Mutual fund portfolio cleanup

[adatre]

Hi there, how to reduce no. Of funds in mutual funds portfolio when the weightage of funds are quite sizeable(15-20 L)

 

[17ysaurabh]

Hi @adatre
First, check your current % of allocation in different types of mutual funds.
Then based on your risk appetite, you can try to balance it as follows:

Aggressive:

• Large Cap MFs: 50%-60%
• Mid Cap MFs: 15%-25%
• Small Cap MFs: 15%-25%

Balanced:

• Large Cap MFs: 70%-75%
• Mid Cap & Small Cap MFs: 25%-30%

Conservative:

• Go for Large Cap MFs mostly and some % in Flexi Cap MFs.

NOTE:
To decide, which mutual funds to keep/discard, you need to check which of these funds are overlapping. There are many websites which allow you to check the overlapping of mutual funds like Fundpicker, advisorkhoj etc.

 

[The INSANE Trader]

• Review Your Portfolio: Begin by reviewing your current portfolio. Evaluate each fund's performance, expense ratios, investment objectives, and how they fit into your overall investment strategy.
• Identify Overlapping Funds: Look for overlapping investments across your funds. If multiple funds hold similar stocks or sectors, you might be duplicating your holdings unnecessarily.
• Assess Fund Performance: Analyze the performance of each fund over different time periods. Consider consolidating your investments into funds with consistent, strong performance and clear investment strategies.
• Consider Asset Allocation: Ensure that your portfolio maintains a balanced asset allocation suitable for your risk tolerance and investment goals. Consolidating funds can help simplify this process.
• Diversification: While reducing the number of funds, ensure that you maintain diversification across asset classes and sectors. Avoid concentrating your investments in a single fund or asset type.
• Exit Strategy: Develop a plan for exiting funds you decide to sell. Consider potential tax implications and any applicable redemption fees.
• Consult a Financial Advisor: If you're unsure about which funds to consolidate or how to rebalance your portfolio, consider seeking advice from a qualified financial advisor. They can provide personalized recommendations based on your individual circumstances and goals.