How often should I review and rebalance my mutual fund portfolio, and what should I actually look at?

Once a year, and why not more

Checking a portfolio monthly does not make it better; it makes you trade. The measures that matter — rolling returns, drawdown behaviour, whether a fund beats its own benchmark — barely move in a month, and the thing that does move is your conviction. An annual review is enough for almost everyone, with a second look only when something structural changes: a mandate change, a merger, or a large amount of new money going in.

What a review is actually checking

1. Drift. After a few years of unequal growth, the allocation you intended is not the one you have. A portfolio set at 70:30 equity to debt can be 80:20 after a good run — more risk than you chose, arrived at by doing nothing.
2. Overlap. Funds drift towards each other as managers chase the same winners. Two funds that overlapped 40% when you bought them can be at 60% now, and the diversification you are paying for has quietly gone.
3. Each fund against its own benchmark, over the windows it has lived through — not against last year's best fund.
4. Concentration underneath. Look through to the companies. A single stock at 8% of everything you own is a position you did not consciously take.

Rebalancing: the trigger, not the calendar

Rebalancing means selling some of what grew and buying what lagged, to return to your intended mix. It is the one piece of portfolio mechanics with a decent evidence base — not because it raises returns reliably, but because it stops risk drifting upwards without you noticing.

A threshold works better than a date. A common rule is to act when an asset class is more than five percentage points away from target; otherwise leave it. Calendar rebalancing on a fixed date trades when nothing has drifted, and each trade may cost exit load and capital gains tax.

The cheapest rebalancing is done with new money: direct the next few months of investment into whatever is underweight instead of selling anything. No tax, no exit load, same effect, slower.

When to exit a fund

Real reasons: the mandate changed and it no longer does the job you bought it for; it has lagged its own benchmark across most windows, not just recently; it now overlaps heavily with something else you own; or your own goal changed.

Not a reason: one bad year, on its own. If a fund's history shows one year in six ending negative, a negative year is the fund behaving exactly as it always has. Selling then converts normal volatility into a realised loss, and pays exit load and tax for the privilege. Give a fund at least a full market cycle — three years is a reasonable floor, and for mid and small caps, longer.

Producing a review you can keep

On MF Analyser a portfolio analysis can be saved as a report. A saved report can be re-run as often as you like at no further charge and cannot be deleted, so last year's review stays comparable with this year's — which is the entire point of writing one down. The Workspace level adds the rebalancing view and the exports.

What the page will not do is tell you to sell anything. It shows drift, overlap, concentration and benchmark-relative behaviour. MF Analyser is not a SEBI-registered Investment Adviser or Research Analyst; the decision is yours or your adviser's.