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POSTED BY ON October 21, 2010 12:47 pm COMMENTS (6)
How do we decide when we should exit a particular fund, How do we decide a bad performance of a fund and how many months should we wait to see if the performance changes.
Are there any other parameters to look for before exiting a MF.
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Also, review your portfolio once in a year. Less than a year is not a right strategy to judge any fund. A particular time may be good or bad for some stocks or even fund manager. So, don’t compare funds for 3 months or 6 months time frame.
Hope it will help you.
Investmentkit.com
Thanks Moneysavings help,
How much fall should be there or what are the parameters to judge a bad performance of fund, I understand what Saravanan said that u have to compare with benchmark or peers etc..but how much difference is allowed if the fund is in a short term bad phase etc.. I hope you understood what i am trying to ask.
How many months should you wait to decide to exit a fund which is not performing well
Compare with other peer products in the same category as stock market is same for both the funds. If it’s a difference of just 5% – 6% in a year, it’s ok. Some months may be good for one fund, and some may be good for other. But of the difference is HUGE, like one fund is giving 35% return and the other one is giving 10%, it should be an alarming signal for you.
The following article will also help you.
http://www.investmentkit.com/articles/2010/08/when-should-you-exit-your-mutual-fund-investment/
Thanks again, I guess now I understand.
one way is to look at how the fund has performed against its benchmark, and the performance of peer funds vis-a-vis that benchmark… number of months to review would be a personal call…
Thanks Saravanan…..