Mutual Fund Consolidation

Dear Srikanth,

I came across your blog last week and found it interesting
enough and thought of seeking your advice on my MF portfolio.

I have been investing in the following Mutual Funds since

January 2007 via SIP and wish to remain invested in them for the next 15-20
years.

Fund	Portfolio weight
DSPML Top 100 Equity Reg	3%
HDFC Equity	15%
HDFC Prudence	1%
HDFC Tax saver	5%
Kotak 30	3%
Magnum Contra	15%
Magnum Global	7%
Magnum Taxgain	6%
Reliance Diversified Power Sector Retail	7%
Reliance Growth	10%
Reliance Vision	14%
Sundaram BNP Paribas Select Midcap Reg	3%
Sundaram BNP Paribas Taxsaver	3%
Tata Infrastructure	8%

Please suggest as what needs to be done if I wish to consolidate
my portfolio to 5-7 diversified funds plus 1-2 ELSS funds.

Moreover, would this be the right time for portfolio consolidation

since most of the funds are in Red since January due to market downturn.

Warm Regards
Sandeep Nangrani



SRIKANTH SHANKAR MATRUBAI REPLIED
sharesher

Dear Sandeep,

As you have not given any details about yourself like age, risk profile, I have assumed you to be aged about 35 years with a medium risk profile considering your 15-20 years time horizon. It feels really good to see people like you who would like to stay invested for 15 years and above. Also, the fact that you are investing through sips only gladdens my heart more. Congratulations. With your kind of time horizon, you can definitely plan to earn high returns on your investments.

You have 31% exposure to one Single Fund House, Reliance. Normally, it is not considered good to have more than 20% exposure to 1 single Fund House.
Your exposure to HDFC Mutual Fund @ 21% is just about Ok.
You have 20% exposure to Large Caps.
You have 15% exposure to Sector Funds (Rel Diversified Power & Tata Infra)
You have 64% exposure to Diversified Equity funds (HDFC Equity, HDFC tax Saver, Magnum Contra, Magnum Global, Magnum Taxgain, Reliance Growth, Sundaram Midcap/Taxsaver).

You need to increase your exposure to Balanced Fund and also add an International fund to your portfolio.
You can stop your sip in the following funds and also cash out due to their below par performance and hazy future ::::
Magnum Global (Only the name is Global, but it invests in Indian Equities only)
Magnum Taxgain
Reliance Diversified Power Sector Fund (Bigger Corpus than even Reliance Growth and not so rosy picture for Power Sector)

Switch from HDFC Equity to HDFC Prudence Fund
Also switch from Sundaram Select Mid cap to Sundaram Select Focus Fund. (your mid-cap exposure will be taken care by Reliance Growth Fund).
Instead of Tata Infrastructure, you can invest in DSML tiger Fund which has wider range of stocks within Infra Sector (Financial, Power, Metals, etc) and is less vulnerable in a DownTrend as evidenced recently)
You can consider adding Fidelity International Opportunities Fund which would take care of your Intl Exposure.
For ELSS, you can continue to stay invested in HDFC Tax Saver and Sundaram Tax Saver, and for your furture ELSS tax funds, you can add
DWS TAx Saving Fund (Added Bonus is Free Life Insurance of 5 times your investment amount)
Birla sunlife Tax Relief 96 Fund
Lotus India Tax Plan
After effecting these changes, your portfolio will look like this :
Birla sunlife Tax Relief 96 Fund
DSPML Top 100 Fund
DSPML Tiger Fund
DWS Tax Saving Fund
Fidelity International Opportunities Fund
HDFC Prudence Fund
HDFC Tax Saver Fund
Lotus India Tax Plan
SBI Magnum Contra Fund
Reliance Growth Fund
Reliance Vision Fund
Sundaram Select Focus Fund
sundaram Tax Saver
Best of luck,
Srikanth Shankar Matrubai