Why Regular portfolio Review is necessary in Current Environment?

Why Regular portfolio Review is necessary in Current Environment?

What is Portfolio Review?

As an investor, you might have spent your worthy time with your advisor in deciding where and how to invest. You must have shortlisted the products, depending upon your needs and risk profile, and allocated the amount accordingly.

For most of us the above is the set of methods involved in the investment process. But it does not actually end there.

One has to make sure that the portfolio has to be reviewed periodically, i.e., constant monitoring and assessment is required, to get the best of your time and money invested.

Why Portfolio Review is important, especially in times like these?

BSE sensex is 25% lower than it’s high, and thanks to economic scenario, market is not expected to be stable in near future. Neither it is expected to move upwards and breach it’s highest point.

In times like this, one should keep following things in mind:

Rebalancing of the portfolio

Say Mr. Investor is a medium risk taker and can afford 60:40 ratio in equity and debt.

Around a year back, i.e., on May 2019, he invested a crore, with the 60:40 allocation.

If we see his portfolio allocation now, the debt part has risen to approximately 50% of the portfolio and equity portion has decreased to 50%.

This is because of the fact that equity valuations has decreased, as a result, delivering negative returns.

Hence, Mr. Investor should reallocate the funds, to bring it to 60: 40 level, by shifting the amount from debt to equity.

Above activity is absolutely necessary, and is only possible when one monitors and reviews his portfolio wisely.

Appropriate asset allocation mix

It is historically verified, that when market falls and hits rock bottom, it is the large cap funds that gain value sooner than mid or small caps.

Hence, at times like this, Mr. Investor should reallocate the funds to large caps, so that he sets to gain max when market rises.

In order to gain maximum from investment, market throws such opportunity every now and then. However, one needs to be vigilant enough for that. For people in wealth management profession, or anyone who has a sound knowledge regarding markets and investments, this is an easy task. Hence, one should resort to hiring an advisor.

Review in reference to your Goal Timeline

Mr. Investor has a daughter who wants to study abroad for graduation after 7 years. He approaches his advisor, and advisor guides to reconsider the ratio of the current portfolio or can make fresh purchases for the goal. Investment in equity is suggested as we have a adequate time period of 10 years.

Periodic Portfolio review is important not only for rebalancing, but also for situations like these, where in you have to adjust your other goals in order to make place for a new one. A constant guidance by a professional is important, so as to be sure that investments are heading in a right direction.

For example in the above case, initial allocation can be inclined towards more in equity, and as we approach the goal, the allocation can be more towards debt , and then finally 100% in debt.

To correct the investment mistakes

Generally, when an individual invests by himself, he only sees past performance of the fund.

As per one of the studies by CRISIL, chasing the performance does not work. One cannot achieve higher returns by continuously juggling in the portfolio.

The other thing also holds true: there is a vast difference in alpha generation in the bottom performing fund and highest performing fund

A wealth management professional is not only there to guide you as far as your investments are concerned, but also to let you know which scheme is apt for you and will be fruitful for you in the long run. He scans the fund’s management, the portfolio, the ratios and whether the fund’s strategy is in sync with one’s goals or not.

While reviewing the portfolio, it is important to correct such mistakes.

For tax purposes

Tax planning is indeed an integral part of the investment planning process. So reviewing the portfolio becomes essential, when you have to save taxes and do some gain or loss booking, in order to lessen the liability of taxes.

Changes in one’s economic circumstances

In times like these, one wants to sit on cash as there has been delay in salary payments and for business class, there has been no sale and the units are shut. Hence, it is important that given the market scenario, one should do reallocations, depending upon the needs and wants.


Making the required investments across the asset classes is just the half a work done. Continuous review is important, in order to make sure that our money is working for us as we desire. Hence, exploring the oppurtunities what market throws at us and how we can utilise that for our advantage is an important question that needs to be addressed for you as and investor. Hence, continuous scanning of the the entire portfolio is important, so that you can achieve the best out of it

CA Mukesh Gupta
CA Mukesh Gupta
Mukesh Gupta is the founder and director of Wealthcare. He is Fellow chartered accountant, Certified Financial Planner and Certified Public Financial advisor. He is in financial services industry since 1994. He conducts free money management sessions for corporates and associations on topics related to Personal finance. His previous engagement was with Birla Sunlife group. He regularly writes on topics related to Personal finance and occasionally appear on electronic media.

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