Why you should avoid daily tracking of your Mutual fund performance ?
Mutual Funds investment in INDIA are on a rise whether through SIPs or through lumpsum investments but it has been seen that many investors tend to survive in these funds only for a shorter period of time.
This shorter holding period is mainly due to the investors anxiousness and daily performance tracking of the investments.
Every investor irrespective of the amount invested should understand the time horizons for which the given amount is invested, tracking mutual fund NAVs and their performance daily can lead to bizarre results.
Mutual funds mainly perform well in a longer time period and they usually tend to do well in a Five year time period, tracking returns daily will tend to undermine the volatility of mutual funds and keeping unrealistic expectations that these funds will always rise is not what one should do.
The returns provided in a mutual funds factsheet are provided under SEBI guidelines and are based on point to point basis in a given time period of one-three years. These returns are standard returns based on certain time period, a investor might have come in a different time period and would also have increase his amount at some point hence every individuals returns would be different.
Instead of comparing the returns of the fund one should compare the fund performance, If the fund performance is not well compared to its peers then there might be some downside to such a fund, otherwise any investor should consider staying invested.
For better guidance in such situations one should always consider taking advice from a financial planner
