The annual portfolio review — what to check, what to act on

One thorough annual portfolio review captures most of the value of portfolio monitoring, without the cognitive cost of checking daily or weekly. The right time: late March (financial year end) or early April. Block two hours; come back to the document after a few days for a fresh look before acting.

Step 1 — Refresh the goal list

Open your goal document (or create one):

• Each goal: name, target date, target amount (today's prices), current corpus dedicated to it.
• Years remaining to target.
• Inflation-adjusted target amount at the target date.
• Required monthly SIP to reach target.
• Actual current SIP toward this goal.
• Gap (positive or negative).

This is the single highest-value exercise in the annual review. Most goals drift — either expense expectations rose, or actual SIPs slipped, or both.

Step 2 — Asset allocation vs target

For each goal-specific portfolio and for the overall portfolio:

If any class is drifted by 5+ percentage points, rebalance. Use this article's tax-loss harvesting section to consider how to do it tax-efficiently.

Step 3 — Per-fund performance check

For each mutual fund in the portfolio:

• 1-year return.
• 3-year and 5-year CAGR.
• Category-average for the same windows.
• Peer quartile / decile rank.

The bar for action is high: a fund underperforming its category by 3-5%+ for 2-3 consecutive 12-month periods, with no obvious explanation (no AMC manager change announced, no structural issue), warrants consideration of switching out.

A fund underperforming for one or two quarters with the rest of its category doing well is usually not a signal — short-term performance is noisy.

Step 4 — Tax-loss harvesting decisions

Identify positions with unrealised losses. If:

• You have realised gains this FY to offset.
• You have carried-forward losses approaching their 8-year expiry.
• You want to switch funds anyway and the unrealised loss makes the switch effectively tax-positive.

Plan the harvest before 31 March.

Step 5 — LTCG exemption utilisation

For equity, the ₹1.25 lakh annual LTCG exemption is per FY. If you have not used any of it through redemptions during the year, consider:

• Realising up to ₹1.25 lakh of LTCG to capture exemption.
• Re-investing immediately resets the cost basis at the higher NAV.
• This "exemption harvesting" can save meaningful tax over a multi-decade investing career.

Step 6 — SIP plan for the coming year

Review:

• Existing SIP amounts and which funds.
• Salary hike expected in the coming year — how much can the SIP increase?
• Any new goals to add — do you need new SIPs?
• Existing goals reaching their final 2-3 years — do you need to pivot to debt?

Update SIP amounts in the AMC apps for the new financial year.

Step 7 — Insurance review

• Term insurance: is the sum assured still adequate? (Rule of thumb: 15-20× current annual income.)
• Health insurance: family floater coverage, individual riders, is the sum insured adequate for current city costs?
• Health insurance for elderly parents: separate or layered?
• Critical illness rider: do you have it; is the cover adequate?
• Personal accident cover: usually small premium; verify in place.

Insurance is a cost-of-living item; lifestyle inflation in healthcare specifically warrants annual review.

Step 8 — KYC, nomination, succession

• Verify KYC is current for all mutual fund folios (re-KYC required periodically).
• Verify nominees are registered in all folios.
• If you have a will, ensure it covers the MF holdings (or relevant nominee scheme).
• If you don't have a will, this is the year to write one.

Step 9 — Tax filing prep

By the annual review date, you should also be planning the tax filing:

• Download AMC capital gains statements when available (typically June).
• Reconcile against AIS / TIS.
• Compute estimated tax liability.
• Plan advance tax / self-assessment payments.

Step 10 — Document everything

Write down:

• What you found in the review.
• What you decided to do.
• What you decided not to do (and why).

This document becomes the input to next year's review. The "why I held this underperforming fund" answer is much more useful when you can read your own reasoning from a year ago.

What to NOT do in the annual review

• Don't chase last year's winning fund category.
• Don't reduce equity allocation because the market had a bad year.
• Don't add 5 new funds because they were ranked top-decile for 1Y.
• Don't make big asset-allocation pivots based on macro forecasts in financial press.

The annual review is for confirming alignment with long-term plan, not for tactical re-optimisation.