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How often should we churn our mutual fund portfolio?

Lot of investor ask there Mutual fund agent's about churning their portfolio regularly because the market is not doing well- like in the recent times. When the Russia/ Ukraine war started, a lot of portfolios went negative and investors started calling with the concerns about their portfolio and schemes which are not doing well- like the smallcap funds, midcap funds & global funds.

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A Small Example:


If our son is not faring well in studies and getting lower marks compared to his previous marks, what should we do?

Should we tell him to get out of the house because he has not fared well in  his studies or should we tell him stop going to the school permanently or should we change his school?

No, we would not do any of the above things because our job as a parents is to nurture our child and not demoralize him otherwise he will never be able to perform well in future. As parents we should try to find out the root cause of his getting low marks, keep him a good tutor for the subjects where he has not done well and motivate him for the next semester.

Similarly for our portfolio, when things are not favorable in the market- like war, inflation, bad economic condition, political unrest- which will be distracting the market to a large extent, all gains of shares may come down in a short period of time, all negative rumors and illogical talks will begin in the market, and we will be disturbed by the noise in the market and will try to churn or start redeeming our good portfolio which will eventually hamper our financial goals.

Advice would be to try to adjust the situation, nurture your investments just like you would nurture your child. If you have surplus money, add to your current portfolio because investment done in bad times will give you excellent return in good times.

Nifty, from a high of 18604 as on 18th oct 2021 made a low of 15183 as on 17th june (fall of 18.39%) And today as on 29th Aug 2022 while writing this article, nifty is trading at 17,310. (at 10.30 am to be precise) (a rise of 14.01%) 

So, in my view mutual fund portfolio should not be churned for at least five year unless some drastic changes happen in the funds/Schemes.



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