Mutual fund investments are an increasingly popular investment option among Non-residential Indians (NRIs) as a means to invest in the Indian market and potentially earn attractive returns. However, like any investment instrument, it’s crucial for NRIs to actively monitor their mutual fund for NRI to ensure that they align with their financial goals and risk tolerance. In this article, we take a look at the importance of NRI mutual fund portfolio review, how to evaluate their performance, and how often you should do so.
Mutual Fund Investment for NRIs
Non-residential Indians (NRI) have the option to invest in mutual funds which pool the money from various investors and invest in various diversified portfolios of stocks, bonds, and other securities. NRIs have the option to invest in mutual funds through Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts, once their NRI mutual fund KYC is complete.
Also read: How can NRI Invest in Mutual Funds in India?
Why Do You Need to Monitor the Performance of NRI Mutual Fund?
Monitoring the performance and NRI mutual fund portfolio review is essential for several reasons:
- Goal Alignment: Your financial goals may change over time. Regularly reviewing your mutual funds helps ensure that your investments are still aligned with your objectives, whether it’s wealth accumulation, retirement planning, or funding a major purchase.
- Risk Assessment: The risk tolerance of NRIs may vary, and market conditions can fluctuate. Monitoring performance helps you assess whether your funds are still within your risk comfort zone or if adjustments are needed.
- Portfolio Diversification: A well-diversified portfolio can help mitigate risks. Reviewing your mutual funds allows you to ensure that your investments are spread across different asset classes and sectors.
- Fund Manager’s Performance: Fund managers play a crucial role in achieving investment objectives. Regular evaluation helps you determine if the fund manager is delivering consistent results.
- Cost Management: Mutual funds have associated expenses, such as expense ratios. Monitoring costs can help you ensure that fees are reasonable and not eroding your returns.
Also read: Things NRIs should Keep in Mind When Investing in Mutual Funds
How to Evaluate the Performance of a NRI Mutual Fund?
Evaluating the performance of your NRI mutual funds portfolio review requires a systematic approach. You can review your NRI mutual funds based on these key factors:
- Returns: Assess the fund’s historical returns over various time frames (1 year, 3 years, 5 years, and since inception) to gauge its performance. Compare mutual fund performance returns to relevant benchmarks, such as Nifty 50 or S&P BSE Sensex.
- Risk Metrics: Examine risk-adjusted metrics like standard deviation, beta, and Sharpe ratio to understand the fund’s risk-return profile. A fund with lower volatility and a higher Sharpe ratio is generally considered more attractive.
- Fund Manager’s Track Record: Research the fund manager’s experience and track record. A consistent, skilled manager can make a significant difference in fund performance.
- Expense Ratio: Ensure the fund’s expense ratio is reasonable compared to its peers. Lower expenses can enhance your overall returns.
- Portfolio Holdings: Review the fund’s portfolio holdings to ensure they align with your investment objectives and risk tolerance. Changes in the portfolio may impact future performance.
Also read: Top 5 Tips for NRIs to Pick a Winning Mutual Fund
How Often Should You Monitor Fund Performance?
The frequency of monitoring your NRI mutual fund investments review can vary depending on your financial goals and risk tolerance. Here are some guidelines:
- Quarterly Review: For long-term investors with a moderate risk tolerance, reviewing your funds every quarter may suffice. This allows you to keep track of any significant developments.
- Semi-Annual Review: Investors with a lower risk tolerance or those with less active investment strategies can opt for a semi-annual review.
- Annual Review: If you have a long investment horizon and are comfortable with some level of market volatility, an annual review might be suitable.
- Event-Driven Review: Additionally, you should consider reviewing your mutual fund investments whenever there are significant economic or geopolitical events that could impact the markets.
Also read: 5 Common Mistakes NRIs Make When Investing in India
Wrapping Up
Monitoring your NRI mutual fund investments is a critical aspect of maintaining a healthy and balanced portfolio. Regularly reviewing the performance, risk, and alignment with your financial goals ensures that your investments continue to work toward your objectives. The frequency of these reviews should be tailored to your circumstances and risk tolerance. By staying proactive and informed, NRIs can make informed decisions to optimize their mutual fund investments over time.
Get your Free NRI Mutual Fund Investment Portfolio reviewed by the SBNRI Team
For end-to-end assistance with various mutual fund schemes and a free online mutual fund investment portfolio review, connect with our SBNRI Team today.
NRIs can now download the SBNRI App and choose to invest in different investment options in India with ease. You can also get detailed investment advice from experts at SBNRI. Also, visit our blog and YouTube channel for more details.
SBNRI is an authorized Mutual Fund Distributor platform & registered with the Association of Mutual Funds in India (AMFI). ARN No. 246671. NRIs willing to invest in mutual funds in India can download the SBNRI App to choose from 2,000+ mutual fund schemes or can connect with the SBNRI wealth team to better understand Mutual Fund investments.
FAQs
What is a mutual fund portfolio review?
- Mutual fund portfolio review is a process of evaluating mutual fund investments periodically or as per time events to oversee the performance and returns generated from your investments. Such investment portfolio review allows you to know your fund performance and plan for any impending changes to generate better returns.
What is an annual portfolio review?
- Mutual fund portfolio annual review is the process of evaluating your portfolio on an annual basis to oversee the performance of your investments and rebalance the portfolio as per your investment goals and objectives.
How can you get a NRI mutual fund investment review?
- A mutual fund investment review is an important part of your investment evaluation and should be done by all investors. Our team at SBNRI offers free mutual fund investment portfolio reviews for NRI users and investors.
Should an NRI do a portfolio review?
- Yes, an NRI should do a portfolio review as it is important for all investors to evaluate the performance of their funds and rebalance their portfolio accordingly to generate better returns.
Are mutual funds a good investment for NRIs?
- Yes, mutual funds are a great investment vehicle to generate returns and build wealth for the long term. Investing in mutual funds for NRIs helps to utilize their savings and build wealth for the future. It also helps them to beat inflation and fulfill their investment goals.
Are mutual funds a good long-term investment for NRIs?
- Yes, mutual funds are a great long-term investment vehicle to generate returns and build wealth for NRIs. Investing in mutual funds for NRIs helps to utilize their savings and build wealth for the future. It also helps them to beat inflation and fulfill their investment goals.
