How to review your mutual fund investments periodically Assess the risk and volatility of each mutual fund in your portfolio. Stay updated about any changes in the fund manager or investment team overseeing mutual fund schemes
Reviewing mutual fund investmentsRegular review ensures alignment with financial goals and risk appetite. By evaluating performance, asset allocation, and scheme suitability, investors can optimise their strategy. Here’s how:
Establishing clear objectives
Periodically review investment objectives and financial goals. Assess whether goals have changed and if current mutual fund holdings still align with these objectives. Adjust holdings accordingly.
Evaluating performance against benchmarks
Compare each mutual fund’s performance against relevant benchmarks like market indices or peer group averages. Identify consistent outperformance or underperformance relative to these benchmarks across different time periods.
Assessing risk and volatility
Assess the risk and volatility of each mutual fund in your portfolio. Consider factors such as standard deviation, beta, and downside risk to gauge fund’s sensitivity to market fluctuations and its impact on overall portfolio risk.
Monitoring fund manager changes
Stay updated about any changes in the fund manager or investment team overseeing mutual fund schemes. New management can influence investment strategy and performance. So, evaluate the capabilities and confidence in the new team.
Rebalancing portfolio
Based on review findings, rebalance the mutual fund portfolio to match asset allocation with goals and risk tolerance. Sell funds that no longer meet criteria and reallocate proceeds to funds that offer better prospects or opportunities.
Points to note
Point to note
Investors can seek professional advice if they are unsure about how to review mutual fund portfolio or make investment decision.
Content courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
This story originally appeared on: India Times - Author:Faqs of Insurances
