Active Management of Portfolio is Not Always a Good Idea!
“The market is continuously breaking past highs. Let me sell off my equity funds to make profits. My fund has many non-banking financial corporation funds. I should rebalance my portfolio. Interest rates are changed, I must leave the debt funds that have been affected.” These are some of the concerns which come to everyone’s mind whenever the market faces a bit change.
Yes, it is undoubtedly true that one must keep a track on one’s portfolio, but it doesn’t mean with every fluctuation you have to think of rebalancing.You must know that if you try to manage your fund's portfolio actively on the basis of every single event or opportunity, it will never leave your investment in a good shape. Keep the following points in mind while managing your mutual fund investments in India.
Mutual Fund Schemes Have Fund Managers
While investing in mutual funds, you agree with the terms that the fund manager shall be managing your hard-earned money and do the stock picking and other important tasks. This is the actual reason for choosing the mutual fund plans for the portfolio that one gets the professional and expert management of the money instead of doing it by oneself. When you have an expert doing the job of choosing the best stock and managing your money in a better way, then it’s no sense to micromanage your funds.
Not All Sectors Have Specific Funds
The thematic or sectors funds do not constitute every sector or theme. You won’t find a fund for the chemical industry, defense industry or for fertilizers. The reason being is that there are not enough stocks in the listed space to run such a fund. However, the schemes falling in the sector category provide a flavor of micro themes within a broader play. For example, ports may be the part of an infrastructure or logistics fund, the defence as a part of capital goods, etc. Hence, you too may need to settle for micro themes by choosing the broader funds. Just because other sectors are performing well, you must not switch to them, rather, keep a balance with a diversified portfolio which your fund managers do for you.
A Diversified Fund’s Portfolio is Variable
The investors often look for the diversified funds having exposure to the sectors they want or hold the micro themes just to get the exposure they desire. Accordingly, you search for the fund which has highest weight of the theme you want to choose. Either you won’t find such fund or invest in the scheme which is a poor performer. The diversified funds never ignore the key sectors which receive maximum weights in the index. They choose the sectors as per their performances in the index. Hence, ignoring the key sectors in the favor of smaller sectors will definitely prove to be expensive for your portfolio.
The portfolio is subject to change with every market move, but it may or may not affect your investment values. Rebalancing the funds so frequently may lead your capital in a wrong direction. Just because you find a particular sector quite favorable doesn’t mean it will suit your investment objective. It is always better to analyse the implications of every move to take the apt decision within time. The fund managers are proficient enough in taking adequate decisions for your portfolio. You must be patient and should not bring changes in the portfolio due to emotional connotations.
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