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I am 37-year-old. My mutual fund assets are only 10 per cent of my total investments. Please review my portfolio and see if the current asset allocation is right.
-Thangaraju Ramasamy

I am 37-year-old. My mutual fund assets are only 10 per cent of my total investments while the remaining is invested in land, post office schemes and gold. Majority of my investments are lump sum. Please review my portfolio and see if the current asset allocation is right.
-Thangaraju Ramasamy


Ramasamy's Portfolio
Funds  % Allocation
Fidelity Equity 6.05
Fidelity Tax Advantage 8.16
Franklin India Prima 1.01
Franklin India Smaller Companies 17.27
HDFC Long-term Equity 8.44
HDFC Top 200 1.02
Magnum Contra 11.99
Magnum MultiCap 17.21
Reliance Banking 0.98
Reliance Growth 1.03
SBI Bluechip 8.26
Sundaram CAPEX Opportunities 17.55
Sundaram Growth 1.03
Total  100

While it remains to be seen if your investments work for you or not, they have already worked for your advisor. Agents earn more by selling new funds and the fact that nearly 83 per cent of your asset is invested in less than one-year old funds, that too at one go, indicates that they have been sold to you and not bought by you. New funds are expensive and have no track record. Though past performance is no guarantee of future returns, it's better to invest in funds about which you at least know something rather than in funds about which you know nothing at all.

Now, let's get back to the details of your portfolio. As per the Value Research Portfolio Manager, you have an all-equity portfolio with two newly-launched closed-end funds. Large-cap stocks form 57 per cent of your assets, followed by nearly 42 per cent allocation to mid- and small-cap stocks. Nearly two-thirds of your funds are new with three of them yet to disclose their first portfolio (hence your capitalisation, sector and stock exposure given in the graphics is not exact). Since you have substantial investment in close-end Franklin India Smaller Companies fund, your allocation to mid- and small-cap stocks is likely to shoot up in the future resulting into higher volatility of your overall portfolio.

Given the high percentage of new funds, your overall portfolio does not look too convincing. However, there's no way out. Nearly 25 per cent of your asset is in close-end fund. Another 8 per cent is in tax-planning fund which you can't redeem for the next three years. Therefore, there's not much you can do right away. For your future investments, go for experienced funds rather than some newcomer promising the moon. As far as the existing funds are concerned, all the older funds have great long-term track record and you should therefore continue investing in them. Moreover, pay close attention to the newcomers. If any of them starts to 'misbehave', throw it out.

Though funds form just 10 per cent of your assets, you should understand that unlike your other investments, a poor decision here would have higher impact. Also, a good decision would be of great value to you as among all your investments equity mutual funds are better placed to generate superior returns in the long-run.