How to review portfolio?

POSTED BY rajan.panchal24 ON February 24, 2013 3:53 pm COMMENTS (26)

How Can I review my protfolio? what parameters to look for when reviewing the portfolio??


26 replies on this article “How to review portfolio?”

  1. Dear RAajan, please review your portfolio every 18-24 months. If any change is required either in terms of fund performance or from asset allocation, do it.



  2. says:

    Dear FFc,
    By what % the equity and debt are rebalanced in the excel sheet of “Rebalancing SIP”?

    1. If you are referring to my calculator you can set the equity and debt % as per your risk appetite

      1. says:

        Since the portfolio is rebalance every year so I want to know what percentage is being used for rebalancing in excel.


        1. Say your goal is 10 years away and you can invest in 60% equity.
          So for next 7 years rebalancing should be done according to 60% equity and rest debt.
          For last 3 years gradually start decreasing equity % as per convenience and as quickly as possible.

  3. says:

    hi Ashal,
    What I want to understand is do I need to rebalance irrespective of profit or loss or I should rebalance only when my fund is not performing?

  4. Dear Rajan, please read my reply & dear Ganesh’s reponse, this so Tactical allocation is not everyone’s cup of tea (Including myself). So KISS is my call. Keep it simple silly. That’s it. simple & boring SIPs & once in a year or may be 2Y, review ‘ll do the work for you.



  5. says:

    Do I really have to go through the book “The Ivy Portfolio’.. Will it help me with my asset allocation?

  6. says:

    Hi all,
    Do I really need to understand tactical asset allocation for portfolio reviewing?


  7. Ganesh says:

    Thanks, Ashal. I think this forum is what it is because of you!

    Hi FFC – You have a nice collection of spreadsheets on your website. Well done with all the detailing.

    I invest primarily in mutual funds. There is a small % of my portfolio in direct equity. These are midcap bets based on CANSLIM.

    1. Ramesh says:

      Another of my fav persons to read and understand.

  8. Dear Ganesh, thanks for the update. As long as you have your own clear vision, it’s OK. Please keep doing what you know to do best. 😉

    Our wishes are with you.



  9. Ganesh says:

    Agreed, Ashal – That’s why I said this was optional in my original post. My post intended to provide a personal perspective and not recommend a course of action.

    FFC – I take your point about goals, expectations and amounts one needs to save. Goals however are not set in stone as they rely on inflation assumptions. If we do not know what inflation rate is going to prevail over the next 30 years, there is no way you can be very scientific about goals and amounts you need to save. Goals help get a ballpark of what one needs to save – nothing more, nothing less. I have always endeavored to invest the maximum I can and make the investment work the best it can.

    As an example, the impact of 17% compared to 13% compounded over 30 years for a SIP is significant – the corpus is more than double. This is enough for me to spend some time every month on tactical re-balancing to ensure I reach my goals sooner.

    Again, just my perspective after about 8 years in the markets – do not intend to spam the forum. This is a great forum with some very nice material!

    1. Point taken. Agree that goal calculations have their own limitations. My belief is that one handle the limitations with moderate expectations primarily so that rebalance or not I don’t fall 50% short!

      Do you invest primarily in stocks of MFs? It is always good to learn from other viewpoints so no question of spamming.

  10. Dear Ganesh, your reply says it all – Pure luck. Interestingly dear Subra also says so. 🙂

    Also as dear FFC point it out, such type of tactical rebalancing is not every one’s cup of tea. Sample this – A majority of queries are still here in the forum for which fund to invest or which policy to purchase.

    Also I’m a firm believer of KISS for myself & suggest the same to everybody else. 🙂

    Please don’t think that I’m opposing you or restricting you, I’m merely expressing my views & as long as you are able to do it for your own good, no issue from me or any one else.



  11. Ganesh says:

    Errata – Meant Jun 2012 instead of Jan 2012 in the above post.

