Can I continue to invest in these mutual funds for my retirement?

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Two years ago, I started three SIPs in HDFC Small Cap Fund (Rs 2,500) HDFC Balanced Advantage Fund (Rs 2,500) and Nippon India Small Cap Fund (Rs 3,000). I am a 30-year-old moderate risk-taker looking to save money for my retirement. Should I keep investing in these same funds or I need to change the funds? Where else I can start investing?
-Aakash Yadav

You are currently investing In two small cap schemes and a dynamic asset allocation fund. The small cap schemes are not in line with your stated risk profile. These schemes are meant for aggressive investors with a very high risk appetite and capacity to tolerate higher volatility. Dynamic asset allocation funds are meant for conservative equity investors who want to play it safe while investing in the stock market. These schemes change their exposure to equity based on valuation parameters.

Mutual fund advisors typically ask moderate investors to invest mostly in multi cap funds. If they want to diversify and reduce the overall risk in the portfolio, they can also take a small exposure to large cap mutual funds.

  • -0.88%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 3.11 YearsTime taken to double money
  • 1.53%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 2.2 YearsTime taken to double money
If you are worried about the prolonged poor performance of small cap schemes and the volatility associated with them, it clearly shows that you have chosen the wrong category to invest. In that case you should sell these schemes and invest the money in a multi cap mutual fund. Since you are investing a modest sum, you need just a multi cap scheme. You can increase the number of schemes when your SIP amount becomes very large. However, do not add more than three or four schemes, as many investors struggle to monitor their large mutual fund portfolios effectively.

Here are our recommended multi cap and large cap schemes for you.

Best large cap funds to invest in 2020
Best multi cap funds to invest in 2020
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