We discuss some minimalist equity MF portfolios. This is intended for beginners new to the capital markets. Existing investors with multiple funds need not act on this. However, they should tell themselves not to buy more anymore and try to de-clutter as and when possible in the future.
New investors should also recognise that a minimalist portfolio will not remain so if FOMO urges them to buy more. The MF industry will continue to produce new products. We cannot buy all of them. We must ask ourselves to stop at some point (preferably right at the start) and focus on more important things.
The data is clear. About half the funds in any category are unable to consistently beat the index. So it is clear that index investing is the way to go, especially for young earners.
However, choosing active or passive funds is a personal choice. What matters more is a proper financial plan. See: Active vs passive investing: the ground reality.
With all that said, let us look at the portfolio ideas.
1. Nifty 50 or Sensex Index Fund. This is a super-simple portfolio, and only a sage-like investor can remain happy with this!
2. Nifty 100 Index fund. If you want about 10% exposure to the Nifty Next 50.
3. If you want more Nifty Next 50 exposure: Nifty 50 or Sensex Index Fund+ Nifty Next 50 Index Fund 20%.
Nifty Next 50 is a “midcap-like” index. So not go overboard. See Nifty vs Nifty Next 50 vs Nifty Midcap 150 vs Nifty Smallcap 250: Return Comparison Sep 2025
Nifty Next 50 can be a frustrating index to hold. So be aware of risks before investing. The only reason to use Nifty Next 50 is to beat the Nifty 50. There is a chance for this to happen “over the long term”, but not a guarantee.
3. Nifty 500 Index Fund or LargeMidcap 250 Index* For investors who prefer wider market coverage. Please note that the Nifty 500 is still a 65% large cap fund! So invest with the right expectations. See: Nifty 50 or Nifty 500, which index fund should I choose?
The largecap 250 has 50% of mid caps, so expect this to be quite volatile and frustrating to hold.
* There are two caveats, though
a) These funds are quite new. We do not yet know how they will perform during market turmoil, when buyers evaporate. Will the tracking error increase?
b) If the AUM in these funds increase, will it be tough for the fund manager to buy and sell large quantities of mid and small cap stocks due to impact costs (large buy-price vs sell-price difference)?
These are unknowns as of now, and the same concerns apply to the Nifty Midcap 150 index.
If you prefer active funds
4. Aggressive Hybrid Fund. Diversification is the only free lunch in investing. Replace some equity with bonds, and you get a fund that is less volatile, has lower drawdowns and offers similar returns.
Pity we don’t yet have an index fund here. We are still waiting for an Aggressive Hybrid Index Fund
For recommendations, see: Plumbline: Handpicked Mutual funds.
5. Flexicap Fund or Large & Midcap Fund. As long as you appreciate that these funds will not stay on top all the time and can underperform indices.
Strong Avoid
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