8 Reasons To Revisit Your Mutual Funds Portfolio Annually


It is common knowledge that people should at least once a year assess their mutual fund holdings. Many investors, however, are unaware of the significance of this yearly review or are unsure of how to do it effectively.

Investors generally make the mistake of assuming that their investment portfolios do not require regular maintenance. However, just as you would regularly service your car or conduct general maintenance on your home, your mutual fund’s portfolio needs to be reviewed and revisited periodically to ensure that it is aligned with your goals and objectives.

There are several reasons why you should revisit your portfolio annually. Below, we highlight some of the key reasons:

  1. Reviewing and reassessing your goals & objectives

Mutual funds are a fantastic way to achieve long-term financial goals because they allow you to invest in various securities.

However, it’s important to review and reassess your goals & objectives from time to time to stay on track. Another way to do this is by checking your investment strategy and revisiting your asset allocation. It will ensure you’re getting the most out of your mutual funds since they’ll work best if aligned with your overall financial objectives.

Finally, be sure to revisit your account statements annually to determine whether your mutual funds are meeting your expectations. By doing this regularly, you’ll keep yourself updated on both how well they’re performing and how well you’re meeting your financial goals overall.

  1. Checking for signs of underperformance

If your portfolio has been underperforming, it may be time to make some changes. Reviewing your portfolio regularly will help you to identify any potential areas of concern so that you can take corrective action if necessary. 

You can also use active management techniques like stock selection and sector allocation to try and identify undervalued stocks or sectors that are likely to outperform the market over the long term. By staying updated on the performance of your portfolio and making sure that it’s appropriately diversified, you can ensure that you’ll continue making profits even during tough times.

3. To ensure your asset allocation is still appropriate

Your asset allocation is an essential factor in determining your portfolio’s performance. However, your investment goals and risk tolerance are likely to change over time, which could mean your current asset allocation is no longer appropriate. By reviewing your portfolio annually, you can ensure that your asset allocation remains optimal.

4. Rebalancing your portfolio

When you rebalance your portfolio, you’re selling high and buying low. This involves selling assets that have increased in value and buying assets that have decreased in value. Doing this ensures that your investment portfolio is as balanced as possible across all asset classes.

Rebalancing can also help reduce the risk of equity loss. When the market falls, some investments (like stocks) will fall more than others (like bonds). However, suppose your investment fund is evenly divided between stocks and bonds. In that case, even if stocks decline in value, it won’t cause any harm to your overall portfolio because there’s still enough exposure to bonds to protect you from a stock-market collapse.

5. Taking advantage of market opportunities

If there have been changes in the market or the economy, there may be opportunities to take advantage of these by making changes to your portfolio. Reviewing your portfolio regularly will help you identify potential opportunities so that you can act accordingly.

6. Minimizing tax liabilities

Several tax-efficient strategies can be used when investing in mutual funds. Reviewing your portfolio annually ensures that you take advantage of all available tax-saving opportunities.

7. Reviewing your investment strategy

You must review your investment strategy regularly to ensure it is still appropriate for your goals and objectives. Things like your time horizon, risk tolerance, and investment goals are likely to change over time, so it is essential to review your strategy regularly to ensure that it remains relevant.

8. Getting professional advice

If you have any concerns about your investment portfolio, it is always a good idea to seek professional advice. Reviewing your portfolio annually is an excellent opportunity to get expert input on making the most of your investments.