Reviewing your mutual fund portfolio

One of the most important tasks in managing your financial or physical health is monitoring the progress. If after one month of working out and following a healthy diet, the results are not seen, then you may have to revisit your regime. Whatever plan you chalk out, you need to review it regularly to ensure that it aligns with your goal.

Similar is the case with your investments. Track your investment with a regular report card of its performance, alignment with your goals and long term objective. Keep these 5 points in mind while reviewing your mutual fund portfolio.

1. Does it align with your current goals?
Is cardio helping you reach the desired weight on scale? Or do you have to switch to a combination of weights? Reviewing your plan will help you figure that out. Likewise, when you build a mutual fund portfolio, you align it with certain goals. But as time passes, your financial goals could change. Hence while revisiting your mutual fund portfolio; you must most importantly check if it still is capable of fulfilling your long term goals. If not, you could consider revising it.

2. Peer performance
It is very important to know how your fund is performing vis-a-vis its peers in the same industry. But you must always make sure that the comparisons you’re making are on similar parameters. A periodic review could help you gauge the performance of your fund in comparison with other similar funds in the category and take the necessary steps.

3. Maintain diversification
As we have said earlier also, following only one type of workout may not get you the desired results. Each workout has its benefits and thus you need to have a combination of one or more. Similarly, your mutual fund portfolio too needs variety. The market is prone to fluctuation and it is vital to remain diversified to ride those changes. This is another major point to consider while reviewing your portfolio on a regular basis.

4. Manage short-term fluctuations
Several times, your routine could get thrown off due to intermittent blocks – a holiday, festivities etc. But what’s more important is how you manage such fluctuations in your routine. Investing too is a long-term activity. In order to manage market movements that take place at shorter intervals, you must review your portfolio from time to time to re-assess the performances of the fund basis the markets. For example, if markets have been slow, you could consider investing more during that time so that the accumulation happens during market recovery.

5. Enhance your portfolio
When you achieve your goal of fitting into an old dress, it motivates you to take up another such goal. Same is the case with your financial goals – they evolve with time, along with your income. At times like these, you could consider adding up to your current portfolio basis its performance, thereby enhancing its total value. Even your intermediate incomes could be put into funds as a top-up as mutual funds allow investors to top-up their current investments through a simple procedure.

Disclaimer – This document is for general information only and does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. This document provides general information on performance; financial planning and/or comparisons made are only for illustration purposes. The data/information used/disclosed in this document is only for information purposes and not guaranteeing / indicating any returns. This material provides general information and comparisons made (if any) are only for illustration purposes. Investments in mutual funds and secondary markets inherently involve risks and recipient should consult their legal, tax and financial advisors before investing. Recipient of this document should understand that statements made herein regarding future prospects may not be realized. Recipient should also understand that any reference to the indices/ sectors/ securities/ schemes etc. in the document is only for illustration purpose and should not be considered as recommendation(s) from the author or L&T Investment Management Limited, the asset management company of L&T Mutual Fund or any of its associates. Recipient of this information should understand that statements made herein regarding future prospects may not be realized or achieved. Neither this document nor the units of L&T Mutual Fund have been registered in any jurisdiction except India. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

CL05650