I have SIP in three different large cap funds. Out of this Nippon is not performing. What should I do as I have observed a trend that particular mutual fund generates good return for some time and then it becomes Underperformer? Shall I continuously switch my investment as per the fund performance as it may happen that in future Axis Bluechip could underperform then again I have to switch out my investment to another fund?
1. Nippon india large cap (Investment till now Rs 80000) SIP 2000/month
2. Mirae asset Large Cap (Investment till now Rs 120000) SIP 5000/month
3. Axis Bluechip fund (Investment till now Rs 40000) SIP 3000/month
Ans: Please continue with Mirae and Axis Large cap funds and may include Uti Equity Fund-growth Plan-growth and / OR Parag Parikh Long Term Equity Fund- Regular Plan Growth
Portfolio Review:
Once the funds and categories are identified and investment is made thereafter it becomes very important to periodically review the portfolio.
The frequency at which investments can be review in 6 months to a years' time depending upon the objective, tenure and the risk profile.
Few of the parameters that can be used when to review in between are as under.
1) Material change in the category of the fund due to regulatory requirement i.e. at present multi cap funds
2) Major events i.e. corporate tax rate cut that happened last year on 23rd September 2019, few industries / sectors had more benefit, few may have not; similarly, Covid 19 impacts (not panic part)
3) If all remains normal, then look at the portfolio churn ratio; lower ratio means the fund portfolio will change slowly and therefore the review can be once a year; however it the ratio is very high then constant review is required i.e. in 3 months.
4) If there is substantial underperformance vis-a-vis category as well as benchmark for couple of quarter, fund needs review
5) If there are certain realignment required in the set objectives / goals or change in risk profile considering dynamic nature of live.
