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Building a Solid Equity Mutual Fund Portfolio

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fradela

fradela

TF Ace

Building a Solid Equity Mutual Fund Portfolio​

When it comes to investing, I firmly believe in the power of mutual funds.
They offer a practical way to grow wealth with minimal hassle, especially for those who prefer a structured, hands-off approach.

Every month, on the day my salary gets credited, I invest consistently. Here’s my approach:
  • Stick to Index Funds (Passive): I only invest in passive funds, as they are low-cost and transparent.
  • Direct and Growth Funds Only: This ensures that I avoid commission fees and focus on long-term capital appreciation.
  • SOA Route (No Demat): I prefer the Statement of Account (SOA) route for its simplicity.

Why Index Funds Are the Best Choice​

Index funds make investing simple and stress-free. Here’s why I believe they are the superior choice:
  1. Ease of Selection: With index funds, you don't need to constantly search for the "best" mutual fund. They mirror a market index, eliminating the risk of underperformance by fund managers.
  2. Returns Aligned with the Market: Index funds guarantee returns in line with the index they track. This predictability offers peace of mind, as there’s no guesswork.
  3. Market Risk Only: The primary risk is market volatility, which can be balanced through proper asset allocation between debt and equity.
  4. No Worries About Underperformance: Active funds may shine for a few years but often fall behind over the long run. Index funds remove this uncertainty.
  5. Cost Advantage: Active funds usually have higher management fees, which can eat into returns. Index funds, on the other hand, are more cost-effective.
  6. Historical Evidence: Data consistently shows that few fund managers outperform their benchmark over the long term, further solidifying the case for index funds.

Key Factors for Choosing the Best Index Funds​

When selecting an index fund, focus on these three key elements:
  • Expense Ratio: A lower expense ratio means you retain more of your returns.
  • Tracking Error: This measures how closely the fund tracks its index. Lower tracking error is better.
  • Assets Under Management (AUM): A higher AUM provides liquidity and stability.

Small Investors’ Guide: Start Simple​

For small investors, one well-diversified equity mutual fund may be enough.
Consider starting with the Nifty LargeMidcap 250 Index, which is a blend of Nifty 100 and Nifty Midcap 150 in a 50:50 ratio.
  • Zerodha Nifty LargeMidcap 250 Index Fund (Direct Growth) is a solid choice.
  • For tax-saving, the Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund (Direct Growth) offers dual benefits of growth and tax efficiency.

Optimal Diversification: Maximum of Four Funds​

You don’t need more than four funds to build a well-diversified, non-overlapping portfolio. Here's how you can structure it:

Large Cap:​

  1. Nifty 50 or Sensex:
    • UTI Nifty 50 Index Fund (Direct Growth) (OR)
    • HDFC Index Fund Sensex Plan (Direct Growth)
  2. Nifty Next 50:
    • UTI Nifty Next 50 Index Fund (Direct Growth)

Mid Cap:​

Choose one:
  1. Motilal Oswal Nifty Midcap 150 Index Fund (Direct Growth)
  2. UTI Nifty Midcap 150 Quality 50 Index Fund (Direct Growth)
  3. Edelweiss Nifty Midcap 150 Momentum 50 Index Fund (Direct Growth)

Small Cap:​

Pick one:
  1. Nippon India Nifty Smallcap 250 Index Fund (Direct Growth)
  2. DSP Nifty Smallcap 250 Quality 50 Index Fund (Direct Growth)
  3. Mirae Asset Nifty Smallcap 250 Momentum Quality 100 ETF FoF (Direct Growth)

Portfolio Construction Strategy:​

For a balanced portfolio, I suggest the following allocation:
  • Nifty 50 or Sensex (40%)
  • Nifty Next 50 (30%)
  • MidCap (20%)
  • Small Cap (10%)
This approach ensures diversification across large, mid, and small-cap stocks, reducing the risk while maximizing growth potential.

Preferred Investment Platforms​

I primarily use Kuvera for investing and redeeming, and keep MF Central as a backup to cross-check investments.
For a consolidated account statement across all platforms, you can use this link: CAMS + KFintech.

