There’s a fair chance your mutual fund portfolio is all wrong
mutual fund industry is doing. Some of this praise is directed towards you too, dear reader. For your SIP more than anything.
That’s because the SIP is super special. It’s the solution to all evils of investing. It’s the vehicle for generating untold wealth.
And it does all this without taking too much of your time. It’s perfect. If that’s what you believe, let me ask you a question: What’s the return on your overall SIP portfolio? Be honest.
Most of you have never bothered to work this out. It’s too complicated. I'll give you that.
Who wants to spend the weekend calculating the IRR for a family’s portfolio which probably has 15 SIPs running? What you probably do is simply look at the absolute return. How much you invested, vs how much it’s worth now. That’s it.
No time value. I make this point only to make a larger one. But first, answer this question.
Has your mutual fund portfolio, which probably has 7 to 10 equity funds, made you rich? Richer than the average investor (since you are the smart investor, opting for mutual funds, and using SIPs too)? You probably have not thought about that either. But what you have thought about for sure is this: Why haven’t I made the kind of money that I should have? Well, there are some possible answers to this. Let’s start with the most obvious.
You have too many equity funds in your portfolio. Take a look at this table. 81.6% 12.7% 70.3% 11.2% 93.0% 14.0% 120.3% 17.1% 127.9% 17.9% 106.4% 15.6% 72.7% 11.5% 104.9% 15.4% 125.6% 17.7% Note: Direct plans, growth option.
Ignored merged scheme. Source: Moneycontrol, Investing.com I picked up the Mint 30 equity fund list from July 2018 to see how that played out. (Here’s Mint’s methodology for picking these funds).
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