'It is not wise to take tactical calls based on short-term performance'

Dilshad Billimoria, Founder, Dilzer Consultants, a Sebi-registered investment advisory firm based in Bengaluru.

Questions asked by clients:

My portfolio hasn’t moved much. What is happening?

How come some schemes are giving better returns than my schemes?

Why are the recommended best mutual fund schemes not in my portfolio?

What she is telling her clients:

Many investors are wondering why their portfolios are stagnant for the last one year. I show my clients the entire data so they understand the concepts well and don’t just take it on my word value. There is an asset allocation in place and that is why your portfolio is not in negative. The negative returns posed by some of the schemes in your portfolio get cancelled out by the positive returns by other schemes. This is why your portfolio stands where it is. In the absence of this asset allocation, your portfolio returns would have been in negative.

I also tell my clients some schemes might always do better than your scheme. The recommended schemes that you see being published in various platforms is not customised for you. The online lists keep changing with the quarterly or annual performance. It is not advisable to keep switching schemes. Don’t think about stopping your investment in a scheme until it underperforms its benchmark for at least a year.

Also, tactical calls based on which sector or category of schemes is doing better than your schemes is not a wise move. Such shifts are not meant for retail investors. We do it only when a scheme isn’t able to come out of the negative zone for a long time and we believe that the management has not been able to do the best. Otherwise, your risk appetite and investment horizon should be the only things to consider while choosing a scheme. If today large caps are doing well, you can not leave your mid cap schemes and move to large caps. Two years down the line, you might want to switch back to mid cap schemes.

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