In an exclusive interview to CNBC-TV18, Radhika Gupta of Forefront Capital Management answers investors’ personal finance queries.
Q: An investor can invest Rs 10,000 per month. Which MFs would you recommend him?
A: Since it’s his first time investing in mutual funds, I suggest he invests in a large cap mutual fund. He has chosen some good fund house names. In terms of specific funds, I would recommend DSP Equities and Birla Frontline.
He can look at Franklin Templeton Funds, it’s generally a very good fund house and a specific fund recommendation would be Franklin Templeton India BlueChip. These are all large cap funds that look at the top 50 to 100 stocks and since he has a long-term horizon, I think this would make sense for him.
Q: An investor can invest Rs 3,000 per month; his time period is 20 years while his goal is Rs 1 crore. What would your advice be?
A: It’s a very aggressive goal. Definitely, she needs to up the amount to meet the goal. That said, with the existing Rs 3,000 a month, I would put 75% of this again into a large cap equity fund since she has a long-term horizon and equities will perform over that period hopefully.
Recommended funds for her would be again DSP Equity, Franklin Blue Chip, Birla Frontline - good large cap funds. She needs to be a little aggressive for the remaining 25%. I would put into a midcap fund, again suggestions there are ICICI Discovery, DSP Small and Midcap or an IDFC Premier Equity. So that 75-25 split should hold well.
Q: How many funds would you have her buy? You have named five funds. Should she go with all the five? Should she restrict it? What should be the split, because the amount of money every month is Rs 3,000?
A: One fund in the large cap category, one fund in the midcap category, not more than that. Two funds, at the most three. The problem of many funds is something everybody has and it’s really not necessary. It’s a diversified instrument already. One fund in each category should be more than good enough.
Q: An investor can invest Rs 3,000 per month in mutual funds. What’s the advice that you would give him?
A: He already has investments in large cap equity funds. If that’s a lump sum investment what he can do is take the same two funds and continue his SIP there. If he is doing an SIP there and wants to add another fund then he can add a midcap fund.
So he can do an SIP into IDFC Premier Equity with at least half the corpus. The other suggestion I have for him, in addition to equities, is he can do SIP of Rs 1,000 into a gold fund. So something like a Kotak Gold Fund or a Reliance Gold Fund would be good for this purpose.