How to Monitor Mutual Fund Performance? Learn All About Portfolio Tracking

How to Monitor Mutual Fund Performance? Learn All About Portfolio Tracking

Roboadviso     Financial Planning,Mutual Funds     Posted On, Sun 27th August, 2017     No comments

mutual fund portfolio review

How to monitor my mutual fund performance?

Planning and executing investments in mutual funds is not the end of job of investing. It is also important to keep a track of your investments; it need not be checked on a daily basis, but investors have to keep themselves updated about changes in portfolio and progress of the scheme, etc. at regular intervals.

Listed below are some tips that can help monitor the performance of your mutual fund investments.

  • Compare the fund performance against the benchmark: It is mandatory for all schemes to have a benchmark. The benchmark is the index selected by the mutual fund company to act as a standard for its yields. Investors should check the fund performance against the benchmark to get a better idea about the health of your investment. If the scheme beats the benchmark, then it means that it is doing well. If the margin of outperformance of the fund vis-à-vis the benchmark is big, then it is indicative of the great stock-picking skills of the fund manager.


  • Compare the fund performance against the category: Beating the benchmark may not necessarily be indicative of great performance of the mutual fund. Investors also need to compare it with the average returns within the category and verify whether or not the scheme is a better than average performer. You may also compare the fund with peers in the category that have shown outstanding performance in the near and far past.


  • Check the portfolio: Even if the fund is an above average performer, you need to verify if the scheme is bankable. This can be done by checking the portfolio of the mutual fund. Verify if the stocks that make up the portfolio is according to the mandate of the scheme and whether it continues to comply with the risk profile that you envisaged at the time of investment.


  • Check the varied ratios: There are a variety of ratios that offer vital information about the performance and bankability of the scheme. You can check ratios such as Sharpe ratio, standard deviation, beta, alpha, portfolio concentration ratio, portfolio turnover ratio, expense ratio, and Treynor’s ratio, etc. You may also compare these ratios of your fund to the ratios of the peers in the category to gain a better understanding of where the scheme stands overall.


  • Check Fund Fact Sheet: It is a document which enumerates all the schemes that are managed by the asset management company or the fund. The AMC publishes it every month. The sheet allows investors to easily monitor their investments in mutual funds. The sheet can be termed as a report card which shows the progress and growth of your investments. The fund fact sheet provides details of the following:
    • Performance of varied schemes in terms of Sharpe ratio, CAGR/compound annual growth rate, beta, and standard deviation
    • Size and investment information about schemes managed by the fund house
    • The manner of deployment of your money in varied securities or division/allotment of the investments


  • Other Tools: Some other tools which can be used by investors to monitor their mutual fund performance are as follows:
    • Consolidated account statement: It offers a consolidated picture and valuation of all fund investments across different AMCs under a specific PAN. This statement is provided via email or in paper once in 6 months if no transactions occurred during the month.
    • Folio number: It is provided at the time of allocation of mutual fund units to an investor. Ensure that you have a record of the folio number. It is needed when conducting any transaction or while trying to gather valuation of the investments.
    • Online portfolio trackers: Investors can use online trackers to check and monitor their investments. Such online access is provided by all mutual funds. It is a safe and hassle free way to view all scheme investments. The online platforms offer the latest and updated value of all investments currently being held by an investor.

How to track the performance of mutual funds

All the information provided above can help monitor the progress of your mutual fund investments. Some investors may find the process to be exhaustive. Provided below are a few simple things that you can do to keep a track of your funds’ performance.

  • The NAV or the net asset value of mutual funds is listed on their websites. You may check it from time to time.
  • The performance of a scheme cannot be evaluated in isolation. Hence compare the fund returns to the benchmark. Also compare it with other peer funds in the category.
  • Fund fact sheets can be sometimes too complex and hard to understand. Investors can check out different websites that are dedicated to providing simple, yet detailed, information about the performance of varied schemes. Such websites also offer comparisons and performance charts in monthly, quarterly, and/or half-yearly periods.
  • Check if there is any change in the team that manages the fund. Management changes do occur from time to time and that is normal. However, if the fund manager is changed frequently, then it is a definite red flag. It may be noted that investment style also tends to change with a change in the manager of the scheme. In such scenarios, investors also need to check for changes in portfolio so as to make sure that the investment objective is retained.
  • High turnover or churn in the portfolio can also be a cause of worry, especially if it occurs regularly. High turnover may not necessarily be indicative of increased returns. High churn of portfolio can sometimes be harmful as increased transaction costs can reduce the returns. Sometimes, it can be a sign of short-term focus. However even though short term focus may offer high yields in the short-term, it can increase the vulnerability of the portfolio and expose it to unwarranted risks over a longer period.

It is important to avoid over-reviewing the mutual fund portfolio. Excessive tracking of the scheme portfolio may cause investors to make incorrect decisions based on short-term volatility. It is advisable to review the portfolio once every 6 months or once every year.

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