  12. Ganesh says:

    Ashal Sir 🙂

    Most times, I end up selling funds I have had more than a year. If you take the last two years, my asset allocation varied between 49% (in Apr 2011) to 75% (Jan 2012). This might be luck – but I have not had to sell off anything with a short term capital gain. Yes, because I get rid of my poor performers, I have taken a short term capital loss at times.

    Even if there were some capital gains, the benefit of tactical asset allocation is significant. For example, since Jan 1999, tactical re-balancing would have produced a CAGR of around 17% compared to a static 70-30 asset allocation of 13% and a 100% equity asset allocation of 14.6%. Needless to say, dynamic asset allocation is great because of higher risk adjusted returns.

    1. The difference bet 17% return and 13% is significant only if I had expected 15%. If I had expected 10-12% I don’t care about the difference because either way I have enough to achieve my goal.

      I am sure dynamic asset allocation is exciting and can be bountiful. But its not for everyone.

  13. Ganesh says:

    Thanks, Ramesh. Will check out the book!

    Always good to have expert validation. 🙂

  14. Churning a portfolio often is needless exercise complicated by exit load and tax issues as Ashal has pointed out. There are many research papers on this subject and most of them agree that once is year gives you the same results.
    In fact underestimating returns and overestimating inflation as much as one can would allow the one the luxury of minimal rebalancing.

    For someone who has just started should not worry about rebalancing for a couple of years or so until they are fully aware of other aspects of investing.

  15. Dear Ganesh, jus a small query from my side. When you are reviewing your portfolio on mly basis & making corrective actions also, how com capital gain thing is not pinching you? Share some Idea SIRJI. 😉



  16. Ganesh says:

    Hi, Rajan.

    Portfolio review is a highly personal activity and varies by person. My method consists of three steps.

    1. Come up with a strategic asset allocation plan. This is the target % by various asset classes (debt, equity etc.). This incorporates your goals, your risk appetite and your life stage. A good thumb rule here is 100-age% in equity. An example – If you are 30 years old, your strategic asset allocation would say you need to have 70% in equity and 30% in Debt.

    2. Incorporate a tactical asset allocation plan. This one is optional but I like this. Markets are irrational at times and we should take advantage of this. We can do this by tilting your asset allocation towards equity when the markets are cheap (Say index P/e of less than 15) and tilting it towards debt when markets are overpriced (say index P/e more than 23). An example – my asset allocation varies between 75% and 25% based on index p/e.

    3. Churn portfolio as needed as per 1 and 2. Establish a routine. I like monthly for this as opposed to annual because I use tactical asset allocation. Monthly, I review my portfolio and decide on asset re-balancing based on my target asset allocation. I then pick funds / stocks that are poor performing and need to be sold. I will keep an eye on capital gains during this. An example – If my portfolio is 20L and my equity asset % is 50% and target is 45%, I sell 1L worth equity and move it to debt.

    Hope this helps..


    1. Ramesh says:

      Good style.

      I will suggest you look at
      1. Franklin Dynamic P/E Ratio fund to check out their asset allocation. Just to give you an additional support by an opinion of a good management team.
      2. Read up “The Ivy Portfolio”. It is a good book, and will help you in the Tactical Asset Allocation thing. May be it will not influence any changes, but still a good read.

  17. Dear Rajan, before finding answer for How? Please find answer, Why you should review your portfolio? If this is clear to you, you may define your own frequency to review. Rest is similar to what dear FFC has told you.



  18. You need to be clear about your risk appetite. That is % equity and % debt. Then each year you review the value of your equity and debt portfolio. If equity has gained more you sell and invest in debt so that the portfolio %s aligns with your risk appetite.

    You start with 60% equity and 40% debt. If after year 1 equity occupies 75% of the portfolio you sell and invest in debt so the portfolio has 60% debt. This controls risk.

    Use this rebalancing simulator to see how this benefits

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