How should investors decide which mutual funds to continue with, pause, or exit? Which red flags signal it’s time to move on?
Ravi Kumar TV, Director Gaining Ground Investment Services:
When equity markets are near record highs, investors should avoid reacting to index levels and, instead, evaluate each mutual fund in their portfolio based on its role, fit and investment style. The first question should not be, ‘Has the fund done well?’ It should be, ‘What role does it play in my portfolio?’Diversified equity funds that are aligned with long-term goals should usually be continued even at highs. High levels of equity markets test asset allocation, not conviction; your decisions should flow from goals, time horizon and risk tolerance, not market headlines.
Exiting a fund is justified only when there are structural red flags. Clear signals include persistent multi-year underperformance versus the right benchmark, process changes, style drift, rising concentration, capacity issues from large fund sizes, or tax inefficiencies that no longer make sense. If a fund no longer behaves as expected, or if its volatility makes it impossible for you to stay disciplined, it’s time to move on.
When the markets are at record highs, success doesn’t come from guessing what will happen next, but from following a clear plan. Retain funds that still make sense, slow down where your allocation is high, and sell those that no longer work.
I am a 20-year-old student. I have started two SIPs of Rs.2,000 each, one in a large-cap equity fund and the other in a balanced advantage fund. Are these appropriate given my age, risk profile and my aim to make Rs.50 lakh over the next 10 years.
Ravi Kumar TV, Director, Gaining Ground Investment Services: Starting to invest at 20 is an advantage. Your choice of a large-cap fund and a balanced advantage fund reflects discipline and a preference for stability. At your age, short-term market ups and downs need not be feared. With a long investment horizon, higher equity exposure allows compounding to work harder for you. Being slightly more growth-oriented now can meaningfully improve outcomes. That said, fund selection alone will not take you to a Rs 50 lakh corpus in 10 years. The real driver of wealth is the amount you invest and how consistently you increase it as your income grows. A modest SIP is a strong starting point, but it must evolve with your career. At 20, your most valuable asset is not your portfolio, it is your earning potential. Focus on building that, step up your investments steadily, and let time and discipline do the heavy lifting. You are on the right path.
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