How is your mutual fund portfolio doing? Not many investors are able to answer this. This new section will provide the answer. The portfolio doctors on our panel will assess the health of the mutual funds held by individuals, examine their suitability and, if required, recommend corrective measures. While doing so, they will consider the performance of the schemes, the risk profile of the investor as well as the financial goals of the individual. The investor will be given a detailed diagnosis of how his mutual fund portfolio is doing and whether he needs to make changes.

Bharat Joshi has invested in 17 funds. He wants to invest more but has no idea how individual schemes have performed. Here is what the doctor has to say:

PORTFOLIO CHECK UP

• Investments made for child's education and retirement.
• Investments for child 100% in equity. Needs ₹ 10 lakh in 12 years. Investing ₹ 5,000 a month for education.
• For retirement, allocation 64% in equity. Investing ₹ 4,000 a month for retirement.
• Plans to buy land worth ₹ 1 lakh in 3 years and some gadgets in 5 years.

DIAGNOSIS

• Too many funds due to haphazard investments. Many funds bought with no goals.
• No idea of asset allocation or cash flows. Has invested in dividend plans though goal is long-term savings.
• Needs to be realistic about education and retirement goals. For example, ₹ 10 lakh needed for education today would be about ₹ 25 lakh in 12 years assuming 8% annual inflation.

Note from doctor

• Seek professional advice for preparing a financial plan.
• Reduce number of funds and consolidate portfolio to make it easy to monitor.
• Save at least 20% of income (₹ 15,000 a month). Save more for retirement.
• Invest through SIPs and avoid sector and theme funds.
• Avoid dividend option for long-term goals.

INVESTOR'S EXISTING PORTFOLIO


Vidya Bala Head of Mutual Fund Research, Fundsindia.com says: Joshi wants to invest an additional ₹ 15,000 a month in equity funds. He already has some good funds in his portfolio and should add more to them. He should invest more in BSL Frontline Equity and UTI Equity. Only two new equity funds suggested for Doshi: SBI Bluechip Fund and ICICI Pru Focused Bluechip. Avoid new funds. The NAV of a fund does not matter. Whether it is ₹ 10 or ₹ 50, the returns will depend on how the stocks in its portfolio perform.

PORTFOLIO DOCTOR ANSWERS QUERIES

I want to diversify by investing in global funds. Will that be a good move? Jayant Pai CFP and Head of Marketing, PPFAS Mutual Fund says: Global funds invest in foreign markets. While this gives geograpahical diversification, these funds are taxed like debt funds. Also, some global funds may have higher costs if they invest in foreign mutual funds, also known as feeder funds. These funds also carry foreign exchange risk.

The original article could be seen here.