A fact remains that not all stocks and mutual funds have generated wealth in the last few months or years. A number of them have underperformed or displayed a meek performance.  

True, no mutual fund scheme can beat its peers consistently. But any scheme that consistently underperforms the benchmark and its peers may not be a suitable one for your portfolio.

Markets at all time high! And your portfolio?

Data as of July 27, 2018
(Data source: BSE, PersonalFN Research)

From its March lows, the S&P BSE Sensex has rallied nearly 15%. Looking at the performance of mutual fund schemes in your portfolio, can you believe this?

Only a handful of stocks have driven this market to new highs.

And mind you, it is not the mid-and-small caps that have stolen the show. In fact, both mid and small caps since the start of the calendar year 2018 have retraced and underperformed the S&P BSE Sensex.  The S&P BSE Midcap Index is down 14.7% from its January-highs. Likewise, the S&P BSE Smallcap Index is down 21.9% from its January-highs.

So, had you invested heavily in mid-and-small cap oriented mutual fund schemes, your portfolio may not have done very well, and perhaps even bleeding today.

This in a way reflects, how crucial is for a fund manager to manage downside risk.  Plus, on your part, as an investor, it is important to select consistently winning mutual funds.

Our experience says, investors often make these common mistakes:

• Investing in mutual funds based on the unsolicited and unqualified advice from friends and relatives

• Not taking into consideration your financial goals and risk profile before investing

• Not investing as per the best-suited asset allocation

• Are unaware of your time horizon before investing

• Take investment decision based on past performance

• Not opting for Systematic Investment Plans (SIPs) in equity-oriented mutual funds to plan long-term financial goals, but engaging in some sort of trading ––which could prove hazardous to wealth and health.

Investing is individualistic and is a serious exercise. 

Along with having the best mutual fund schemes in your portfolio, it is important to have the most suitable ones taking into consideration your age, financial health, risk profile, investment objectives, financial goals, and the time horizon before goals befall.

There’s no point aping someone else’s portfolio; because one man’s meat is the other man’s poison.

[Read: Why Mimicking Your Friend’s Investments Can Be Risky]

If you have made mistakes or ignored certain fundamental aspects to build your mutual fund portfolio, here are few tips to revive your portfolio.

• Get rid of mutual fund schemes that have consistently underperformed their benchmarks and peers.

• Be wary of mutual funds that are vulnerable to greater downside risk during bear phases of the equity market compared. The objective here is to limit the overall risk to your portfolio, therefore assess performance across market cycles – bulls and bear.

• Unless you have a very high-risk appetite and hold a fair amount of diversified equity mutual funds, give skip sectorial and thematic mutual funds

• If you have too many similar schemes in your portfolio, your portfolio may not be well-diversified across investment styles and market capitalisation. This might also be a reason why your portfolio hasn’t done well. In this case, your portfolio needs a deep cleansing treatment.

• If you do not have an investment time horizon of at least 5-7 years, yet holding equity-oriented mutual funds, you are exposing to a high degree of risk and should reconsider holding them.

[Read: How Well Do You Know The Health Of Your Mutual Fund Portfolio? You Will Be Shocked!] 

If you need superlative guidance to know if you are holding the best and most suitable mutual fund portfolio, opt for PersonalFN's Mutual Fund Portfolio Review service.

(Image source: unsplash.com)

PersonalFN's investment advisers, who effectively serve as Financial Guardians, will put your interest at fore by offering ethical and unbiased advice and tell you the ones to Buy/Sell/Hold keeping in mind your investment objectives and financial goals. Act now!

Selecting a mutual fund scheme is an extremely difficult task. As you know, there’re thousands of schemes available and to select only a few among them requires a special skill set.

At a time when the Indian equity market has hit a peak, following a strategy that some successful investors use is extremely important. If you hold a strategic portfolio, you multiply your wealth like never before.

At PersonalFN, we have formulated the “core and satellite strategy” for mutual funds investors.

The ‘Core and satellite’ investing is a time-tested strategic way to structure and/or restructure your investment portfolio.

PersonalFN’s research states that 60% of the portfolio should be reserved for Core mutual funds and the balance 40%, for the Satellite mutual funds.

But what matters the most is the art of cleverly structuring the portfolio by assigning weights to each category of mutual funds and the schemes picked for the portfolio.

Also, when there is a change in market outlook, revisiting the strategically structured portfolio by reviewing assigned weights to funds, is important.

Want to own the Ultimate Strategic Portfolio Ready-made Mutual Fund Portfolio based on the core and satellite approach of investing?

Looking for “high investment gains at relatively moderate risk”?

Subscribe to PersonalFN’s “The Strategic Funds Portfolio for 2025”; it is geared to potentially multiply your wealth in the years to come. Subscribe now! 

In this report, PersonalFN will provide you with a ready-made portfolio of its top equity mutual funds schemes for 2025 that have the ability to generate lucrative returns over the long term.

Here are the key benefits of holding a strategic portfolio brings along: 

✔ Your portfolio will be optimally diversified;

✔ Would reduce the need for constant churning;

✔ The risk to your portfolio would reduce;

✔ You can benefit from a variety of investment strategies;

✔ Create wealth cushioning the downside; and

✔ Potentially outperform the market;

To know more about PersonalFN’s Strategic Portfolio For 2025, click here! 

Happy Investing!

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