIF Short Term Fund.