I have SIPs in the following funds since the last three years. I am little unsure about Axis schemes and large cap funds after seeing their underperformance via-a-vis index funds
Axis Bluechip Fund
Axis Focused 25 Fund
DSP Midcap Fund
UTI Flexi cap Fund
My goal is to buy a house in 10-15 years. Also, to build a retirement corpus. I am okay with market fluctuations but I am just a little worried that the selected funds aren’t performing as good as the market has in the past couple of years.
Also, I keep reading about rebalancing. Can you please explain how and when a person needs to decide to change the schemes.
–Vivek Pandey
We looked at the performance of your schemes in the last three years. This is what we found. Axis Bluechip Fund and Axis Focused 25 Fund have underperformed both their benchmarks and respective categories in 2021, 2022, and in this year so far. Axis Bluechip Fund has offered 16% returns in three years. Its benchmark offered 23% and category offered 22% in the same period. Axis Focused 25 Fund offered 15% in three years, compared to 25% returns by its benchmark. DSP Midcap Fund failed to beat its benchmark from 2020. It has offered 22% in three years. Its benchmark offered 34% in three years. UTI Flexi Cap Fund has underperformed in 2022 and in this year till date. The scheme has offered 20% in three years, compared to 25% returns given by its benchmark. In short, your schemes have failed to beat their benchmarks and category average in the short period. Since you have not shared the details of your investments, we won’t be able to offer personal advice.
Always choose your mutual funds based on goals and investment horizon, risk profile. Examples, if you have a conservative risk profile, should invest mostly in large capital funds. If you have a moderate risk profile, you should invest in flexi cap funds. If you have an aggressive risk profile, you can invest in mid cap, small cap and sector schemes based on your allocation plan. Choosing mutual funds based on your goals and risk profile, will also help you to understand the potential returns you can expect from these schemes.
Rebalancing the portfolio is to get the portfolio back to the original allocation plan. For example, you have 50% in equity schemes and 50% in debt schemes. When the equity market goes up substantially, the portfolio will be 60% in equity and 40% in debt. In the annual review, you will have to sell some of your equity investments and invest the money in debt to get back to your original allocation plan.