Important Note: Avoid New Fund Offers (NFOs).
 
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fradela said:

Building a Solid Equity Mutual Fund Portfolio​

When it comes to investing, I firmly believe in the power of mutual funds.
They offer a practical way to grow wealth with minimal hassle, especially for those who prefer a structured, hands-off approach.

Every month, on the day my salary gets credited, I invest consistently. Here’s my approach:
  • Stick to Index Funds (Passive): I only invest in passive funds, as they are low-cost and transparent.
  • Direct and Growth Funds Only: This ensures that I avoid commission fees and focus on long-term capital appreciation.
  • SOA Route (No Demat): I prefer the Statement of Account (SOA) route for its simplicity.

Why Index Funds Are the Best Choice​

Index funds make investing simple and stress-free. Here’s why I believe they are the superior choice:
  1. Ease of Selection: With index funds, you don't need to constantly search for the "best" mutual fund. They mirror a market index, eliminating the risk of underperformance by fund managers.
  2. Returns Aligned with the Market: Index funds guarantee returns in line with the index they track. This predictability offers peace of mind, as there’s no guesswork.
  3. Market Risk Only: The primary risk is market volatility, which can be balanced through proper asset allocation between debt and equity.
  4. No Worries About Underperformance: Active funds may shine for a few years but often fall behind over the long run. Index funds remove this uncertainty.
  5. Cost Advantage: Active funds usually have higher management fees, which can eat into returns. Index funds, on the other hand, are more cost-effective.
  6. Historical Evidence: Data consistently shows that few fund managers outperform their benchmark over the long term, further solidifying the case for index funds.

Key Factors for Choosing the Best Index Funds​

When selecting an index fund, focus on these three key elements:
  • Expense Ratio: A lower expense ratio means you retain more of your returns.
  • Tracking Error: This measures how closely the fund tracks its index. Lower tracking error is better.
  • Assets Under Management (AUM): A higher AUM provides liquidity and stability.

Small Investors’ Guide: Start Simple​

For small investors, one well-diversified equity mutual fund may be enough.
Consider starting with the Nifty LargeMidcap 250 Index, which is a blend of Nifty 100 and Nifty Midcap 150 in a 50:50 ratio.
  • Zerodha Nifty LargeMidcap 250 Index Fund (Direct Growth) is a solid choice.
  • For tax-saving, the Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund (Direct Growth) offers dual benefits of growth and tax efficiency.

Optimal Diversification: Maximum of Four Funds​

You don’t need more than four funds to build a well-diversified, non-overlapping portfolio. Here's how you can structure it:

Large Cap:​

  1. Nifty 50 or Sensex:
    • UTI Nifty 50 Index Fund (Direct Growth) (OR)
    • HDFC Index Fund Sensex Plan (Direct Growth)
  2. Nifty Next 50:
    • UTI Nifty Next 50 Index Fund (Direct Growth)

Mid Cap:​

Choose one:
  1. Motilal Oswal Nifty Midcap 150 Index Fund (Direct Growth)
  2. UTI Nifty Midcap 150 Quality 50 Index Fund (Direct Growth)
  3. Edelweiss Nifty Midcap 150 Momentum 50 Index Fund (Direct Growth)

Small Cap:​

Pick one:
  1. Nippon India Nifty Smallcap 250 Index Fund (Direct Growth)
  2. DSP Nifty Smallcap 250 Quality 50 Index Fund (Direct Growth)
  3. Mirae Asset Nifty Smallcap 250 Momentum Quality 100 ETF FoF (Direct Growth)

Portfolio Construction Strategy:​

For a balanced portfolio, I suggest the following allocation:
  • Nifty 50 or Sensex (40%)
  • Nifty Next 50 (30%)
  • MidCap (20%)
  • Small Cap (10%)
This approach ensures diversification across large, mid, and small-cap stocks, reducing the risk while maximizing growth potential.

Preferred Investment Platforms​

I primarily use Kuvera for investing and redeeming, and keep MF Central as a backup to cross-check investments.
For a consolidated account statement across all platforms, you can use this link: CAMS + KFintech.

