Retire Rich: Streamline 30+ Mutual Funds for 60-Year-Olds

A 60-year-old investor with over 30 mutual funds received expert guidance from Hrishikesh Palve, Director at Anand Rathi Wealth Limited, on how to restructure their portfolio for retirement. The core advice involves dividing investments into three distinct baskets to manage liquidity, growth, and long-term needs effectively.

Structuring Your Retirement Investments

Hrishikesh Palve suggests a strategic approach by categorising your funds into three “baskets.” This method helps you balance immediate financial needs with your long-term wealth creation goals. Each basket serves a unique purpose.

• Basket A (Immediate Liquidity): Allocate 100% debt funds, specifically ultra-short-duration or arbitrage funds, to cover two years of living expenses.
• Basket B (Medium-Term Needs): Aim for 60-70% equity and 30-40% debt, with annual rebalancing to refill Basket A as needed.
• Basket C (Long-Term Growth): Maintain an 80% equity and 20% debt allocation for sustained wealth building.

Rebalancing Your Existing Portfolio

To optimise your current investments, the expert recommends increasing your exposure to large-cap funds. This adjustment helps achieve an ideal market-cap allocation across different segments. The recommended split is 55% large-cap, 23% mid-cap, and 22% small-cap.

What to Exit and Why

• ELSS funds: Exit these as Section 80C tax benefits are less relevant under the new tax regime.
• Hybrid and thematic funds: Avoid funds like HDFC Balanced Advantage Fund, Tata Digital India, Franklin India Opportunities, and HDFC Innovation Fund. This gives you direct control over asset allocation and helps mitigate cyclical performance risks.

Funds to Keep and New Additions

You should retain certain performing funds within your portfolio. Additionally, consider new funds to enhance your market-cap allocation and reduce overlap.

• Retain these funds:
  • HDFC Large Cap Fund
  • HDFC Mid Cap Fund
  • SBI Small Cap Fund
  • Parag Parikh Flexi Cap Fund
  • ICICI Pru Value Fund
• Exit these for simplification:
  • Mirae Asset Large Cap Fund
  • Edelweiss Recently Listed IPO Fund
  • SBI Multicap Fund
  • HDFC Liquid Fund
• Consider these new additions:
  • Quant Large Cap Fund
  • Bandhan Large & Mid Cap Fund
  • Kotak Midcap Fund

This structured approach, as advised by Hrishikesh Palve, simplifies your portfolio and aligns it with your specific retirement goals. By carefully managing your allocations, you can ensure both liquidity and long-term growth.