Ask our experts – April 2024

Investment queries

I am from Hyderabad, and I would like to start a monthly SIP for Rs.5000. I am planning to invest this amount for the next 5 or 10 years. Should I consider investing in small cap, mid cap, or hybrid funds. Please suggest a good fund?

Assuming you will be investing for the next 10 years through SIPs, you can choose midcap and small cap funds, as long as you are aware of their inherent volatility. If not, you can begin with a few multi-cap funds, which have a minimum of 25% exposure to small- and mid-cap stocks. Eventually, you can add small- and mid-cap stocks as your portfolio grows.

Below are our recommended schemes in these categories.

CategoryScheme Name% SIP CAGR
3 Yr5 Yr
MulticapBaroda BNP Paribas Multi Cap Fund-Reg(G)24.124.9
MulticapMahindra Manulife Multi Cap Fund-Reg(G)28.628.7
MulticapNippon India Multi Cap Fund(G)30.729.2
MidcapMotilal Oswal Midcap Fund-Reg(G)32.131.6
MidcapHDFC Mid-Cap Opportunities Fund(G)29.829.8
MidcapNippon India Growth Fund(G)26.328.4
SmallcapNippon India Small Cap Fund(G)2934.7
SmallcapEdelweiss Small Cap Fund-Reg(G)22.629.8
SmallcapCanara Rob Small Cap Fund-Reg(G)19.229.2

CAGR as of 18-Mar-24.

Many years ago, I made some stock investments. These stocks—2,000 shares of VIVIMED LAB, 3,000 shares of PARAB IFRA Ltd., and 3,000 shares of Vishal Exports—are currently not visible in my portfolio. What happened to these companies? I also have holdings in RBL Bank, Bandhan Bank which are at a 50% loss. what should I do?        

ViviMed, Parab Infra, and Vishal Exp have been delisted or suspended from exchanges. Below is the outlook for stocks; Bandhan Bank and RBL Bank.

Bandhan Bank: Currently, asset quality has begun to show slight improvement, alongside financial indicators displaying signs of recovery. The bank’s management has committed to implementing cost control measures and anticipates further improvement in asset quality, which should bolster its future earnings. Hence, we maintain ACCUMULATE rating on the stock with a target price of Rs. 228, based on a 1.2x FY26E BVPS.

RBL Bank: In Q3FY24, the bank saw strong growth in net interest income (NII) by 21.0% YoY to Rs. 1,546cr, with net interest margin (NIM) expanding to 5.52%. Profit After Tax (PAT) grew 11.5% YoY to Rs. 233cr but was affected by higher provisioning and operating expenses. The bank is well-positioned for future growth due to robust advances, healthy asset quality, and sufficient capitalization. The stock exhibits promising potential and is worthy of holding. Therefore, we maintain HOLD rating on RBL, with a revised target price of Rs.288.

I’m retired and have Rs.10 lakh to invest. Could you suggest good funds for a Systematic Withdrawal Plan (SWP) as I want to withdraw Rs.10,000 per month?

You wish to withdraw Rs.10000 per month, on a capital of Rs 10 lakhs, assuming returns of 12% p.a., which is on a higher side.  Although some equity-oriented funds may have the potential to deliver higher returns over the long term, this may not always be the case. Therefore, you might need to consider “what-if” scenarios in which the value of funds declines in tandem with the drop in the markets. If you are ready for such fluctuations, you can consider setting up an equity-based SWP, however we do not recommend this as the first choice.

Alternatively, you can consider fixed-income funds (Low or Short duration Debt Funds) for setting up an SWP if you are looking for stability in your returns. You may consider an annual withdrawal rate at the time of investment which is marginally lower than the scheme’s yield on capital (YTM). For example, if the scheme’s YTM is 7%, consider 6.4% or 6.5% as the withdrawal amount, which would work out to around Rs. 65,000, p.a.

Below are our recommended funds in respective category from which you can select based on your suitability:

CategoryScheme Name
Aggressive HybridICICI Pru Equity & Debt Fund
Aggressive HybridEdelweiss Aggressive Hybrid Fund
Balanced AdvantageHDFC Balanced Advantage Fund
Balanced AdvantageTata Balanced Advantage Fund
Debt- Low DurationSBI Magnum Low Duration Fund
Debt- Low DurationInvesco India Low Duration Fund
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