How Often Should You Review And Rebalance Your Mutual Fund Portfolio?

In today’s fast-moving financial environment, reviewing and rebalancing a mutual fund portfolio is no longer about reacting to market highs or lows - it is about maintaining alignment with clearly-defined financial goals. As markets evolve more rapidly and investment choices become increasingly diverse, portfolios can drift from their original intent without investors even realising it.

According to industry experts, a well-structured portfolio review should ideally be carried out at regular intervals, typically twice a year.

“This allows investors to assess whether their asset allocation still matches their risk tolerance, investment horizon, and long-term objectives. Over time, strong market performance in certain segments, particularly equities, can lead to unintended risk concentration, while other asset classes may fall below their intended allocation. Rebalancing at this stage helps restore balance and prevents excessive exposure to any single theme or asset class,” says Avnish Gulati, CEO, Zuari Finserv Limited.

However, portfolio reviews should not be limited to a fixed schedule alone. Personal milestones such as changes in income, new financial responsibilities, or approaching major life goals often warrant an immediate reassessment. In such situations, rebalancing is not about improving returns but about ensuring financial preparedness and stability.

A portfolio that evolves with an investor’s life circumstances is more likely to deliver consistent outcomes over the long term. Another important shift in investor behaviour is the need to avoid over-monitoring. Frequent changes driven by short-term volatility can dilute the benefits of long-term investing and increase the risk of emotional decision-making. Instead, disciplined reviews focused on fund consistency, alignment with benchmarks, and overlap within the portfolio can add more value than frequent churning.

“Rebalancing should be viewed as a strategic discipline rather than a corrective action. By periodically trimming overperforming assets and strengthening underweighted ones, investors reinforce a systematic approach that prioritises risk management alongside growth. This structured method also supports better decision-making during uncertain market phases,” informs Gulati.

Ultimately, the frequency of reviewing and rebalancing a portfolio should strike a balance between awareness and patience. Investors who adopt a thoughtful, goal-oriented review process are better positioned to navigate market cycles, stay invested with confidence, and build portfolios that remain resilient and relevant over time.