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Her questions included whether Edelweiss Mid Cap Fund should be switched to Motilal Oswal Large and Midcap Fund, whether DSP Multi Asset Allocation Fund could be replaced with Quant Multi Asset Allocation Fund, and whether ICICI Prudential Retirement Pure Equity Fund should make way for a flexicap or multicap fund.
Her husband is currently investing Rs 2,000 per month Nippon India Small Cap Fund, Rs 5,000 per month each in Edelweiss Mid Cap Fund, DSP Multi Asset Allocation Fund, ICICI Prudential Retirement Pure Equity Fund.
According to Harshvardhan Roongta, CEO, CFP, Roongta Securities investors should first assess whether enough time has passed before reviewing the performance of their mutual fund investments.
The expert said that most of the schemes in the portfolio are relatively new investments. While the small-cap and mid-cap investments have completed around a year, some of the other schemes have been running for only two to three months.
Roongta stressed that fund selection research should ideally be completed before starting investments. Investors should evaluate factors such as fund manager experience, risk-reward characteristics, investment strategy and long-term track record before committing money.
“Once you have selected a fund after proper research, it should be given sufficient time to perform. Reviewing a scheme after just two or three months is far too early and can be counterproductive,” he said.
Give a fund at least two years
Roongta believes SIP investors should ideally allow a scheme at least two years before assessing whether it is outperforming or underperforming its benchmark and peer group.
Short-term fluctuations are common in equity markets, particularly in mid-cap and small-cap categories. Making frequent changes based on recent returns could disrupt long-term wealth creation and lead to unnecessary portfolio churn. As a result, he advised the investor not to make any immediate changes to the current portfolio.
A word of caution on ICICI Retirement Pure Equity Fund
While he did not recommend altering most of the portfolio, Roongta highlighted one specific concern regarding the ICICI Prudential Retirement Pure Equity Fund.
The scheme comes with a five-year lock-in period or until retirement age, whichever is earlier. Since the investor had started investing only recently, he suggested carefully considering whether such a lock-in aligns with the family’s investment approach.
“If you tend to review your portfolio frequently and prefer flexibility to switch schemes when required, a lock-in product may not suit you,” he explained.
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Roongta pointed out that the retirement fund is managed with a flexicap-style investment mandate, allowing investments across large-cap, mid-cap and small-cap stocks. Therefore, investors seeking a similar investment strategy without a lock-in period may consider switching to a flexicap fund.
He suggested that investors who wish to remain within the same fund house could consider the ICICI Prudential Flexicap Fund, which offers comparable flexibility while allowing investors to exit or switch if required.
On the question of adding a value-oriented fund through SIPs, Roongta did not favour a Quant value strategy. Instead, he suggested that the SBI Contra Fund could be a better choice for bringing diversification and balance to the portfolio.
Overall, Roongta’s assessment was that the portfolio remains largely appropriate for an investor seeking significant exposure to mid-cap and small-cap segments. He believes the existing schemes do not warrant replacement at this stage simply because of short-term performance concerns.
His key message is to conduct thorough research before investing, avoid frequent reviews based on a few months of returns, and allow mutual funds adequate time to demonstrate their performance potential.
For investors who value flexibility, however, he suggested reconsidering lock-in products such as retirement funds and opting for a flexicap alternative that offers similar equity exposure without restricting withdrawals.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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