1. Reviewing each mutual fund of one's portfolio annually helps to assess how it is doing, and whether it is suitable for meeting pre-determined needs and goals.
2. This method also makes it easier to take decisions towards new allocations, besides tax-friendly switches by weeding out laggards, goal-based redemptions and even asset rebalancing.
3. Don't monitor a fund's performance in isolation, but compare it over different time frames with its category peers.
4. While no single fund normally stays in top 25% of its category at all times, it should continue to stay in top 50% for over a year, hence check how soon it bounced back after slipping.
5. During the annual review, knock out the fund if it slipped for four consecutive quarters in its ranking, as it's unlikely to recover from such downfall soon enough, while giving some extra time to an above-average long-term past performer.
2. This method also makes it easier to take decisions towards new allocations, besides tax-friendly switches by weeding out laggards, goal-based redemptions and even asset rebalancing.
3. Don't monitor a fund's performance in isolation, but compare it over different time frames with its category peers.
4. While no single fund normally stays in top 25% of its category at all times, it should continue to stay in top 50% for over a year, hence check how soon it bounced back after slipping.
5. During the annual review, knock out the fund if it slipped for four consecutive quarters in its ranking, as it's unlikely to recover from such downfall soon enough, while giving some extra time to an above-average long-term past performer.