Mutual funds for a moderate-risk appetite investor

I am 29 years old. I work in the private sector and I am unmarried. I want to start my investments in mutual funds but I am not sure where and in which funds should I invest. My risk profile is moderate. I am willing to invest Rs. 15,000 per month.

Creating a portfolio is primarily a function of three things – your age, the time frame of your investments, and your risk profile. In general, the younger you are (and, at 29, you are very young) the more risk you can take in your portfolio. Similarly, the longer your time frame the more risk you can take, and obviously, if your risk profile is aggressive, you can take more risks. 

In your case, assuming you are investing for the long term (greater than 7 years), you check two out of the three boxes required for a high-risk portfolio. Your risk profile, the third box, is moderate (in between conservative and aggressive). Hence your portfolio can lean towards being aggressive without being completely so. 

With this in mind, I would recommend a 70:30 equity to debt ratio in your portfolio. If you like to have gold in your portfolio, the allocation would become 70:20:10 with 10% going to gold. And in the equity segment, out of the 70%, you can invest 40% in large-cap funds (one or two funds), and the remaining in a combination of a flexi cap fund and small cap fund. 

For example, a portfolio with UTI Nifty Index fund (large-cap), Parag Parikh Flexi cap Fund, and SBI Small Cap Fund will comprise its equity portion. For debt funds, you can choose HDFC Corporate Bond Fund and ICICI Prudential Credit Risk Fund. If you are going with gold, you can choose a good gold fund such as SBI Gold Fund or Nippon India Gold Savings Fund.

 

Srikanth Meenakshi is a co-founder at PrimeInvestor.

(Do you have a personal finance query? Send in your queries at [email protected] and get them answered by industry experts.)

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