Rushabh Desai AMFI registered mutual fund distributor replies:
From 1 January 2020 to 31 May 2021, the fund has generated around 12.9% absolute returns. The net yield to maturity (minus expense ratio) and the average maturity of your debt fund stands at around 4.7% and 5.3 years respectively, which means you will earn an annualised yield of around 4.7%. As of today there is no possibility of earning 9 to 10% returns from your debt fund. Currently yields are low but once the covid situation eases and growth of the economy is back to normal we will see yields rising. It is important to not get carried away by returns. Selecting any product / asset class and shifting between them should be strictly based on the parameters of your goal, risk appetite, time horizon and asset allocation. Based on your time horizon and the fund’s average maturity, the debt fund is ideal for you. Currently equity markets are expensive and I will not recommend you to shift your lumpsum investment as it will be risky.I am 38. I have started investing Rs 37,000 monthly in mutual funds through direct SIP from April 2021. The SIP allocation comprises Rs 10,000 each in Motilal Oswal Nasdaq 100, Parag Parikh Flexicap and Mirae Tax Saver fund, besides Rs 5,000 in SBI Small Cap and Rs 2,500 in Mirae Assets Emerging Bluechip. My time horizon is 15 years and the target value is Rs 2 crore, for my children’s higher education. I am willing to invest Rs 20,000 per month or lumpsum in stocks for the long term. Kindly review my investment.
Vidya Bala, Co-Founder, PrimeInvestor.in replies: Your fund choices are fine. If we assume Rs 37,000 per month earns on an average 10% IRR then you will fall short of Rs 2 crore by close to Rs 50 lakh. Since you can spare another Rs 20,000 per month, instead of focusing on stocks right away, consider low risk short du ration debt funds to diversify your portfolio. You can add Rs 15,000 to funds such as Axis Banking & PSU Debt and Aditya Birla Sun Life Floating Rate and the remaining in a Nifty based index fund. Adding debt will reduce your portfolio risk and still ensure you reach your goal with Rs 57,000 a month. Add stocks as an additional wealth builder when your surplus goes up.
