Review your portfolio on a regular basis

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