Subbu’s Solutions

(4) Dear Sir, I am a 68 years old and I invest in Mutual Funds through the SIP route. I wish to have your views on my selection of schemes, though the bias is towards midcap funds. I plan to distribute the wealth created among my three children who are all well placed in jobs. 

I shall much obliged and thankful to you for your views. – SG Chellapa

Dear Mr. Chellapa, 

Firstly, monitoring such a vast portfolio as yours is a cumbersome task.  So may be you can trim the number of funds, and then you would be able to monitor them more effectively.  I also noticed that there are a few mid cap funds in your portfolio, which could result in duplication and expose your portfolio to higher concentration in mid caps which would be risky.  If you were to add up all the underlying stocks in each of the mid cap portfolios you may end up with a significant exposure to a few stocks, again making it risky. 

Take a look at the example mentioned below. Now assume you have 3 mid cap funds  A, B and C. The exposure to Stock H on a cumulative basis is 25% of your mid cap portfolio. Now say for instance, Stock H goes bust. Now 25% of your portfolio is affected.

Additionally, I would suggest investment in broad based schemes rather than investing in sector specific funds. Prune the number of funds in your portfolio to a few diversified schemes. If you want exposure to a variety of funds opt for a Fund of Funds scheme.

Subbu's Solution is authored by I.V.Subramaniam. I.V.Subramaniam is a director of Quantum Asset Management Company Private Limited and Chief Executive Officer & Chief Investment Officer of Quantum Advisors Private Limited. The responses expressed here are the personal view of the author.The responses expressed here are strictly for information and explanation purpose only. The responses are meant for general reading purpose and not to be considered as an investment advice / recommendation. This information is not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in the responses.

Risk Factors: Mutual fund investments are subject to market risks read all scheme related documents carefully.

Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

View All