Investment Review 2025: How to Optimize Your Mutual Fund Portfolio
Most of the mutual fund investors think that the end of the year and the new year are the correct times to review their investment portfolios. For that, investors usually check the net asset value (NAV) of their investments. So, it is important to forget to regularly check a fund’s net asset value or its previous returns. These numbers can’t indicate the performance alone.
Apart from this, compare how the scheme is performing with its benchmark. Benchmark set a standard to measure against. If the scheme doesn’t perform better than its benchmark, identify whether this is a short-term or long-term issue.
For equity mutual funds, experts advise that investors need to calculate how the fund has performed against its benchmark and equals over a medium to long-term time horizon.
When it comes to debt mutual funds, don’t focus on high returns. It is important to consider the credit quality, duration, and how well the fund manager handles interest rate risks.
Most investors, mainly DIY investors, constantly invest in NFOs without arranging them according to their risk appetite and aim because the investment can be done at Rs.10. A mutual fund adviser suggests that most investors look for new fund offers (NFOs). They think that the Rs.10 is a great deal, but it’s the growth of the NAV over time that helps to build wealth.
If the investors start investing in the new fund offer with the lower amount of Rs.10 without coordinating it with their investment horizon, aims, and risk appetite. The important thing is to understand what to do if these investments are not performing well.
The DIY (Do-It-Yourself) investors believe that mutual funds are the best investment to secure their financial goals. They believe that they can manage everything on their own: research, pick schemes, talk to friends or people in mutual fund forums, and invest directly in mutual funds.
To become a DIY investor, curious investors reviewed their portfolios and wanted to know what losses they had incurred. A mutual fund expert suggests investors have a structured approach to reviewing the portfolio. Proper asset allocation, diversification, and alignment with your financial goal are the key elements of an effective review of the portfolio.
A tax professional said, “Unlike IPOs, NFOs are launched to raise funds without offering any special perks, and their Rs.10 per unit price is not tied to market demand. If your NFO is underperforming, keep an eye on it for about a year—track how the AMC, fund manager, and theme are doing. If it is still not performing well or the theme is out of favour, it is probably time to exit. That is why it is usually better to stick to funds with a proven track record instead of new ones.”
