Portfolio Review and Suggestion for Balancing

POSTED BY Paresh Patel ON December 9, 2012 3:53 pm COMMENTS (7)

Dear all,

I am Thankful to all member for providing their unbiased views on financial planning and providing help to new investor to grow with series of knowledgeable articles and answer in forum.


My Basic details are

I am working professional having monthly income of 35 K; out of 35 K I am able to save 12 K.

I am having term plan of 40 Lakhs, family floater of 3 Lakhs and emergency fund of 90K. (Thanks to Jago investor for making my life simple) No loan.

My 12 K saving is equally divided in two categories (50-50) from Nov 2011. (1 Year )

A) Equity Mutual fund

B) Debt (RD – 6K)

Now coming to my question, I am having two questions.

1)      Please review my mutual fund portfolio and provide your suggestions.

2)      Should I rebalance my portfolio or not?


1)      IDFC Premier EQ (G) – 2K    — Midcap

2)      UTI Div. Yield (G) – 1K   Large and Midcap

3)      ICICI Focused Blue chip (G) -1K — Large cap

4)      HDFC Prudence (G) – 1K — Balanced

5)      QLTEF (G) – 1K  — Multicap

My portfolio’s annual return is 15.48% as on date.

Hope I clarified, please help me.




7 replies on this article “Portfolio Review and Suggestion for Balancing”

  1. Dominic Prakash says:

    @ Paresh Patel: I feel you continue with your existing funds. If possible increase the SIP amount and not number of funds.

  2. Your goal is only 6 years away. Whether you choose 6 funds or 2 funds assuming 14% returns in such a short time is overoptimistic. Financial planners usually assume only 12% returns that too for goals which are about 10 years away. While not impossible you cant calculate 14% for 6 years since you need to shift away from equity as your goal approaches.
    Sitting in 50% equity for now is okay but I think you should reduce it perhaps each year by 10-15% booking profits.

    Not sure if you understand what rebalancing a porfolio means.
    If you want to know if the no of funds should be reduced then yes as Vikash as suggested increase balanced fund and large cap exposure, decrease midcap exposure to minimize risk. Returns will also go down but capital protection is important for a goal so close.

    if you want to know if equity exposure as a whole should be changed then yes each year it should down as mentioned above booking profits during a sharp market rise.

    Rebalancing a portfolio in the sense used by financial planners is different. You look at the total corpus value each and find the % equity and % debt. In the next year you adjust the % equity investment in alignment with some % decided before.

    For a short term goal such a yours this will not apply and only a gradual decrease in % equity will apply and safe.

  3. Paresh Patel says:

    sir I am investing in mutualfund for 14% appropriate return. my goal is to purchase house in 2018. 50-50 ratio I finalize considering my risk profile. I am conservative investor.
    PPF is good instrument but considering my time horizon I choosed RD as my investment vehicle.

    I am having plan for term insurance but I.will purchase it in April 2013.amount I choosed is 25 Lakhs more.

    should I rebalance my investment or not? what care needs to be taken while rebalancing?

  4. Reducing no of funds is a generic advice may or may not be suitable to everyone. 15% CAGR is something to be pretty happy about.

    A portfolio review can be done only when you are sure as to why you are investing 12K each month That is what is your goal, what is the inflation assumed, what is return assumed, what is risk appetite, that is how much equity investment can you stomach and risk profile of investment (how much equity investment you actually need).

    You also need to see if 40 lakhs insurance is enough considering lifestyle changes you expect in future.

    Only then can someone decide out 12K put this % in debt or equity.
    A RD is taxable and may not be best choice. if your goal is 15 financial years away then PPF is better. So you need to figure this out.

  5. Vikash says:

    Yes sorry, It’s 6k for MF and 6k for RD (Debt).

    Since you already have 90k as emergency fund. Hence, My suggestion would be to invest 9k in MF and 3k in Debt. (RD). Equity will outperform debt fund in next 5 years.

    Therefore for 9k, 2 SIP is fine! Remaining SIP you can shift or redeem and invest in these 2 funds mentioned below.

    1> ICICI Focused Blue chip (G) – 5,000
    2> IDFC Premier EQ (G) – 4,000


  6. Paresh Patel says:

    @Vikash. Please read my question again. I am not investing 12K IN MUTUALFUND.

  7. Vikash says:

    Yes, I think you should rebalance your MF portfolio. You have too many funds. It serves no purpose.

    For 12k SIP,

    1> ICICI Focused Blue chip (G) – 7,000
    2> IDFC Premier EQ (G) – 5,000

    2 fund is enough for proper diversification.

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