Why track the Investment Performance

You might have seen the disclaimer that ‘past performance does not indicate the future performance of a fund’. It means that you cannot expect guaranteed returns on investment. Therefore, you need to look beyond the previous years’ returns to assess a mutual fund. Primarily, you should monitor your investments so that you can make informed decisions that can lead to higher returns.

You know that the capital market keeps fluctuating with changes in the overall economic conditions. Such a change disturbs the asset allocation of the portfolio. For instance, an original allocation of 50:50 in equity & debt may change to 60:40 owing to a market rally. It may increase the risk profile of the fund beyond your requirements. Fund evaluation also helps you to compare the performance of your investment against other similar funds. Additionally, a change in fund manager or fundamental attributes of your fund may also trigger an evaluation. Hence, a review and rebalancing might be required to keep the risk profile of the portfolio intact.

Every mutual fund investor is eager to know the performance of his scheme and his average portfolio. Unlike stocks which need regular tracking, a mutual fund portfolio can be reviewed once in six months

1. How does an investor know about the performance of his scheme?
The portfolio of the scheme in which you have invested is available on the fund house internet site. Every month, the fund house releases a factsheet which info every scheme and the portfolio, stocks which can be gift in the scheme.It tells you how the scheme fares in comparison to its benchmark, the annualised go back and essential ratios together with popular deviation, Beta and Sharpe Ratio.

2. How do I realize if my fund is appearing well?
Wealth managers accept as true with a mutual fund schemes overall performance must not be visible in isolation. To recognize the overall performance of a scheme better, compare it with comparable funds in that class and with its benchmark. For instance, compare a massive cap fund with the Nifty TRI or different massive cap finances. Many independent websites song performance of schemes. You can hold music of the way your scheme is acting vis-à-vis friends within the identical category by using reviewing overall performance over various time frames which include quarterly, half of yearly or every year basis.

3. What changes need to one preserve a watch on?
In addition to overall performance related modifications, one may want to maintain out an eye for promoter adjustments, fund management or other key employees modifications. Many a time modifications in fund management may want to cause a trade in investment fashion. Check portfolios intently after the brand new fund supervisor is in vicinity. If he adjustments fashion it have to be a challenge. There may be ownership adjustments, like a existing promoter going away or a new promoter coming in. Consult your marketing consultant at the in all likelihood impact of such adjustments and make applicable adjustment in your portfolio.

4. What need to I do if my scheme under performs?
Don’t soar and go out the fund for terrible overall performance over a quick period of time. If the fund supervisor is new deliver a while to prove his well worth and meet its funding objective.