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Please advise on selection and tenure of Mutual Fund Schemes for SIP investing

I started Monthly SIP from 10-01-2016 for Rs. 2K each in following schemes - 1. ICICI Prudential Balanced Advantage Fund, 2. Birla Sun Life Frontline Equity Fund, 3. HDFC Equity Fund, 4. HDFC Midcap Opportunities Fund, & 5. L&T India Value Fund. Please advise on selection & tenure to continue 3-5-10 Yrs?

Jan 28, 2016 by Vivek, Karad  |   Mutual Fund

You have taken the right decision to invest in these mutual fund schemes through SIPs. Given the volatility in equity markets, you will be able to average out your cost of purchase and get excellent returns on your investment. Also you have a good mix of large cap (Birla Sun Life Frontline Equity), diversified (HDFC Equity and L&T India Value), midcap (HDFC Midcap Opportunities) and balanced (ICICI Prudential Balanced Advantage) funds. ICICI Prudential Balanced Advantage Fund, HDFC Midcap Opportunities and L&T India Value Fund are all strong performers in their respective investment objectives. HDFC Equity Fund, on the other hand, has been underperforming over the past few years. But HDFC Equity Fund is the largest mutual fund scheme in India in terms of asset size and has legendary status as a wealth creator. Given the pedigree of the fund manager, the mutual fund house and status of this fund as the flagship fund of HDFC mutual fund, one can be hopeful that this fund will regain its preeminent status as one of the best diversified equity funds in India. However, you should continue to monitor the performance of all your mutual fund investments on a regular basis, and make appropriate if some your schemes are not performing well over a 2 – 3 year horizon.

As regards the tenure, the longer the tenure of your SIP, greater is your wealth creation potential, because you can benefit from the power of compounding. The current market weakness notwithstanding, the long term growth story of India is still intact. Many global financial institutions have identified India as the top performer among the emerging economies. Even if you look at the last 10 years performance of diversified equity funds in India, these funds have given 15 – 17% returns. While, past performance is not an assurance with regards to future performance, assuming similar performance levels as past, you can accumulate a corpus of Rs 27 to 30 lacs over 10 years, if you continue your SIPs for 10 years.

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