How to review your portfolio


Long-term investing doesn’t mean sitting back and doing absolutely nothing until you need to call on your money. Reviewing your portfolio is an important component of being a DIY investor.

Experts recommend an annual review of your Isas and pensions to see whether they’re on track and if not, why not. With global markets in turmoil, many of the funds in your portfolio are likely to be in the red for returns so far this year.

Portfolio breakdowns, which are easily accessed on investment platforms, should allow you to easily spot the funds that have dragged down returns. But that doesn’t mean you should automatically ditch those holdings.  Here’s what you need to look at during your all-important review:

Make a fair comparison

If a fund is losing you money, you need to set their performance in context and check how the numbers compare to others in the same group. By comparing it to an appropriate benchmark you can see whether your manager has performed in line with everyone else, or if they have missed the average by a mile. If the latter is the case, then it might be time to make a move – or certainly to dig a little deeper on the manager’s strategy and current outlook.

Look for long-term offenders

All long periods of underperformance start with a short period of underperformance. Keep an eye out for funds that are consistently underperforming and not just struggling because of the recent downturn.

Are you diversified enough?

Diversification has always been key to a long-term investment process. That doesn’t mean buying up a long list of funds. Instead you want an decent spread of assets across regions and industries.

Check your balance

Markets and asset classes don’t all move neatly in line, so over time your exposure to different investments will change. This could mean your portfolio could end up in a different risk category. If necessary, take steps to rebalance. This might mean selling out of some of the funds that have earned you decent returns and topping up elsewhere – or buying up some new opportunities.

Resist selling out

The reality is that one of the worst times to sell your stocks is after the market has downturned. Investors who have stayed the course over the long term have typically been rewarded for their patience.

Fund manager moves

If any funds you own have seen a manager change since your last review, then do some homework about the replacement. Look for information about how they’re running the fund and if they have stuck with the existing investment process. This should help you judge whether you want to remain invested.

Keep an eye on costs

Remember that you’ll be racking up trading costs as well as the time and effort spent moving your portfolio around. So don’t switch funds for the sake of it.

Don’t get scammed

Fraudsters typically use an economic downturn to trick more people into handing over their cash for fake investments. If you find yourself worrying about the fall in valuation of your Isas and pensions, don’t be caught off guard if you are approached by someone offering an investment opportunity that seems too good to be true — because it probably is.

Con artists will likely phone you out of the blue and offer an investment with sky-high returns. If it sounds too good to be true

Rigorously check out any new opportunities and report scams to Action Fraud on 0300 123 2040. Even if you haven’t been a victim of fraud but you’ve seen something you think is a scam, you should report it.

Photo by Markus Winkler on Unsplash