Why financial year-end portfolio rebalancing matters and how to go about it

Unless deviation from the original portfolio is drastic, rebalance by buying more of the underperforming asset class, to avoid tax and exit load

The end of the financial year is an ideal time to review and rebalance your investment portfolio. Doing so helps ensure that the portfolio becomes realigned with your financial goals and risk appetite.

 

How asset classes performed

 

Equity funds delivered modest returns this year. Large and small cap funds recorded single-digit gains, while mid-cap funds averaged around 11 per cent (see table). “Despite taking higher risks, investors in mid- and small cap funds did not receive proportionately high returns this year,” says Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors. He adds that global equities outperformed Indian equities.

 

“Among