Model Mutual Fund Portfolio for 2018

In Stock Market | Last Updated October 16, 2017|3 Comments

mutual fund portfolio

A Model Mutual Fund Portfolio means a perfect portfolio suitable for everyone. However, in the real life, there is nothing called as a perfect mutual fund portfolio. The reason is financial goals, risk profile and investment preferences of every individual are different. So, the portfolio building exercise includes multiple factors such as the age of investor, financial goal, risk profile, time horizon etc. Let’s try to understand the basic process of building a Mutual Fund Portfolio.

How to build a Mutual Fund Portfolio?

A step by step method used for building a mutual fund portfolio is given below.

  1. The first step in building a portfolio is defining a financial goal. Once you are done with defining your goal it becomes easy to build a portfolio.
  2. If your goals are short-term you can invest in fixed income investment. Fixed income investments are the best choice for short-term investment horizon. Here the meaning of short-term is less than 3 years.
  3. The next is deciding financial target and risk factor. If you can answer risk and returns precisely you have won the battle. E.g You can invest “X” amount every month and you will need “Y” amount after 3 years for your daughter’s marriage.
  4. Once you are through with this you need to start building your portfolio. As you have investment horizon and risk profile it will be easy for you to build the portfolio.
  5. You can either build a single common portfolio for your all financial goals or make an individual portfolio for individual financial goals. The second method would be difficult but surely give better results.

If you want to build your portfolio but don’t know which mutual fund scheme to select? Or you have already invested in a mutual fund but not sure if they are appropriate? Whatever be the case, I am herewith 3 model mutual fund portfolio for 2018.

These mutual fund portfolio should not be considered as a verdict for the investment. It is given here for the reference only. You can design your own portfolio on similar lines, based on financial goals, age, risk profile and other factors. Three types of portfolios are given Aggressive, Moderate and Conservative.

Model Mutual Fund Portfolio for 2018

Aggressive Profile

This type of mutual fund portfolio is best suited for the young individuals who have begun to earn money. They have very low or no financial obligation. The typical age group would be 20-35 Years. These type of investors are willing to take a risk for high return. They are not afraid of stock market uncertainties.

The best-suited mix for these type of investor would be a small cap, mid cap funds along with multi-cap funds.

mutual fund portfolio aggressive profile

Moderate Profile 

The moderate investors are slightly older. Typical age group would be 35-50 Years. They have financial responsibilities. However, they are willing to take some risk with finances. For moderate risk investor, a portfolio with the addition of large-cap and balanced mutual fund with optimum allocation will do.

mutual fund portfolio moderate risk profile

Conservative Profile 

The conservative investors are a risk-averse investor. Protection of capital with small growth is their preliminary concerns. They are nearby retirement age typically above 50 years. They cannot afford the risk of the equity market. For these type of investors debt oriented schemes along with MIP are recommended mix. In addition to this small percentage of investment can be made in safe large-cap funds.

mutual fund portfolio

Note – Number of funds in your portfolio should not exceed certain limit. Ideal count would be 5-7. It will help in effective management and monitoring of the funds. The SIP amount in these funds depends purely on your financial goal and horizon.

Disclosure –  I have done SIP in SBI Magnum Multicap Fund & HDFC Balance Fund.

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4 Comments

  1. Devan says:

    If we build a single common portfolio for all financial goals , then how to track and manage portfolio.
    For instance how to keep asset allocation for the all the goals. How to make sure , which goal corpus belongs in the overall corpus of portfolio.

    Second query, in your moderate portfolio, you have not mention any debt funds for Debt portion of Portfolio.
    Do you mean only pure equity funds are sufficient for the goals.

    • Dear Devan,

      You have got very valid point.However,many people keep only single portfolio for all goals.It will be very difficult to track like this. For moderate portfolio I have not considered debt component. Considering fact moderate risk taker will be ok to take moderate risk.

      • Devan says:

        Thanks RaviRaj,

        Do you have any post on managing Single vs Multiple portfolio for goals. Request you to write on this topic . It will be very much useful for investors to choose one based on the merits and demerits of the approach. May i ask personally , how do you manage for your own goals .

        • Dear Devan,

          As of now i have two portfolio. One is with Demat account and second is Direct mutual funds – invested via MF websites. I keep track using moneycontrol portfolio free services.

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