Mutual Fund Corner: 'I want to invest around Rs 5 lakh in mutual funds, what should I do?'

A: In order to do an STP, you need to invest in liquid funds. You can invest in these funds: Aditya Birla Sunlife Liquid Fund, HDFC Low Duration Fund, Mirae Asset Cash Management Fund and Reliance Liquid Fund.

A: You have exposure to nine funds currently. We would advise you to limit your exposure in large and mid-cap funds to a maximum of 4-5 funds. Hence we suggest you to increase your investment in the below funds:

Mirae Asset Emerging Bluechip Fund: With the total AUM of Rs 5,730 crore, the fund is managed by Neelesh Surana. The fund has been a consistent performer. We suggest you to continue your investments in the fund.

SBI Bluechip Fund: The performance of the fund has dipped in the last one year. However, it has a long-standing track record. We recommend you to hold on to the fund and monitor its performance.

L&T Hybrid Equity Fund: This fund is a balanced fund, which invests in equity and debt. If we look at the returns generated by balanced funds historically, it can be seen that investments in equity and debt separately have generated higher returns than a balanced fund. Hence, we recommend you to shift your investments in HDFC Mid-cap Fund.

Kotak Standard Multi-Cap: With the total assets under management (AUM) of Rs 21,271 crore, this fund is managed by Harsha Upadhyaya. The fund has delivered higher risk adjusted returns measured by sharpe ratio vis-à-vis benchmark in most of the time frames, indicating that the calls taken by the fund manager has worked in his favor with the fund outperforming the benchmark across various time periods. The fund is well diversified across 55 stocks with almost 75 percent allocated to large-cap companies. You can continue to invest in this fund.

ABSL Frontline Equity Fund: Instead of investing in Aditya Birla Frontline Equity, we would suggest you to invest in another fund of the same fund house – Aditya Birla Sunlife Equity Fund. If you see over the last 2, 3 and 5 year returns, ABSL Equity Fund has outperformed ABSL Frontline Equity Fund. ABSL Frontline Equity Fund is a pure large-cap fund, while ABSL Equity Fund is a multi-cap fund. The alpha generation of a multi-cap fund is higher than that of a pure large-cap fund.

ICICI Pru Equity & Debt Fund (G): This fund is a balanced fund, which invests in equity and debt. If we look at the returns generated by balanced funds historically, it can be seen that investments in equity and debt separately have generated higher returns than a balanced fund. Hence, we recommend you to shift your investments in Mirae Asset India Equity Fund.

HDFC Hybrid Equity Fund (G): This fund is a balanced fund which invests in equity and debt both. If we look at the returns generated by balanced funds historically, it can be seen that investments in equity and debt separately have generated higher returns than a balanced fund. Hence, we recommend you to shift your investments in Franklin India Prima Fund.

You have also invested in two tax-saver funds. We suggest you to invest in ELSS funds only if your sole aim is to save tax.

A: IDFC Multicap Fund: The fund has generated lower than average returns in the last 2, 3 and 5 year time frame. It has also underperformed its category average in the past years. We would suggest you to shift your investments in Mirae Asset India Equity Fund.

Reliance small-cap Fund: The fund has generated good returns. However, the standard deviation of the fund is high. We suggest you to hold your investments in the fund and review it on a regular basis.

ICICI Pru Nifty Next 50 Fund: This is an index fund. There is no alpha generation in index funds since they mirror the index. We suggest you to invest in actively managed diversified funds. You can invest in ABSL Equity Fund.

HDFC Hybrid Equity: This fund is a balanced fund, which invests in equity and debt both. If we look at the returns generated by balanced funds historically, it can be seen that investments in equity and debt separately have generated higher returns than a balanced fund. Hence, we recommend you to shift your investments in Franklin India Prima Fund.

A: You have an exposure to 10 funds. Over-diversification in portfolio can lead to lower returns. Below is the review on your funds:

Kotak Select Focus Fund: Now called Kotak Standard Multi-cap Fund. With the total AUM of Rs 21,271 crore, this fund is managed by Harsha Upadhyaya. The fund has delivered higher risk adjusted returns measured by Sharpe ratio vis-à-vis benchmark in most of the time frames, indicating that the calls taken by the fund manager have worked in his favor with the fund outperforming the benchmark across various time periods. The fund is well diversified across 55 stocks with almost 75 percent allocated to large-cap companies. You can continue to invest in this fund.

SBI Bluechip Fund: The performance of the fund has dipped in the last one year. However, it has a long-standing track record. We recommend you to hold on to the fund and monitor its performance.

Mirae Asset India Equity Fund: The fund has been a consistent performer. You can continue to invest in the fund.

HDFC Mid-cap Opp Fund: You can continue to invest in the fund.

ICICI Bluechip Fund: The total AUM of the fund is Rs 18,747 crore and it is managed by Rajat Chandak and Priyanka Kahndelwal since the last one year. You can continue to invest in the fund.

