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Should I add more mutual fund schemes to my portfolio?

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Last Updated: Feb 19, 2020, 04.21 PM IST
I am investing in mutual funds through monthly SIPs of Rs 12,500. I am an NRI, investing for the education of my children and other reasons. I am investing in:

Mirae Asset Emerging Bluechip Fund - Reg (G): Rs 5,000 per month
IDFC Sterling Value Fund - Reg (G): Rs 2,500 per month
Axis Midcap Fund (G): Rs 5,000 per month

Should I invest in more funds? I want to invest Rs 5,000 extra every month. What funds should I invest? My Risk profile is moderate.
-Rohan Belani

Your current mutual fund portfolio is not in line with your stated moderate risk profile. You are currently investing in a large & mid cap fund, value-oriented scheme, and mid cap scheme. Large & mid cap schemes and mid cap schemes have higher risk. These schemes are suitable for aggressive investors with a large risk appetite and stomach for volatility. Value-oriented schemes have been underperforming in the last two years - these schemes tend to do well when the market becomes value or quality conscious.

We typically ask a moderate equity investor to invest mostly in multi cap schemes and take a small exposure to large cap schemes if /she wants to reduce the overall risk in the portfolio through diversification. You should reassess your risk profile and ensure that all the schemes in your portfolio are in line with your risk profile.

Do not add more than three or four schemes to your mutual fund portfolio. Too many schemes lead to overdiversification and compromise the overall returns in the portfolio.

(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)

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