Planning a 15-year mutual fund investment? Here’s a simple 4-scheme portfolio approach

Synopsis

A long-term investor with Rs 10 lakh and a 15-year horizon can build a simple four-fund mutual fund portfolio combining a Nifty index fund and flexi-cap funds. The strategy focuses on disciplined investing, diversification, and staying invested through volatility to generate sustainable wealth over time despite market fluctuations.

With increasing awareness and accessibility, mutual funds are no longer limited to urban investors. Today, even individuals from smaller towns and diverse professions are actively exploring market-linked investments for long-term wealth creation. For investors with a long horizon and no immediate liquidity needs, a disciplined and well-diversified equity portfolio can play a crucial role in building a sizeable corpus over time.

A similar query came from Ram Kumar, a 60-year-old farmer from Haryana and a viewer of The Money Show, who is looking to invest Rs 10 lakh in mutual funds for the next 15 years. With a fixed deposit maturing next year and no near-term requirement for funds, he is open to taking equity exposure and wants to build a portfolio across four schemes that cover the broader Indian market.

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According to Srikanth Bhagavat, MD, Principal Advisor, Hexagon Wealth, the first thing to acknowledge is the investor’s long-term mindset. A 15-year horizon allows for meaningful participation in equities, but it also requires the ability to stay invested through market volatility. Investors must be prepared for phases of correction and avoid emotional decisions, neither panic during downturns nor excessive risk-taking during market rallies.

“It is amazing to see how a farmer in Haryana is now confident of investing in mutual funds. A few years ago, we just could not have thought of this kind of a scenario. This is the kind of penetration that we have reached and there is a way to go,” Bhagavat said.

Given the long investment horizon and no immediate need for withdrawals, a predominantly equity-oriented portfolio is considered appropriate. The expert said that the investor should be aware that he will go through volatile phases and not trade on it. When markets are down, as they are today and are bound to happen in the future also, do not panic and do not become exuberant and take excessive risks when markets are high either.

To build a simple yet effective allocation, the expert suggests starting with a core exposure to large-cap stocks through a Nifty index fund. Choosing a low-cost index fund with minimal tracking error ensures efficient participation in the broader market without active management risks.

To complement this, flexi-cap funds can be added to the portfolio. These funds dynamically allocate across large-cap, mid-cap, and small-cap stocks, offering both stability and growth potential. Among the options, schemes like HDFC Flexi Cap Fund, Parag Parikh Flexi Cap Fund, and Kotak Flexi Cap Fund are cited as examples of established funds in this category. Typically, such funds maintain a strong large-cap base while selectively investing in mid- and small-cap stocks to enhance returns over time.

This combination helps create a balanced portfolio, index funds provide stability and market-linked returns, while flexi-cap funds add active management and potential alpha generation.

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In essence, a simple four-fund portfolio anchored by a Nifty index fund and supported by flexi-cap funds can offer broad market exposure and growth potential. For investors like Ram Kumar, the real edge lies not just in fund selection, but in patience, consistency, and the ability to stay invested through market ups and downs.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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