MF Guru: ‘Your investment style is right’

Sudhanshu Singh, director IBBM, MM Securities, answers your mutual fund queries:

Do you have mutual fund queries? Please mail your questions to [email protected] with the subject line ‘Ask Sudhanshu’ along with your name and Sudhanshu will offer his unbiased views.

Rupert D’Souza: Sir, my age is 50 and I want to make lump sum investment of Rs 2.5 lakh each in debt funds. I am looking for returns that would be better than FDs but also inflation-beating. Looking forward to your suggestions.

Sudhanshu Singh: I would like to suggest that in spite of putting all your eggs in one basket (that is, debt funds), you should go for diversification of funds for goods returns.

You should put 50 per cent of your investment in debt funds, and 50 per cent should go into balanced funds which is combination of debt and equity. This way you will always have 65 per cent of investment in debt only and 35 per cent in equity.

Some good debt funds can be:

1. ICICI Prudential Ultra Short Term Fund – Direct Plan – Daily IDCW Payout

2. Aditya Birla Sun Life CEF – Global Agri Plan – Growth-Direct Plan

3. IDFC Government Securities Fund – Constant Maturity Regular – Growth

4. Nippon India Gilt Securities Fund – Direct Plan Defined Maturity Date Option – Growth

Some Good balanced funds can be:

1. HDFC Balanced Advantage Fund

2. ICICI Prudential Balanced Advantage Fund

3. Nippon India Balanced Advantage Fund

4. Edelweiss Balanced Advantage Fund.

5. L&T Dynamic Equity Fund.

Anmol Gulecha: Sir, I want to create a corpus of Rs 1 cr in next 15 years. I can invest more than Rs 10,000 per month in mutual funds. Is Rs 10,000 SIP in different mutual funds enough to create this corpus or will I need to put more money into my SIPs?

What kind of mutual funds would you suggest for me?

Sudhanshu Singh: For, achieving this target your thought process is correct. This target can surely be achieved in the next 15 years. By taking an average CAGR 14 per cent annualised, which is currently the average return in last 15 years given Indian growth-based mutual funds, this target is surely achievable. Seeing India’s bright future ahead in terms of economic growth, the best mutual funds for this aim will be growth-based stock mutual funds.

Janaki Patil: I am 42 and my monthly salary is Rs 40,000. With twin sons and along with my husband’s salary, we manage to save Rs 28,000 per month. We want to invest half of these savings in some good mutual funds which we plan to keep investing in for the next three to four years.

I am looking forward to use the funds for the education of my sons who will finish their twelfth standard in 2026. How should I go about my investments?

Sudhanshu Singh: Provided a little time frame and a huge target of education of your twins, we have very limited scope left. You should invest all these funds on monthly basis in growth oriented mutual funds. Indian growth-based mutual funds have a history of giving 14 per cent -16 per cent of CAGR annualised returns, and seeing the bright prospects of Indian economy probability is high that it will continue. This will give enough returns for starting the education of your twins for first 2-3 years. Further for higher education I will suggest you to keep this investment going in the same way till they end their graduation, which will give enough funds to keep their higher education in line.

Pranavati Deka: My MF journey began some 5 years ago and I have a pretty diversified portfolio.

I need to grow my money quickly and so planning to go for top up SIPs in solid funds. Somebody told me that I cannot do this via SIPs in my existing MF portfolio. Will I need to cancel my existing MF SIPs to do this? My existing portfolio is doing good and I don’t want to disturb it. I want create a long term portfolio. Please advise.

Sudhanshu Singh: It is wrong to say that it cannot be done by top ups in current SIPs; it can be done. But it is never a good investment method of going for top ups. Let the current portfolio go as it is going and see your money go up gradually. For growing your money quickly, I will suggest to find new upcoming NFOs in good AMCs and start a fresh long term portfolio in growth-based equity mutual fund that will achieve your targets.

Soham Guru: I want to do SIPs of Rs 25,000 per month. I am 50 and can invest 10 lakh as lump sum too. In which MFs can I start my SIPs and would you have any good names for making lump sum investment?

Sudhanshu Singh: Nice to know that you can invest 10 lakh in lump sum. I will suggest you to invest this lump sum money in debt-based mutual funds which can give inflation-beating return. You should try to keep in line with returns on this fund and wait for a right opportunity to invest this fund in balanced or growth funds (like when you see market crash).

Further as far as your monthly investment goes you should invest the same in balanced funds which will be a mixture of debt and equity and will give a good return with safety of funds.

Some good balanced funds can be:

1. HDFC Balanced Advantage Fund

2. ICICI Prudential Balanced Advantage Fund

3. Nippon India Balanced Advantage Fund

4. Edelweiss Balanced Advantage Fund.

5. L&T Dynamic Equity Fund.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.

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