Switch out of mutual funds which show sustained underperformance

I maintain the next mutual funds for 3 years. I need to know if I ought to maintain it for an extended interval, say 10+ years, or ought to I swap to another plans subsequent yr onwards for higher returns?

1. Motilal Oswal Lengthy Time period Fairness Fund – Direct Development

2. Aditya Birla Solar Life Tax Reduction’96 Fund – Development Direct Plan

3. L&T Tax Benefit Fund Direct Plan


All of the funds that you’ve invested in are Fairness Linked Financial savings Scheme (ELSS). Whereas these funds are managed identical to fairness diversified funds one distinction between ELSS and different fairness funds is the minimal allocation of the portfolio in fairness. In ELSS, the fund ought to have a minimal of 80% in fairness whereas in different fairness diversified funds this restrict is as much as 65%. Nonetheless, this situation doesn’t have a serious influence as a lot of the fairness diversified funds can have greater than 80% allocation in equities more often than not. Often, you may proceed to stay invested in ELSS even after the top of lock-in, if the fund performs constantly over a interval. Nonetheless, the funds you’re invested in at current have underperformed its friends and likewise the funds from different classes. It’s possible you’ll think about reinvesting your cash from these funds into a mixture of massive cap, massive & mid cap and flexicap funds. This could additionally allow you to create a portfolio primarily based in your wants and threat profile.

– Reply by Harshad Chetanwala, founder MyWealthGrowth.com

(Have private finance queries? E mail us at mintmoney@livemint.com)

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