Invest in equity MFs for higher long term returns: Roongta

Excerpts from Markets Midday on CNBC-TV18 Watch the full show »

Harshvardhan Roongta, certified financial planner at Roongta Securities advises investors to increase investments into equity based mutual funds so as to gain higher returns.

Below is an edited transcript of his interview. Also watch the accompanying video.

Q: The investor is interested to invest Rs 2,000 per month - In which fund should he allocate this money for higher returns?

A: What I see in his portfolio is that he has a healthy mix of equity, debt and even gold. I am happy to see that he has bought a term insurance policy so in that perspective he has balanced out. He has an asset allocation plan in place.

The only concern that I have is that he wants to invest Rs 2,000 and accumulate a corpus of about Rs 15 to 20 lakh over a period of seven years. I do not think that he is going to achieve that just with an investment of only Rs 2,000. Assuming that the existing investments that he is making into his HDFC Top 200, Birla MNC fund and other mutual funds is going to be used and mapped against this gold that he has after seven years. If we are to assume a return of 12% on his entire portfolio, on equity portfolio rather and on the gold and the recurring deposit that he is making.  With a return of about 8% he will achieve a corpus of Rs. 12 lakhs. 

If he needs to accumulate exactly Rs 15- Rs 20 lakh then he needs to increase his investments per month into equity mutual funds. The existing Rs 2000 that he wishes to invest; he can choose the HDFC Top 200 fund in which he is already investing Rs 1,000 and add on Rs 2,000 into the same fund. That will help him towards his goal more so.