Building a mutual fund portfolio is not just about selecting funds that have delivered strong returns. As investors approach retirement, the focus needs to shift towards managing risk, ensuring liquidity and aligning investments with near-, medium- and long-term financial needs. Having too many schemes can also make portfolio management difficult, particularly when several funds have overlapping mandates.
For a 60-year-old investor, the need for a well-defined asset allocation becomes even more important. The portfolio should ideally provide enough liquidity to meet immediate expenses while retaining adequate equity exposure to support long-term growth and counter inflation.
A 60-year-old investor reached out to ETMutualFunds and sought a review of his family’s mutual fund portfolio. The portfolio includes investments made for himself, his 55-year-old wife, 23-year-old daughter and his company. The family started investing around 2021, with some lumpsum investments made during 2024 and 2025.
The combined portfolio has exposure to 31 schemes across large-cap, large & mid-cap, mid-cap, small-cap, multi-cap, flexi-cap, balanced advantage, ELSS, thematic, value, focused, liquid and hybrid categories.
Some of the funds in his family portfolio were - Parag Parikh Flexi Cap Fund, HDFC Flexi Cap Fund, Parag Parikh ELSS Tax Saver Fund, SBI Small Cap Fund, HDFC Small Cap Fund, HDFC Mid Cap Fund, HDFC Flexi Cap Fund, HDFC Innovation Fund, ICICI Pru Equity & Debt Fund.
The portfolio has a significant allocation to HDFC Balanced Advantage Fund, which accounts for 39.72% of the overall portfolio. Flexi-cap funds account for 16.24%, while mid-cap funds have a 10.27% allocation. Liquid funds account for another 6.47%.
Since individual portfolio breakups for each family member were not available, the expert reviewed the investments as a combined portfolio and suggested changes with retirement planning in mind.
Hrishikesh Palve, Director, Anand Rathi Wealth Limited analysed the portfolio and told ETMutualFunds that the investor should now divide the portfolio into three baskets based on when the money is likely to be needed.
Basket A: 100% in debt funds
The first basket should be focused entirely on liquidity and capital preservation. Palve said that in this basket, the investor should consider allocating 100% to debt funds and estimate living expenses for the next two years. This amount can then be invested in ultra-short-duration funds or arbitrage funds, particularly if the investor falls in the highest tax bracket.
The objective of allocating 100% in debt funds is to ensure adequate liquidity for your regular cash flow needs.
