1. "Well invested" in MFs would mean "well-diversified" MFs, in a "well-diversified" asset allocation, as per age and risk profile, because that's essential for wealth creation, growth, utilization and protection.
2. While doing so, each invested product should be assigned a specific tenure-wise goal as per need / target with periodic review, preferably annually, for rebalancing them to original debt-equity ratio, through process of redemption, "weeding" and fund reallocation.
3. Before any redemption / weeding of a "bad" fund, its performance has to be meticulously compared with its appropriate benchmark index and its own fund peers (not own funds).
4. If its parameters and ratings have gone down continuously over all quarters of a year, as compared to its peer schemes, review and weed it out (instead of averaging) for a better peer fund, if needed, within asset allocation and risk profile.
5. If a fund was included to "time" a situation, it should be avoided.
6. Exit a fund that is inconsistent in its objective, benchmark and asset allocation, and inappropriate.
7. Aversion to booking a loss is stronger than booking a profit, because of feeling of regret about having made a wrong selection.
8. But this has to be overcome as sensible investing also means releasing capital from loss-making investments for alternative use.
9. Lumpsum redemption of a "bad" or "irrelevant" fund works when:-
a) Money is urgently needed,
b) CG taxes are insignificant,
c) A new target fund has potential,
d) Current fund is a nightmare.
10. In other cases, STP / SWP (with simultaneous SIP in another fund) works better for:-
a) Availing CG tax benefits,
b) Cost-averaging new fund,
c) Avoiding peak-level buying,
d) Chance of salvaging some loss.
2. While doing so, each invested product should be assigned a specific tenure-wise goal as per need / target with periodic review, preferably annually, for rebalancing them to original debt-equity ratio, through process of redemption, "weeding" and fund reallocation.
3. Before any redemption / weeding of a "bad" fund, its performance has to be meticulously compared with its appropriate benchmark index and its own fund peers (not own funds).
4. If its parameters and ratings have gone down continuously over all quarters of a year, as compared to its peer schemes, review and weed it out (instead of averaging) for a better peer fund, if needed, within asset allocation and risk profile.
5. If a fund was included to "time" a situation, it should be avoided.
6. Exit a fund that is inconsistent in its objective, benchmark and asset allocation, and inappropriate.
7. Aversion to booking a loss is stronger than booking a profit, because of feeling of regret about having made a wrong selection.
8. But this has to be overcome as sensible investing also means releasing capital from loss-making investments for alternative use.
9. Lumpsum redemption of a "bad" or "irrelevant" fund works when:-
a) Money is urgently needed,
b) CG taxes are insignificant,
c) A new target fund has potential,
d) Current fund is a nightmare.
10. In other cases, STP / SWP (with simultaneous SIP in another fund) works better for:-
a) Availing CG tax benefits,
b) Cost-averaging new fund,
c) Avoiding peak-level buying,
d) Chance of salvaging some loss.