I am 32 years old investing 5,000 each in below funds, 1. DSP BlackRock Micro Cap, 2. Franklin India Smaller Companies, 3.Reliance Small Cap, 4. HDFC Mid Cap Opportunities Fund, 5. Mirae Asset Emerging Bluechip. I am very well aware of the risk in investing small/mid cap funds and would like to continue investing in these funds for 12+ years from now. I am concerned about the portfolio overlaps. I used your website research centre to find common stocks across these 5 MF and found an average of 51 percent holdings is overlapped. So, how do I reduce the portfolio overlap. I have read your article: https://www.advisorkhoj.com/company/Principal-Mutual-Fund/articles/Should-you-invest-in-large-cap-or-midcap-mutual-funds. Where you have suggested to invest in multiple funds when it comes with small/mid cap funds for diversification. Please let me know if I can continue with my existing portfolio of above 5 funds for next 12+ years without worrying much about portfolio overlap as its expected. Or do you suggest removing anyone of the funds from my portfolio to avoid portfolio overlap ? Please advise?
You have done a very good home work. First, by selecting top performing funds from mid & small cap category and second by studying the portfolio overlap between these funds which is around 51%, according to you.
Please note that since you have selected good funds and also that the overlap is only 51%, you should stick to the individual selections and should not change it.
With regards to continuing the investments for next 12 years, though this is a good thought you must review your portfolio performance at least once every year in order to ensure that they are aligned with your long term investment objectives
Glad to know that you are aware about your risk profile and have selected funds according to it!
Thanks for writing to Advisorkhoj!
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