Important Note: Avoid New Fund Offers (NFOs).
Click to expand...
Your analysis and explanation is very good 👍👉

However I will suggest to keep a look at the MF that you are suggesting in each category.

Always check last 5 years returns. I check in fact upto 10 years (on an average).
Like in ELSS - I have AB Sun Life 96.
 
fradela said:
Yes. It is not like IPO in Stocks.
You are not aware the expense ratio.
Most of the time they extended the listing date. So, your money with them without growth.
You can purchase after listed.

Will write about detail article soon.
Click to expand...
true that, exactly applied for NFO , money gone & status stuck on PROCESSING since ages
 
fradela said:
Yes. It is not like IPO in Stocks.
You are not aware the expense ratio.
Most of the time they extended the listing date. So, your money with them without growth.
You can purchase after listed.

Will write about detail article soon.
Click to expand...
Will wait for your article!!

Your explanation is good (in the sense Normal people who don't have much knowledge will get it easily)

Good work mate!!👌👌
 
I believe the startegy you have explained is suitable for long term investments.I generally beleive a horizon of 10 years and above. You park your money and forget about market volatility.

But when it comes to shorter duration, like 5 years, you can consider Active or regular plans suggested by your financial advisor. They also help not to lose drastic amount of money during market volatility to some extent.

So, I believe a combination of both Active and passive funds should be in our portfolio. Everybody has different choices and requirements. So do a good reasearch and invest.
Disclaimer-I am not any agent or advisor.
 
NikTravelEnthusiast said:
I believe the startegy you have explained is suitable for long term investments.I generally beleive a horizon of 10 years and above. You park your money and forget about market volatility.

But when it comes to shorter duration, like 5 years, you can consider Active or regular plans suggested by your financial advisor. They also help not to lose drastic amount of money during market volatility to some extent.

So, I believe a combination of both Active and passive funds should be in our portfolio. Everybody has different choices and requirements. So do a good reasearch and invest.
Disclaimer-I am not any agent or advisor.
Click to expand...
I really like the last line. Disclaimer 👍👍

I am tired of explaining this to people here. No one knows and they are not ready to learn this!!

BTW since you haven't recommended any product here it wias okay even if your post your message without disclaimer.
Anyways very nice mate!!😀😀

If it is fine can I DM you for market related discussion since you seems experience to me!!😁😁
 
fradela said:

Building a Solid Equity Mutual Fund Portfolio​

When it comes to investing, I firmly believe in the power of mutual funds.
They offer a practical way to grow wealth with minimal hassle, especially for those who prefer a structured, hands-off approach.

Every month, on the day my salary gets credited, I invest consistently. Here’s my approach:
  • Stick to Index Funds (Passive): I only invest in passive funds, as they are low-cost and transparent.
  • Direct and Growth Funds Only: This ensures that I avoid commission fees and focus on long-term capital appreciation.
  • SOA Route (No Demat): I prefer the Statement of Account (SOA) route for its simplicity.

Why Index Funds Are the Best Choice​

Index funds make investing simple and stress-free. Here’s why I believe they are the superior choice:
  1. Ease of Selection: With index funds, you don't need to constantly search for the "best" mutual fund. They mirror a market index, eliminating the risk of underperformance by fund managers.
  2. Returns Aligned with the Market: Index funds guarantee returns in line with the index they track. This predictability offers peace of mind, as there’s no guesswork.
  3. Market Risk Only: The primary risk is market volatility, which can be balanced through proper asset allocation between debt and equity.
  4. No Worries About Underperformance: Active funds may shine for a few years but often fall behind over the long run. Index funds remove this uncertainty.
  5. Cost Advantage: Active funds usually have higher management fees, which can eat into returns. Index funds, on the other hand, are more cost-effective.
  6. Historical Evidence: Data consistently shows that few fund managers outperform their benchmark over the long term, further solidifying the case for index funds.

Key Factors for Choosing the Best Index Funds​

When selecting an index fund, focus on these three key elements:
  • Expense Ratio: A lower expense ratio means you retain more of your returns.
  • Tracking Error: This measures how closely the fund tracks its index. Lower tracking error is better.
  • Assets Under Management (AUM): A higher AUM provides liquidity and stability.

