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Review your portfolio on a regular basis
Published On , 29 Apr 2018 By ET Wealth
Portfolio rebalancing, however, should be need-based and not a regular process
It’s the duty of every investor to keep a close watch on his/her portfolio, review its performance on a regular basis and if needed rebalance it. Rebalancing becomes necessary when one finds that the portfolio is not performing as per the investor’s financial Goals. With Sebi now embarking on a major overhaul of mutual fund schemes which may lead to some changes in fund management strategy, a review of one’s portfolio, and then if needed a rebalancing may become necessary.
STEPS TO REBALANCE A PORTFOLIO
Rebalancing is an act of bringing back the asset allocation ratio to its planned path
At times even some of the outperforming funds are sold and some other funds which have the potential to outperform in the future are bought
At times those funds which did badly may be required to be sold and some other funds are bought
Caveat: Do not rebalance just because the portfolio has not been churned for several months or a few years
STEPS TO REVIEW A PORTFOLIO
Look at the asset allocation (distribution of funds among Equity, Debt, gold etc.) that was the target at the beginning
Look at the current asset allocation and if it’s the same as in the beginning
If the two are different, find out the reason for the deviation (one or more assets must have under-/out-performed
The performance of the assets which have deviated from its expected course are to be taken up for rebalancing
One could also review the performance of each fund (Equity, Debt and gold) to identify under-/out-performance
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