personal finance

How to create a balanced mutual fund portfolio?

I have been investing Rs 3,000 every month through SIPs in each of these three mutual funds since January 2019:
Axis Focused 25 Fund
Aditya Birla Sun Life Equity Fund
ICICI Prudential Bluechip Fund

I want to invest another Rs 20,000 in mutual funds. Please advise me how to create a balanced profile? My risk profile is moderately high. I have a time horizon of 10 years.
–Mohsin Rizvi

We recommend goal-based investing. In this approach, you are supposed to choose your mutual funds based on your goal, horizon, and risk profile. As a rule, you must choose debt mutual funds to achieve your short term goals of three years and below. You may consider investing in equity mutual funds to achieve your long-term financial goals. If you adopt this strategy, you would automatically have a balanced mutual fund portfolio.

Since you have a long–term horizon and moderate risk profile, you may consider investing mostly in multi cap mutual funds. You may also consider investing in large cap mutual funds to diversify and reduce the overall risk in your portfolio. Your current portfolio has a focused multi cap scheme, diversified multi cap scheme, and large cap scheme. As you can see, the portfolio is in line with your profile.

Here are our recommended multi cap schemes:
Best multi cap mutual funds to invest in 2019

Here are our recommended large cap schemes:
Best large cap mutual funds to invest in 2019

Do not invest in too many mutual fund schemes to diversify. Too many schemes within the same category often result in overdiversified portfolio. It will drag the overall returns from the portfolio. Limit the total number of schemes to four or five.


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