Want to invest in mutual funds but don’t know how to go about it?

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Get all your mutual fund related queries answered by our expert, Vishal Dhawan, founder and chief executive officer, Plan Ahead Wealth Advisors, on our show Mutual Fund Corner.

Q: 27-year-old Ankit Agarwal writes us from Gujarat. Investing Rs 5,000 in HDFC Mid Cap Opportunities Fund, Rs 5,000 in SBI Magnum Midcap Fund, Rs 5,000 in DSP Small Cap Fund and Rs 5,000 in Aditya Birla MNC Fund via SIP for three years. I have recently invested Rs 5,000 in Axis Midcap and Rs 5,000 in ICICI Pru Banking & Financial Services Fund via SIP. I wanted to know if these funds are good. I am willing to invest in my retirement. Also, I need your opinion on Kotak Low Duration Fund.

A: Whilst your fund choice is broadly good, it is highly concentrated towards mid and small caps schemes. We would suggest that you look at having a more diversified portfolio in a fewer number of schemes, especially as you are planning to put this money towards your retirement. Thus, you could retain the Birla MNC Fund, Axis Mid Cap and DSP Small Cap and stop the SIPs in the rest, including the banking and financial sector fund.

As and when the funds become efficient to exit from a tax and exit load perspective, you should consider consolidating the portfolio. You could look at adding one index fund into the portfolio as well so that your portfolio has a well-diversified but more manageable flavour to it. The HDFC Nifty Index Fund is a good option to consider in that category.

The Kotak Low Duration Fund invests in shorter-term securities and has a lower quality of papers and high expense ratio and whilst it has a good track record, you may be better off looking at a scheme like SBI Magnum Low Duration Fund that has a better quality portfolio of high-quality papers and a lower expense ratio in the current credit environment.

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