How-to portfolio review annual review

How to review your mutual fund portfolio annually

From WebNotes, a public knowledge base. Last updated 19 May 2026. Reading time ~5 min.

Key facts

Frequency	Annual; ideally pre-FY-end (Feb-March)
Time required	2-3 hours for thorough review
Output	Action list: keep, modify, switch, exit, tax-harvest
Critical inputs	Latest CAS, factsheets of held schemes, goal progress

An annual mutual fund portfolio review keeps your investments aligned with goals and corrects underperformance / drift. The right time is pre-FY-end (Feb-March), allowing tax-loss harvesting and 80C planning to be acted on before 31 March.

Conflict-of-interest disclosure. This guide is published by WebNotes Editorial Team for informational purposes. WebNotes has no commercial relationship with any AMC. No affiliate commission is earned. For substantial portfolios, consult a SEBI RIA or CA.

Step-by-step procedure

See the procedure infobox above.

Review framework (annual)

Dimension	Question
Returns	Is portfolio XIRR meeting goal-required CAGR?
Allocation	Has allocation drifted from target?
Scheme performance	Are individual schemes beating benchmark?
Goals	On track for each goal?
Cost	TER drag acceptable?
Tax	Tax-loss harvesting opportunity? Section 80C utilisation?
Operational	Bank mandates, KYC, nominees current?

Asset allocation drift

Suppose target is 70/30 equity/debt:

After bull year: equity grows 25%, debt grows 6%. New allocation ~74/26.
After bear year: equity drops 20%, debt grows 6%. New allocation ~66/34.

5-10% drift triggers rebalancing (per how-to-rebalance-mf-portfolio).

Scheme exit recommendation framework

Criteria for switching out:

Issue	Threshold
Underperformance	5Y return < benchmark by 1.5%+
Manager change	New manager + 2+ years without recovery
Style drift	Scheme deviates from category (Flexi Cap holding only large caps)
Cost	TER 1%+ above category median
AUM concerns	Capacity hit (small-cap fund > Rs 50,000 cr)
Regulatory action	Investigation, penalties

Don’t switch on single-year underperformance; allow 3-5 years for evaluation.

Goal-progress check

For each goal:

Goal	Target	Current	Time left	Required CAGR	Actual XIRR	Status
Retirement	Rs 5 Cr	Rs 1.5 Cr	20 yrs	~10%	12%	On track
Child education	Rs 50 L	Rs 12 L	10 yrs	~17%	13%	Behind
Home down payment	Rs 30 L	Rs 25 L	3 yrs	~6%	8%	Ahead

Below-target goals trigger SIP increase or horizon extension.

Pre-FY-end actions

Action	Why pre-31-March
ELSS investment	Section 80C deduction
LTCG harvesting	Realise Rs 1.25 lakh exemption
Tax-loss harvesting	Offset gains within FY
Capital-gains statement	Get year-end statement for ITR

External references

References

SEBI (Mutual Funds) Regulations, 1996.
AMFI Best Practice Guidelines on investor education.
Income Tax Act, 1961, Sections 80C, 112A, 111A, 94(7).

Reviewed and published by

WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

Last reviewed: 19 May 2026
Conflicts of interest: WebNotes is independent. No relationship with any broker, registrar or bank named in this article.