Mutual fund queries answered by Vishal Dhawan, Founder, Plan Ahead Wealth Advisors

Q. I want to invest Rs. 80k in MFs for a short term of 1 year. Pls advise the name/names of fund to invest so as to get a return of 12 to 15%. --- Devidasan
Since your investment time horizon is one year, there is a mismatch in return expectations of 12-15% pa and your investment time horizon. For a 1 year investment horizon, you can look at Ultra short term funds. This category of funds currently has yields in the portfolio in the range of 8-8.5% pa. However, if you are willing to extend your investment time horizon to 5-7 years, you can have a more aggressive portfolio, where you have the potent of generating a higher rate of return. In that case, you can invest in a two diversified equity funds with good track records.

Q. I am a 53 yr old executive working currently in a MNC. I earn around 50 lacs pa. My current position ..
Exposure to equities, 1 Cr. Exposure to mutual funds, SIP of around 45k per mth.I would like to get advice so that I can be assured of a good retirement . Should I invest additionally in mutual funds, ELSS for the next 7 years to take care of my retirement and which finds would you advice ----Sunil Rao
Since you are about 7 years away from your retirement, it would be advisable to have a portfolio that is a blend of exposure to equities and equity mutual funds, as well as fixed income instruments like the PPF/EPF, tax free bonds and debt/fixed income oriented mutual funds. Considering that you have a fairly significant salary, and are working for a MNC, the tax benefits under Sec 80C are probably covered through your EPF already. Thus, investing in ELSS funds may not be required. You could consider investing in a combination of diversified equity funds, balanced funds, short term debt funds and dynamic bond funds to create a well rounded portfolio. Look for funds with good track records in each category.

Q. My age is around 45 years and my daughter age is 13 years. Presently, I work in a private firm and used to debit 10% of my basic in the VPF account. Else, I have no other investment. I have no experience of Mutual Funds. Still, I wish to invest around Rs.8000/month in (SIP) Systematic Investment Plan, which will assure a yield of handsome return. Please advise me accordingly ---Manas

As you already have a significant exposure to fixed income instruments, and have never invested in mutual funds before, the use of SIPs to invest in a disciplined manner is a good idea. You can consider balanced funds to start with, which will give you an exposure to equities in the range of 65% to 80% in the portfolio, and the rest in bonds .You should ideally have a minimum investment horizon of 5 years due to the significant exposure to equities in balanced funds. You could consider investing equally in the HDFC balanced Fund - Growth and TATA Balanced Fund - Growth.

Q. I have started the following SIPs: ICICI Prudential Focused Bluechip Equity Fund (Large), Mirae Asset India Opportunities Fund (Multi), ICICI Prudential Value Discovery Fund (Multi), Franklin India Smaller Companies Fund-Growth (Small&Midcap).

This is the first time I have started investing in SIP with a monthly contribution of 2K in each portfolio.

1. Is my investment diversification correct?

2. I want to add another monthly 2K SIP in small and mid cap. Kindly suggest one.

3. Since market is still down, I can invest a onetime lump sum of 30k in a fund. Is it a good idea? If yes, then please suggest.

Considering that this is your first exposure to mutual funds through SIPs, we would recommend that you be a little more conservative with the categories that you invest in. We would recommend that you avoid investing in mid and small cap funds in the initial stages, as they can be very volatile and are ideally not suited for first time investors. We would therefore recommend that you consider stopping your SIP in Franklin Smaller Companies Fund, as it is not suitable for a first time investor. The rest of your fund choices for SIPs are fine. For the additional Rs 2000 SIP per month, as well as the replacement of the Franklin Smaller Companies Fund of Rs 2000 per month, you could consider investing in the Franklin India Prima Plus Fund - Growth and HDFC Balanced Fund – Growth.

We believe timing the market is not recommended, especially for first time investors. Thus, you could consider investing Rs 30000 lump sum into a liquid/ultra short term bond fund, from where you can invest Rs 2500 per month over the next 12 months through a Systematic Transfer Plan (STP) into the HDFC Balanced Fund – Growth. This will give you the benefit of rupee cost averaging.