Suggest improvement to my portfolio to generate high returns

I am 35 years old and my wife is 32 years old. We both are state government servants. We have two children aged 7 years (boy) and 2 years (girl). We invest in MFs through SIPs. My Risk appetite is moderate to high. My objective is long term wealth gain, retirement, children education and marriage. We have adequate term insurance, mediclaim, etc. Please suggest improvement/corrections in my portfolio for high returns in long term.

My Present MF Portfolio:
1. Birla SL - Pure Value Fund Reg (G): Rs 6000.00
2. ICICI Pru - Focused Bluechip Equity Fund Reg (G): Rs 5,000
3.Reliance Small cap fund Direct (G): Rs 4,000
4.Birla SL - Balanced 95 Fund Reg (G): Rs 1,0000
5.ICICI Pru - Flexible Income Plan Reg (G): Rs 5,000
6.ICICI Pru - Value Discovery Reg (G): Rs 5,000
7.Birla SL - Frontline Equity Fund Reg (G): Rs 3,000
8.DSP BC Micro cap fund Direct (G): Rs 2,000

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9.Mirae Asset Emerging Bluechip Fund direct (G): Rs 4,000

Also, shall I invest in NPS for an extra tax benefit of Rs. 50000.
--Stalin Kadem

Abhay Shah, Certified Financial Planner, responds:

Before answering your portfolio query, I must convey some important points to you: Investing for the long term is good, but over-diversification of portfolio is never good.

Your portfolio must be diversified but not over diversified as SIP itself adjust your risk in portfolio and as your horizon is long term. Balanced funds or debt funds should be avoided except for emergency fund planning.

For Tax Planning, you can consider NPS.

1. Birla SL - Pure Value Fund Reg (G):
-Mid Cap Value – 5 year Return 28.41 per cent per annum
--Good Fund, but overdiversification kills returns. Consider shifting money to Mirae Asset Emerging Bluechip Fund.

2. ICICI Pru - Focused Bluechip Equity Fund Reg (G)
-Large Cap Growth - 5 year Return 18.29 per cent per annum
Good Fund, but overdiversification kills returns, consider shifting to Birla SL Frontline Equity Fund.

3.Reliance Small cap fund Direct (G)
-Small Cap Growth - 5 year Return 33.28 pe cent PA
It is a good fund, you may continue with it.

4.Birla SL - Balanced 95 Fund Reg (G)
-Hybrid Equity Oriented Growth - 3 year Return 16.80 per cent PA
You can stop investing in it as you say your risk profile is moderate to high. Balance funds not advised for you, considering your age and time period you have.

5.ICICI Prudential - Flexible Income Plan Reg (G)
-Debt Fund Short Term - 5 year Return 9.14 per cent PA
If you have an emergency fund, you can stop investing in it. If you don't have an emergency fund, you may take look at the money invested in Birla Balanced Fund, and if the money is good enough for your emergency fund, you may consider stop investing in this fund.

6.ICICI Pru - Value Discovery Reg (G)
-Multi Cap Growth - 5 year Return 23.15 per cent PA
It is a good fund, you may continue with your investments.

7.Birla SL - Frontline Equity Fund Reg (G)
-Large Cap Growth - 5 year Return 20.21 per cent PA
It is a good fund, you may continue with your investments in it.

8.DSP BC Micro cap fund Direct (G)
-Small Cap Growth - 5 year Return 32.90 per cent PA
Good fund, but overdiversification kills returns. The inflow to the fund is stopped, we believe it may underperform in the coming days. You may consider shifting to Reliance Small Cap Fund.

9.Mirae Asset Emerging Bluechip Fund direct (G)
-Mid Cap Growth - 5 year Return 32.97 per cent PA
It is a good fund, you may continue with your investments in it.



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