Balanced fund – 25 years Goal

Hi,
You may go ahead with the selected fund (balanced). But, do review its performance periodically, and can consider shifting the accumulated corpus to safer investment avenues towards the end of timeline (as you reach the goal year).

Thanks for quick response. My query is , Should i have to maintain another debt fund along with balanced fund from the beginning of the goal for asset allocation / Re balancing. Because for Pure equity funds,  i think we need to add debt funds from the beginning of the goal to manage re-balancing and asset allocation. I think Balanced fund does not require Debt for that purpose  Whats your view.    

Hi Debt funds - May not be really needed.  I am a strong advocate of equity oriented balanced funds for medium or long term goals.    

But one clarification required, Assuming a balanced fund has 70% equity and 30% debt, it will rebalance this every month today, 5Y from now and 10Y from now. Whereas you will need money at some point in time and you cannot be holding 70% equity when you wish to withdraw. So we may require DEBT fund at some point of time. Dont know that time period in the 25 year goal tenure.

Hi, Yes, one can consider shifting to safer investment avenues as the goal target approaches, to safe-guard the accumulated corpus.  I have mentioned this in my first reply.  "You may go ahead with the selected fund (balanced). But, do review its performance periodically, and can consider shifting the accumulated corpus to safer investment avenues towards the end of timeline (as you reach the goal year)." Safer bets can be Debt funds, Bank FDs etc.,

Hi , I have one query to be discussed, I have shortlisted 4 funds ( 1 Large cap, 1 Mid cap,1 Multicap, 1 multicap with International stocks). and identified  have 4 long term goals. I am thinking of selecting each fund or combination of funds( 1/2 funds per goal)  from the above list and construct a separate portfolio for each 4 goals.  Mapping Single multicap fund for goal and instead of 4 funds ( 1 Large cap, 1 Mid cap,1 Multicap, 1 multicap with International stocks). What could be cons which you feel from this approach.  

I have shortlisted 4 equity funds :- 1 large cap,1 Mid cap, 1 Multi cap ,1 Multicap with international stocks(25%) My query is, can i have different folios(same 4 equity funds) for each of goal. Or Can i choose minimalist portfolio approach like choose 1 or 2 funds from the above list and construct the multiple portfolios for my goals. I am assuming, there is risk involved if i choose one fund instead of all 4 funds for single goal, when the chosen fund is not performing well. Please share your views .

Hi, There is no right or wrong approach to this. Ideally, if I am investing for a long-term goal, I would prefer to allocate atleast one multi-cap and one mid-cap fund. The funds can be same or different (subject to low portfolio overlap among the funds) for each long term goal.  Also, one can look at an equity oriented balanced fund if re-balancing (manually) is not possible.

Thanks for your comment. " I would prefer to allocate at least one multi-cap and one mid-cap fund.  "     My assumptions is when Midcap stocks are part of Multicap  fund (say 20%) , Do  i need separate Midcap fund. I thought Single Mutlicap fund will suffice for one goal.

Hi, Agree with your point that some fund managers of few schemes do allocated higher fund corpus to mid-cap Stocks based on market valuations. Ex : L&T Value fund. So, one needs to identify those schemes and stay invested. But, we do know that these allocation might change in case of actively managed multi-cap schemes.  Hence, an investor who wants to have exposure to pure Mid-cap based schemes and can stomach higher risk over long-term may consider mid/small funds as well.  

Thanks Sree for your suggestions. Yes we can not know the allocation of Midcaps in the Multicap fund , because Its arbitrary choice of Fund manager. So i can consider like 70% Multicap fund  and 30% Midcap fund for one portfolio will suffice.(totally 2 funds per goal). Any suggestions are welcome.  Second query, I need another balanced fund for my 25 years goal, my choice is between HDFC prudence and HDFC balanced.  But not sure which one to pick up , because of this latest SEBI categorization of schemes. Will it be merged to one, Still no clue.

Hi, They will be surely merged, we need to wait for few more weeks to get a clarity on this!  

Hi Sree,    Have you written any post on Managing SIngle vs Multiple portfolio for long term goals. I do not find anything related to this topic. There is always confusion in choosing which one is most viable for investor for easy management. Also, Based on SIP amount, can we choose number of funds. For instance for Rs7000 - Its not good idea to invest in 4 funds . I prefer 1 Mutlicap / Balanced fund will suffice.  Same way if its 40K SIP , then should we have more funds.  These kind of doubt always comes for first time investor. Request you to share your view or Post separate in your blog.

Hi, As of now, not yet written any article on 'single vs multiple' portfolios.. Both have its own pros & cons. Personally, I invest in 3 to 5 funds for all of my financial goals. The point here to note is, I have separate portfolios for medium/long-term, but I prefer investing in same set of funds rather than multiple funds. I dont think quantum of SIP should be THE FACTOR for shortlisting number of funds. If time-frame is say 10+ years and have multiple long term goals, may be a minimalist portfolio is fine. It depends on the time-frame, risk profile, convenience,    Related article : https://www.relakhs.com/my-mutual-fund-portfolio-mf-picks/    

Great, I am getting closer to you  now :-) All my 4 goals are 14+ years from Today. Even i think minimalist portfolio is good idea to construct. My understanding of minimalist portfolio is , One / two funds per goal. This is my list of selection  and Mapping for my goals : 1 Large cap + 1 Mid cap =  Retirement 1 Multi cap = Son education 1 Multicap(With international stocks 25%) =  Daughter education 1 Balanced fund = Marriage Will be adding one Debt funds in each goal to support asset allocation & Re balancing. Kindly share your opinions. If you think my understanding  of Minimalist portfolio is not correct. Please feel free to correct. I am eager to learn from you.  

Hi, You may go ahead with your investment plan. I prefer to consider an equity oriented balanced fund as well for my long term goals, as it takes care of asset allocation and re-balancing :)