Diversification of Portfolio: Percentage of Mid/small cap Debangshu, 04 Mar 2014

I was investing through SIP in the following ELSS schemes since 2009. Now I no longer require tax benefits from my folio and thus decided to change the portfolio completely, BSL Tax Relief’96-G: 2000 pm Sundaram Tax Saver-D: 1000 pm Religare Tax Plan-G: 1000 pm HDFC Long Term Advantage-D : 1000 pm Seeing poor performance of BSL Tax Relief’96 and Sundaram Tax Saver over last five years, I have already closed the funds. Now my portfolio looks like: ICICI Pru Focused Bluechip (G)-Direct : 2000 UTI Opportunites (G)-Direct : 2000 ICICI Pru Discovery (G)-Direct : 1000 SBI Emerging Business (G)-Direct : 1000 HDFC LT Advantage-ELSS : 1000 (continuing) Religare Tax Plan : 1000 (continuing) Now, do you think I should continue with those remaining two ELSS funds (HDFC & Religare)? Or shall I close them and increase SIP in any of the equity funds mentioned above? Secondly, I am a bit confused about my mid-cap fund selection. Please suggest whether to continue with ICICI Pru Discovery & SBI Emerging Business together or shall I replace any of them with some other funds like IDFC Premier Equity/Reliance Eq. Opprtunities/HDFC Midcap? Please comment on my portfolio and suggest if anything is to be corrected for making it more diversified. I am 36 with moderately aggressive risk appetite. I have investment horizon of at least 10 years and above and the objective is capital appreciation.

Fintotal Answer

  Basically you are looking for achieving tax saving need and long term needs from this mutual fund investment. In that case you need only one large cap fund for your core long term needs, one midcap fund for general wealth creation and one ELSS fund.  ICICI Prudential Focused Bluechip Equity, UTI Opportunities and ICICI Prudential Discovery Fund all the three are good funds to continue your investment. Since you do not have the tax saving need now you can exit from HDFC LT Advantage and Religare Tax Plan. They anyways are not so good funds. As soon as the lock-in is completed redeem the funds and divert them to any of the large cap funds. While checking the completion of lock-in see to it that every SIP has completed the lock-in of 3 years.  You do not need to add more funds to your portfolio atleast for these needs. Try to keep your portfolio as simple as possible.   

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