Small Investors’ Guide: Start Simple​

For small investors, one well-diversified equity mutual fund may be enough.
Consider starting with the Nifty LargeMidcap 250 Index, which is a blend of Nifty 100 and Nifty Midcap 150 in a 50:50 ratio.
  • Zerodha Nifty LargeMidcap 250 Index Fund (Direct Growth) is a solid choice.
  • For tax-saving, the Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund (Direct Growth) offers dual benefits of growth and tax efficiency.

Optimal Diversification: Maximum of Four Funds​

You don’t need more than four funds to build a well-diversified, non-overlapping portfolio. Here's how you can structure it:

Large Cap:​

  1. Nifty 50 or Sensex:
    • UTI Nifty 50 Index Fund (Direct Growth) (OR)
    • HDFC Index Fund Sensex Plan (Direct Growth)
  2. Nifty Next 50:
    • UTI Nifty Next 50 Index Fund (Direct Growth)

Mid Cap:​

Choose one:
  1. Motilal Oswal Nifty Midcap 150 Index Fund (Direct Growth)
  2. UTI Nifty Midcap 150 Quality 50 Index Fund (Direct Growth)
  3. Edelweiss Nifty Midcap 150 Momentum 50 Index Fund (Direct Growth)

Small Cap:​

Pick one:
  1. Nippon India Nifty Smallcap 250 Index Fund (Direct Growth)
  2. DSP Nifty Smallcap 250 Quality 50 Index Fund (Direct Growth)
  3. Mirae Asset Nifty Smallcap 250 Momentum Quality 100 ETF FoF (Direct Growth)

Portfolio Construction Strategy:​

For a balanced portfolio, I suggest the following allocation:
  • Nifty 50 or Sensex (40%)
  • Nifty Next 50 (30%)
  • MidCap (20%)
  • Small Cap (10%)
This approach ensures diversification across large, mid, and small-cap stocks, reducing the risk while maximizing growth potential.

Preferred Investment Platforms​

I primarily use Kuvera for investing and redeeming, and keep MF Central as a backup to cross-check investments.
For a consolidated account statement across all platforms, you can use this link: CAMS + KFintech.

Important Note: Avoid New Fund Offers (NFOs).
Click to expand...
My suggestion would be avoid MF funds with more than 50 stocks, there will be huge tracking errors and expenses. Because managing 150 or 250 stocks with their particular weights is huge work for managers
 
NikTravelEnthusiast said:
I believe the startegy you have explained is suitable for long term investments.I generally beleive a horizon of 10 years and above. You park your money and forget about market volatility.

But when it comes to shorter duration, like 5 years, you can consider Active or regular plans suggested by your financial advisor. They also help not to lose drastic amount of money during market volatility to some extent.

So, I believe a combination of both Active and passive funds should be in our portfolio. Everybody has different choices and requirements. So do a good reasearch and invest.
Disclaimer-I am not any agent or advisor.
Click to expand...
For short term, we should go with Debt Mutual Funds. Not active or regular.
There are plenty of articles available in the internet for Direct vs Regular. Regular funds give commission to brokers, agents, banks, advisors from your money.
 
NikTravelEnthusiast said:
I believe the startegy you have explained is suitable for long term investments.I generally beleive a horizon of 10 years and above. You park your money and forget about market volatility.

But when it comes to shorter duration, like 5 years, you can consider Active or regular plans suggested by your financial advisor. They also help not to lose drastic amount of money during market volatility to some extent.

So, I believe a combination of both Active and passive funds should be in our portfolio. Everybody has different choices and requirements. So do a good reasearch and invest.
Disclaimer-I am not any agent or advisor.
Click to expand...
Will write article about Debt MFs soon.
 
sarainfo12 said:
I am using zerodha to hold my mutual funds because it's easy to pledge and get margins for future and options trading .
But I think it's not easy to do if we don't hold in demat .
Click to expand...
I don't take risk on my investments.

Trading is completely a different world.
 
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