Don't quit underperformer if fund manager remains true to mandate

Your portfolio shouldn't contain stocks picked at exorbitant valuations or those that have corporate governance issues

Parag Parikh Flexi-Cap, a fund with assets under management of Rs 27,712.07 crore, has given its investors a compounded annual return of 18.01 per cent since inception. But it has been underperforming its benchmark, the Nifty 500, over the past year. Should investors stay put in this fund or exit it?

As you review your portfolio at the year end, you may come across several funds that have underperformed.

Check duration of underperformance

Don’t get worried if the trailing returns show underperformance over a one-year or two-year span. “If the fund has been underperforming over a three-year or five-year period,