When it comes to mutual funds, there are many benefits, some of them are – management of your money through professional fund managers, diversification, minimum investment thresholds, accessibility liquidity and a regulated market. Even with all of these advantages, there are chances of your fund under-performing. As the motive of investing in such funds is to achieve your corpus, thus monitoring the performance your portfolio of mutual funds is a must.
Here are few to do and keep in notice when your funds under-perform:
- You must review your portfolio to keep a track of the performance of your funds. The fund should be able to beat its benchmark. Take notice if there has been a consistent and significant downfall in the performance for your fund.
- Sell the under-performing funds and take a position in other funds, which suit your asset allocation. While selling the non performing funds, you should keep in mind the taxes and other transaction costs, which are applicable.
- Evaluate the acquisition of the fund houses and changes in expense ratio.
- While evaluating the performance of their funds, also consider the return perspective.
- If your fund is under-performing due to market downfall, you should hold on to it. This in turn could enhance the performance of your fund during market turnarounds.
- Keep in mind that the short term performance of your funds should not be of utmost importance when you have a long investment horizon.