Review your mutual fund investments periodically to balance your portfolio

Mutual fund is indeed a great tool to grow your money and get higher returns over a long period of time. But simply believing this and not doing any research before and after buying the mutual fund scheme can put you in a spot of bother. You picked the best mutual fund for you in terms of your risk profile and other factors. You kept investing in it without reviewing your mutual fund investments on a periodical basis, such as in a year, one and a half years, etc. And with this, you couldn’t strengthen the investment portfolio which would have been the case otherwise. In this article, we will let you know the importance of periodical review of mutual funds.

Change in priorities

Financial priorities do change over a period of time due to factors such as inflation, variation in the living standards, growth in the number of dependants, spike in educational costs of your child, among others. Before marriage, you may have limited liability. But the same would have risen significantly post marriage. Before marriage, people generally do not consider factors like the wealth creation for education and marriage of their children while making investments in mutual funds. But after marriage, they have to and that requires them to go back to review their mutual fund investments.

After reviewing, you could feel the need to invest more to meet the future requirements. Based on the rise in income over a period of time, you need to keep adding the investments so that you would be able to create a pool of wealth over a period of time.

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Performance of Peer Funds

If you review your mutual fund investments periodically, then you would be able to compare the performance of your funds with the similar ones and a benchmark index on the particular fund. In addition, you can compare the performance of your fund in terms of the return you projected at the time of investment. See if you have received such returns or not. If you have received returns way below your expectations, then you can either increase the amount of investment or discontinue the scheme. You can look to invest in the new mutual fund that must have had performed well over a period of time.


The biggest element that draws investors towards mutual funds is the diversification factor, which reduces the risk in your investments. On periodical review, you can easily check whether your funds have been diversified sufficiently across sectors and themes or not. Make sure you review the underlying stocks where your mutual funds have invested. You need to check whether there is any duplication of stocks among your funds. But be mindful of over diversification as it can spread your investments in extremely small amounts, making it tough for you to get substantial returns.

Attention to Long-Term Investment

Maintain patience while you review your mutual fund portfolio. Till the time fundamentals of mutual funds remain good, it is better to stay invested in the same. So, you need to keep an eye on the fundamentals and critically review your investments after a certain time frame to stand in the safe shore.

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Respond to Macro-economic Trends

We all know mutual fund investments come with the risk factor. But make sure you do not go much into the short-term fluctuations impacting your funds. See the larger picture and check the impact of macro-economic trends on the performance of your funds. If these trends are hurting your mutual fund portfolio, then you need to consider adopting those funds that may have performed well despite such macro-economic challenges.

These were the plausible reasons for periodical review of mutual fund portfolio. So, keep checking the performance, returns and diversification of your mutual fund investments to balance the portfolio.