How do I reduce clutter in my mutual fund portfolio?

Published: July 31, 2015 at 9:17 am

Last Updated on September 4, 2018 at 10:09 am

A look at “How do I reduce clutter in my mutual fund portfolio so that it can tracked and reviewed easily?”. Typically mutual fund investors with few to several years of experience are interested in this exercise.

The first step is to recognise clutter. I hold 8 funds. If I posted just that information at AIFW and ask, ‘is it too many?’, there would at least be a few answers which go, ‘yes’. Someone might even offer me advice on the ideal number of funds a folio should have.

However, the context is missing here. I have 4 funds tagged to my retirement goal, 3 to my son’s education and 1 to his marriage. You can read more about my goal-planning strategy in the financial audits I post in December.

While 8 may seem like a big number to you, it is a perfectly manageable number to me. I do not like the idea of holding a couple of funds for all long-term goals. For me, not all long-term financial goals the same.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

I had earlier made this point in this post: How many fund should I hold?

What is cluttered -our portfolio or our minds? It is always the mind, it is not?! The culprit is the way in which we buy funds. When I realised this about 4 years ago, I told myself,

  • I will tag my existing funds to my financial goals
  • I will do my best to understand the position of each fund in a goal portfolio. That is, I must realise the objective of the fund and how it can find a place in the portfolio.
  • I will not buy a new fund, unless I exit an old fund.
  • For that I need to know how to review a mutual fund portfolio with personal benchmarks and not star ratings.
  • I will not buy funds because everyone it talking about it.
  • Even if I find two similar funds in a goal portfolio, I will not make knee-jerk reactions in removing one.

After this and after a bit of staring at NAV movement, I came up with minimalist portfolio ideas for young earners

I am gradually trying to make my folio as minimalist as possible for each long-term goal.

There is a flaming hurry to unclutter the mind and have a process in place of portfolio review. There is no flaming hurry to reduce the number of funds.

Like everything else in personal finance, that number is also deeply personal. A person can have two large cap or two mid and small-cap funds from different amcs if his portfolio size is ‘big’ and he wishes to spread the risk -something that Balaji Swaminathan pointed out to me.

If all this is in place and I find that I am holding way too many funds, what should I do?

Analyze weights What is their value wrt entire portfolio value? If a few funds have large weights and a few relatively small, then you can

  • choose to ignore the small-weight funds. Do not invest further in them and leave them be.
  • choose to redeem from these and shift to the large weight funds.

It is only when you have large no of equally weighted funds, there will be dilemma. It can still be solved by deciding on strategy: “my folio should hold X% of large-caps, Y% of mid and small-cap with Z% of international equity”.

Do not look at star ratings before or after switching. The funds you exit might get a higher peer rank after you exit!  Regret does not accomplish much.

When should I switch? Should I wait for markets to improve, so that I can exit on a high?

You could, but for a long-term goal, it will not make much of a difference, if you exit the moment you realise that the fund is a weed in your folio.

How should I switch? Should I exit in one-shot or should I transfer little by little?

All units which are free from exit load and eligible for long-term capital gain (or loss) computation can be redeemed or switched out in one shot. The rest can wait until they become eligible.

Ashal used to describe this in the JI forum as, “a switch from one express train to another, and can be done in one shot”.

De-cluttering a portfolio is easy. Ensuring that it stays that way is hard!

Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.
🔥Now Watch Let's Get Rich With Pattu தமிழில் (in Tamil)! 🔥
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter using the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl-version covers of "Chinchu Gets a superpower".
Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)