ABSL Frontline Equity Fund: Instead of investing in Aditya Birla Frontline Equity, we would suggest you to invest in another fund of the same fund house – Aditya Birla Sunlife Equity Fund. If you see over the last 2, 3 and 5 year returns, ABSL Equity Fund has outperformed ABSL Frontline Equity Fund. ABSL Frontline Equity Fund is a pure large-cap fund, while ABSL Equity Fund is a multi-cap fund. The alpha generation of a multi-cap fund is higher than that of a pure large-cap fund.

We would suggest you to redeem your investments from ICICI FMCG Fund, since it is a thematic fund. You can continue to invest in debt funds. Also, we would suggest you to build your entire portfolio with the above recommended funds.

A: SSP Small-cap Fund: The fund had stopped taking investments last year. However, it has again started taking investments now. The fund has been under-performing in the last two years. We suggest you to shift your investments to another small-cap fund like HDFC Small-cap Fund.

HDFC Mid-cap Opp Fund: With the total AUM of Rs 21,149 crore, this fund is managed by Chirag Setalvad and Rakesh Vyas. The scheme predominantly invests in mid-cap companies. The fund has been a consistent performer and you can continue to invest in the fund.

SBI Magnum Multi-Cap Fund: In the one year, second year and third year time frame, ending August 31, 2018, the fund has shown some under performance. Instead, we would suggest you to invest in another multi-cap fund – Kotak Standard Multi-cap Fund which has been a consistent performer over all time frames.

ABSL Frontline Equity Fund: Instead of investing in Aditya Birla Frontline Equity, we would suggest you to invest in another fund of the same fund house – Aditya Birla Sunlife Equity Fund. If you see over the last 2, 3 and 5 year returns, ABSL Equity Fund has outperformed ABSL Frontline Equity Fund. ABSL Frontline Equity Fund is a pure large-cap fund, while ABSL Equity Fund is a multi-cap fund. The alpha generation of a multi-cap fund is higher than that of a pure large-cap fund.

ABSL Tax Relief 96 Fund: This is an ELSS fund. We would suggest you to invest in ELSS funds if your aim is to save tax.

If you want to make an additional investment of Rs 5000, you can invest in Mirae Asset India Equity Fund.

A: You can invest the amount as lump sum in the ratio of 70:30 in large cap and mid cap funds. Along with this, we would also suggest you to start with SIPs for wealth creation. In large cap, you can invest in Kotak Standard Multi-cap Fund and Birla SL Equity Fund; in Midcap, Franklin India Prima and Canara Robeco Emerging Equities Fund; in Small Cap, HDFC Small-Cap Fund.

A: You have invested in two ELSS funds. We would suggest you to invest in ELSS funds only if your sole aim is to save tax. Also, we would suggest you to make your investments in the funds off top 10 fund houses. It is also important to diversify your portfolio across different fund houses. You have two funds from the same house. We suggest you to continue your investments in Kotak Select Focus Fund, which is now called Kotak Standard Multi-cap Fund. You can shift your investments from Kotak Opportunities Fund to Mirae Asset India Equity Fund. We would not suggest you to invest in a balanced fund, as we feel that your equity and debt investments should be separate. In order to get better returns, you need to invest in equity and debt funds separately.

A: You can invest as lump sum in the ratio of 60:40 in equity mutual funds and debt mutual funds. You can expect around 14-15 percent returns. In Large Cap, I recommend Mirae Asset India Equity and Birla SL Equity. In Midcap, I recommend HDFC Mid-cap Opportunities Fund and in debt funds, I recommend ICICI Pru Regular Savings and Franklin India Income Opp Fund.

A: You can look at investing in Axis Focused 25 out of all the funds selected by you. We would suggest you to build your portfolio in Birla SL Equity, Mirae Asset India Equity and in the Mid-cap category you can invest in Canara Robeco Emerging Equities Fund.

A: Since you have a long-term time horizon, we would suggest you to in invest in equity mutual funds. You can look at investing Mirae Asset India Equity Fund in the large-cap category and Franklin India Prima Fund in the Mid-cap category.

A: We would suggest you to invest in Kotak Select Focus Fund, which is now called Kotak Standard Multi-cap Fund. The fund has delivered higher risk adjusted returns measured by sharpe ratio vis-à-vis benchmark in most of the time frames, indicating that the calls taken by the fund manager have worked in his favor with the fund outperforming the benchmark across various time periods. The fund is well diversified across 55 stocks with almost 75 percent allocated to large cap companies. The fund manager, Harsha Upadhyay, is confident on his portfolio positioning and strives to deliver an alpha of 4 percent-5 percent in the coming years as he expects the earnings growth to pick up going forward.

A: It's important to have a well-diversified portfolio and investing only in mid-cap funds can make your portfolio risky. All your midcap funds are doing well. However, we would suggest you to add Mirae Asset India Equity Fund and Kotak Standard Multi-cap Fund to your portfolio.