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A folio can have schemes from one fund house only

LiveMint logoLiveMint 25-05-2014 Srikanth Meenakshi

I am 27 years old and would like to start investing `10,000 every month in mutual funds (MFs) through systematic investment plans (SIPs). I plan to invest 70% in large-cap funds and 30% in mid-cap funds. Do you think this is a good mix?


As a young person who is presumably starting his investment portfolio, I am assuming you are investing for the long term. Then your portfolio can be more diverse and can take on more risk. You are on the right path in this regard having chosen an all-equity portfolio. In terms of what kind of funds should be in your portfolio, I would suggest some changes. It would be better to go with one large-cap fund for 25% of the portfolio, have two diversified funds (large- and mid-cap funds) for 50%, and round out the portfolio with a small- and mid-cap fund. This way, for about 50% of your portfolio, your fund managers can take the call on how much to invest in different segments of the market.

Regarding specific funds to fit this allocation, you can go with ICICI Prudential Focused Blue Chip Equity for the large-cap fund. For the two diversified funds, you can choose Quantum Long Term Equity and UTI Opportunities. HDFC Mid-cap Opportunities fund could be the choice for the small- and mid-cap category.

Can I direct SIP investments into the same folio?


Whenever an investor makes an MF investment, they are allotted a folio number for the same by the fund house. A single folio can contain multiple schemes in it. Since the fund house allots them, a folio cannot, however, have schemes from different fund houses. Whenever an investor wants to switch between funds within a fund house, they can do so only within the funds held in a single folio. If you have multiple folios with the same fund house, you can request the fund house to merge the folios.

So, yes, you can direct systematic investment plans (SIP) into an existing folio with a fund house. All you have to do is specify the folio number in your SIP application to make this happen. If you do so, all your SIP instalments will flow as transactions into the same folio.

I want to know whether trail commission paid to an agent is calculated based on entry date net asset value (NAV) or year closing date NAV or exit date.

—Malini Bose

Calculation of trail commission happens similar to the calculation of fund’s expenses—on a daily NAV basis. Every business day, a fraction of the total expenses incurred by the fund are deducted from the daily NAV of the fund before it is declared. Trail commissions are paid out from these fees. These are proportional to the number of days an investor stays invested with a fund.

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