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Is my fund selection good for long term wealth creation

It is quite encouraging to see the effort your team takes in comprehensively responding to questions. Do keep up the good work. I need your views on my portfolio below & kindly suggest if I should make changes given that some of these funds are not doing well. I have a long term wealth creation horizon. My age is 36. Investments: ICICI Prudential Value Discovery - Growth - 4000 / month, ICICI Prudential Exports & Other Services - Dividend - 2000 / month, BSL Top 100 Growth - 2000 / month, BSL India GenNext Growth - 4000 / month, BSL MNC Fund Growth - 2000 / month, SBI Pharma Growth - 2000 / month, SBI Blue Chip - 2000 / month. Also, since markets are always unpredictable, is it better to choose Div Payout which ensures I book profits regularly rather than the Growth option where an inactive investor may lose money in a fall? Thank you again for the help & congratulations on the good work you are doing.

Dec 10, 2016 by Gaurav, New Delhi  |   Mutual Fund

At the outset, our apologies for replying you late.

The fund selected by you are all good performing in their respective categories. But, four funds out of seven are from thematic or sectoral category which, we feel may not be ideal if you are investing for long term wealth creation.

Please note that fund selection should be based on your risk profile and not on the basis of their recent or historical performance. If your risk profile is moderately high to high, then, investing in diversified equity funds or large cap funds are fine. Similarly, if your risk taking appetite is very high then you may even invest in mid and small cap funds.

However, since you have invested your entire corpus in equity mutual funds, we are presuming that you can take high risk. If it is true, then our suggestion would be to replace the following funds, which may help you in your long term investing objectives.

Replace ICICI Prudential Exports & Other Services with ICICI Prudential Focused Bluechip Equity Fund, BSL GenNext Fund with BSL Equity Fund, BSL MNC Fund with BSL Pure Value Fund and SBI Pharma Fund with SBI Midcap Fund.

We have tried re-balancing the above selection across large cap, diversified and Midcap Funds while completely overlooking thematic and sectoral funds.

However, we will still urge you to assess your risk profile and then take the final decide as to which fund you should continue with or not. This tool might help - https://www.advisorkhoj.com/tools-and-calculators/asset-allocation

With regards to booking profit through dividend, please note that this is not a good idea. Why withdraw from your funds as you are investing for the long term? Withdrawals during the investing period will definitely erode the future corpus. However, if you still want to book some profit on way to your long term wealth creation, then you may probably opt for dividend reinvestment plan. This way you will be adding more units at different levels whenever dividends are declared.

Hope the above helps. Thanks for the kind words about Advisorkhoj : )

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