How to Review Your Mutual Fund Portfolio (A Step-by-Step Checklist)
Review your mutual fund portfolio in 6 steps: check returns vs benchmark, asset allocation drift, fund overlap, expense ratios, and more. Free checklist in
You set up your SIPs a couple of years ago, you’ve been investing consistently — great. But here’s the thing: starting is only half the job. Most people never actually look at what their money is doing until something goes wrong. A portfolio review is how you catch problems early, trim what’s not working, and make sure your money is still pointed in the right direction.
This doesn’t have to take more than an hour, twice a year. Here’s exactly how to do it.
Step 1: Check If Your Returns Are Actually Good
The first thing you want to know is whether your funds are beating their benchmark — the index they’re supposed to outperform. If you’re in an active large-cap fund charging a 1.5% expense ratio (the annual fee the fund house deducts from your returns), it should be comfortably beating the Nifty 50. If it isn’t, you’re paying for something you’re not getting.
Look at CAGR — Compounded Annual Growth Rate. This is simply the average yearly return your investment has delivered, smoothed out over time. If you invested ₹2,00,000 in a fund three years ago and it’s now worth ₹2,63,000, your CAGR is roughly 10%. You can check this on Groww, Kuvera, or directly on the AMC (fund house) website.
The benchmark to beat for most equity funds right now is around 12–13% CAGR over 5 years. If a fund you’ve been holding for 3+ years is sitting at 7–8% while its category average is 12%, that’s a red flag — not a reason to panic, but a reason to dig deeper.
Step 2: Look for Overlap (You Might Be Less Diversified Than You Think)
This is the one most people miss. If you’re running three SIPs — say ₹3,000 each into Mirae Asset Large Cap, HDFC Top 100, and Axis Bluechip — you probably think you’re well-diversified. You’re not. All three funds are heavily invested in the same 20–25 stocks: Reliance, HDFC Bank, Infosys, TCS, ICICI Bank.
Portfolio overlap means two funds are holding the same underlying stocks. When Infosys has a bad quarter, all three funds take a hit simultaneously. You’ve tripled your SIP contribution but not tripled your protection.
Use the free overlap tool on Rupee Rubric to check how much your funds share. A healthy portfolio of two equity funds should ideally have less than 40–50% overlap. If it’s 70%+, you’re essentially paying double fees for one fund.
The fix is simple: replace one overlapping large-cap fund with a mid-cap or flexi-cap fund. Something like Parag Parikh Flexi Cap or Nippon India Mid Cap gives you genuinely different stocks and different growth drivers.
Step 3: Rebalance If Your Asset Allocation Has Drifted
Here’s a scenario that’s very common right now. Say you started in 2021 with a split of 80% equity and 20% debt. Markets have been volatile but largely up. Today, that split might have drifted to 92% equity and 8% debt, because your equity funds grew faster.
That’s not a portfolio you designed. That’s a portfolio that happened to you.
Asset allocation is just the mix of risky investments (equity) and safer ones (debt, liquid funds). Rebalancing means selling some of the category that’s grown too large and moving it into the one that’s lagged — so you return to your intended split.
If you’re 28, earning ₹85,000/month in Pune, and your goal is a house down payment in 4 years, having 92% in equity is genuinely risky. A market correction of 25–30% (which has happened in 2020, 2018, 2015) could wipe ₹1.5–2 lakh off a ₹6 lakh portfolio right when you need the money.
The rule of thumb: review your allocation every 6 months. If any asset class has drifted by more than 5–10 percentage points from your target, rebalance.
What to Actually Do After This Review
Stop there. Three things — returns, overlap, allocation. These cover 80% of what actually matters in a review. Don’t fall into the trap of switching funds every six months or chasing last year’s top performer.
If returns are healthy (within 2–3% of category average), overlap is manageable (under 50%), and allocation is close to your target — you’re done. Close the app and get on with your life. That’s the right outcome.
If something looks off, give it two consecutive review cycles before making changes. One bad quarter isn’t a trend.
Frequently Asked Questions
How often should I review my mutual fund portfolio?
Twice a year is enough for most people — January and July works well. Reviewing more often leads to unnecessary anxiety and impulsive switching, both of which hurt long-term returns.
What’s a good CAGR for a mutual fund in India?
For large-cap equity funds, 10–12% CAGR over 5 years is decent. Mid-cap and small-cap funds should ideally deliver 13–16% over the same period to justify the extra risk. Anything below category average for 3 consecutive years deserves a closer look.
Should I stop my SIP if my fund is underperforming?
Not immediately. Check if it’s underperformed for more than 2–3 years and is below both its benchmark and its category average. One bad year (especially after a market-wide correction) isn’t a signal to exit. Consistent, prolonged underperformance is.
How do I check fund overlap in India?
You can use free tools on platforms like Kuvera or Groww, which show portfolio holding comparisons. The Rupee Rubric overlap tool also does this clearly. Just enter the two fund names and it shows you the percentage of shared holdings.
Does rebalancing trigger tax in India?
Yes, if you’re selling equity fund units held for less than 1 year, you pay 15% Short-Term Capital Gains (STCG) tax. Units held over 1 year are taxed at 10% Long-Term Capital Gains (LTCG), but only on gains above ₹1 lakh in a financial year. Plan your rebalancing around this — sell older units first to minimise the tax hit.