How to review your mutual fund portfolio

Investing is not a destination, but a journey. It starts with a thorough research before investing and continues with regular monitoring and reviewing of the portfolio. Frequent monitoring of your portfolio is important as circumstances change, and the fund might not fit your portfolio for various reasons. Hence, ideally you should review your portfolio once in six months, but it should not exceed one year.

Performance

The first thing to check is the performance of the funds. It should be checked against category as well as the benchmarks. If the fund has underperformed its peer as well as benchmark, you need to take a closer look at the fund. If it has underperformed for a longer duration, you need to check if the fundamentals have changed such as fund manager, if yes, then it is a good time to switch or keep the fund in the watchlist and review it again after six months. If it continues to lag in performance, then it is a good time to switch.

Objective

One of the reasons you invest in the mutual fund is to meet certain objectives. While reviewing a fund you need to check if the fund still fits into your scheme of things. Whether the character of the fund has changed in terms of risk and return, if yes, then you should review the fund and check if the changed profile of the fund will still help you achieve your financial goals. Therefore, even if the fund is performing good, the tilt in the weightage of the portfolio to certain direction may not serve your purpose, then you should consider switching.

Asset Allocation

Many of us do not give much importance to this, but right asset allocation gives a boost to the overall performance of your portfolio. Therefore, while reviewing your portfolio you should check that your asset allocation is right according to your age and risk profile. You may need to invest in certain assets while book profit in others to balance your portfolio.