How To Review Your Mutual Fund SIP Portfolio?

How To Review Your Mutual Fund SIP Portfolio?

 Reviewing your Mutual Fund SIP portfolio is essential in ensuring its effectiveness and alignment with your financial goals. This guide provides valuable insights into why reviewing your portfolio is crucial and the steps to do it.

By regularly reviewing your mutual fund SIP portfolio, you can make informed decisions, identify areas for improvement, and optimize your investment strategy for long-term success.

Take control of your investments with the help of a SIP Calculator and embark on a journey of continuous portfolio evaluation to maximize returns and achieve your financial objectives.

How To Review Your Mutual Fund SIP Portfolio?

 Why is Portfolio Review Important?

 Here are a few reasons why  you must review your Mutual Fund SIP portfolio regularly

● Portfolio Underperformance: The Mutual Fund SIP portfolio might not have generated the expected returns. If you have not achieved your financial goals over a set time frame, chances are it might not deliver good returns in the future as well. Use a SIP return calculator to estimate the returns and plan accordingly.

● Changing Financial Goals: Regularly review your Mutual Fund SIP portfolio as your financial goals, income, and risk appetite change. Assess your current corpus and future requirements to ensure it remains aligned with your evolving needs.

● Align with the Risk Profile: As you approach your retirement, your risk-bearing capacity tends to decrease. Therefore, you must review and adjust your investment portfolio to match your new risk appetite suitably.

● Utilise Tax Benefits: According to income tax laws, you can claim annual tax exemptions for long-term profit on equity-oriented Mutual Funds. Regular SIP investment portfolio reviews will help identify such opportunities.

Also Read: Top Direct-to-Consumer Brands Revolutionizing India's Retail Landscape

Steps to Review Your Mutual Fund SIP Portfolio

Now that you understand the reasons and importance of reviewing the Mutual Fund SIP portfolio, these are the steps to follow: 

● Review the SIP Performance Against Benchmark

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● Review Performance Against Similar SIP Funds

While reviewing your Mutual Fund SIP performance, compare it against similar SIP funds. Superior performance in comparison to other fund schemes reflects the fund manager's skill in generating returns through effective fund management. 

●  Replace Underperforming Mutual Funds with Better Schemes

If the Mutual Fund in your portfolio has constantly underperformed, consider replacing it with a better-performing option. Doing that will ensure portfolio growth at a steady pace, enabling you to achieve your financial goals over time. A SIP Return Calculator can be a great tool to identify better-performing SIP plans than your current one.

● Review Asset Allocation

Your Mutual Fund SIP portfolio's asset allocation must match your risk profile. Further, even if it is suitable while investing, it might change due to different asset classes and Mutual Fund schemes' relative performance. For instance, even if there are no changes in your risk profile, you must adjust your portfolio asset allocation to remain at the original level.

Suggested Frequency of Portfolio Review

Usually, an annual review of the Mutual Fund SIP portfolio via your Demat Account is sufficient, especially for a long-term profile of about ten years or more. Moreover, the need to review is even less if the portfolio primarily consists of passive Mutual Funds.

However, if your time frame is between three to ten years, you can check the portfolio every quarter. It helps review the funds in the portfolio entirely based on their performance and suitability. Wing the Mutual Fund SIP’s performance against their respective benchmark index is important. However, focus on its long-term performance, as several other reasons may impact its short-term performance. Constant underperformance culminates in an unsatisfactory investment corpus, exerting high pressure on the long-term financial goals with the SIP investment.

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