Chapter 11: How to Track Mutual Fund Performance?

Investing in mutual funds is akin to embarking on a financial journey. While we have learned in our previous chapter how to choose a vehicle (the fund) and a driver (the fund manager), your role as an investor doesn’t end at making the initial investment. Actively tracking your mutual fund’s performance is crucial.

When we say active tracking, that means tracking the performance of the mutual fund regularly. The ideal time frame for tracking the mutual funds you have invested in should be balanced meaning not too frequently and certainly tracking it at least once in your holding period.

Before we delve into how to track mutual fund performance, let us see why you should actively monitor your mutual fund investments.

Goal Alignment Check

Regular tracking helps ensure your investments remain aligned with your financial goals, which may evolve. Making sure that the mutual funds you have selected are on track to help you achieve your financial goal is a prudent act for your future financial planning.

Risk Management

By monitoring performance, you can assess whether the fund’s risk level continues to match your risk tolerance. Although shorter-term volatility can be ignored if your holding period is long-term, a sound check on the fund manager’s activity regularly can certainly alert you on how well the risk is being managed from time to time in different market conditions.

Learning opportunity for future investments

Tracking performance enhances your understanding of market dynamics and investment principles. Regular Tracking also means you get better at understanding which funds are best for you and which ones to avoid. So when there’s surplus cash/savings that you want to deploy in the future, decision-making becomes super easy for you.

Better and Informed Decision-Making

Tracking provides the data needed to make informed decisions about holding, selling, or buying more of a fund. Tracking the performance of your funds also gives you the confidence and the ability to invest in turbulent market conditions – that’s a superpower that you develop because you understand how the mutual fund performs in variable market conditions.


Regular monitoring can help you identify potential issues early, allowing for timely corrective actions, and making superior-quality financial decisions for the future seems quite easy.


Convinced on the fact that monitoring your funds could be super helpful for you. Now at the beginning of the chapter, we spoke about having a balanced time frame for tracking your mutual funds.

So the question is, how often should you track mutual fund performance?

The frequency of tracking should strike a balance between staying informed and avoiding knee-jerk reactions to short-term market fluctuations. Here’s a general guideline:

  • Daily Tracking: Not recommended for most investors. Daily NAV changes can occur as most asset classes are volatile on an intraday basis. Therefore checking your mutual funds daily can lead to unnecessary stress or impulsive decisions.
  • Weekly Review: Well, it’s suitable for more active investors or those in volatile funds. Still, these investors need to be cautious about overreacting to short-term movements.
  • Monthly Review: A good frequency for most investors. It provides regular updates without encouraging over-analysis. A monthly review could work the best for investors having a 3 to 5-year time horizon, who are looking to accumulate a corpus for their shorter-term goals with mutual fund investing like vacation planning, buying a car, etc.
  • Quarterly: Ideal for long-term investors. Quarterly reviews allow you to see meaningful trends while avoiding short-term volatility. Long-term investors using mutual funds as a vehicle to fulfill their long-term goals child education or marriage, retirement planning etc. can adopt a monthly review system.
  • Annually: This is the bare minimum each investor should consider. At a minimum, at least once, all investors should conduct a thorough annual review of their mutual fund investments.

Very important to remember, that the appropriate tracking frequency may vary based on your investment strategy, the type of funds you hold, and your personal preferences. Long-term equity funds generally require less frequent monitoring compared to more volatile or short-term-oriented funds.

Regardless of your chosen frequency, it’s crucial to have a systematic approach to tracking. And therefore we now dive into how you can track mutual fund performance. This guide will provide you with the tools and knowledge to effectively monitor your mutual fund investments, ensuring you stay on course toward your financial goals.

Mutual Fund Tracking Metrics

Here’s a comprehensive and practical guide on how to track mutual fund performance.

Understand Key Performance Indicators (KPIs) of mutual funds.

Before diving into tracking, familiarise yourself with these essential KPIs:

  1. Net Asset Value (NAV): The per-unit market value of the fund.
  2. Total Return: Combines capital appreciation and dividend payments.
  3. Alpha: Measures a fund’s performance against its benchmark.
  4. Beta: Indicates the fund’s volatility compared to the market.
  5. Sharpe Ratio: Evaluates risk-adjusted returns.
  6. Expense Ratio: Annual fee charged by the fund.

These KPIs are the basis on which you can monitor your fund performance on a regular basis.

Using Online Tools and Platforms

Leveraging technology to simplify tracking is a smart way to be highly efficient, isn’t it? Here are some tools you can use to gather data, insights, and KPIs (as discussed earlier) that keep track of your mutual fund investing.

  • Fund House Websites: Most AMCs provide detailed fund information.
  • Financial Portals: Websites like Dhan which offer comprehensive data and comparison tools.
  • AMFI Website: The Association of Mutual Funds in India provides official NAV and other data.
  • Mobile Apps: Many apps offer real-time tracking and notifications.

Prepare a Regular Review Schedule

Establish a consistent review routine that makes your monitoring activity just another day at work :

  • Weekly/Monthly: Review short-term performance and any significant changes.
  • Quarterly: Conduct a thorough analysis of performance, holdings, and any strategy shifts.
  • Annually: Perform a comprehensive portfolio review and rebalancing if necessary.

Compare Against Benchmarks!

How do you know whether your fund is outperforming? Compare it against the benchmark index!
Always evaluate your fund’s performance relative to its benchmark. That’s the only way you can gauge the fund manager’s ability to deliver superior performance amongst the competition.

Here’s what you need to do!

  • Identify the correct benchmark for each fund (e.g., Nifty 50 for large-cap funds).
  • Compare returns over various periods (1-year, 3-year, 5-year, etc.).
  • Look for consistent outperformance over longer periods.

Analyze Portfolio Holdings

Regularly review the fund’s portfolio to check whether the fund you have chosen aligns with its stated objectives.

  • Here’s what you should pay attention to:
    Check top holdings and sector allocations – look out for any anomalies.
  • Ensure the portfolio aligns with the fund’s stated objectives.
  • Look for any significant changes in investment strategy.

Monitor Fund Manager Changes

Every fund manager has a different approach to managing the fund. Therefore keep an eye on the fund management. Be aware of any changes in the fund manager managing your fund. In case there is a change, make sure you research the new manager’s background and the past track record.

Remember the Fund Manager is the driver and you should be sure that your driver knows how to drive well and that the vehicle is in safe hands!

Stay Informed About Market News

Context is crucial for understanding performance. Understanding how macroeconomic factors might impact your investments is going to help your entry and exit strategy.

Use Performance Metrics Wisely

There is no such thing as a perfect system strategy or approach that you can stick to while tracking your mutual funds. Don’t rely on a single metric instead use a combination of data points to conclude.

  • Short-term Returns: Useful for gauging recent performance but can be volatile.
  • Long-term Returns: More indicative of consistent performance.
  • Risk-adjusted Returns: Consider metrics like Sharpe Ratio for a balanced view.

When you consider all this and evaluate your funds’ performance, you are more likely to make a better quality decision than using just one metric.

Setting Up Alerts

Use technology to stay informed. There’s no need for actively monitoring your portfolio, instead use alerts as an effective way for tracking!

Set up email or mobile alerts for significant NAV changes.
Create notifications for important fund-related news or announcements.

This way you will never miss an important update, negative or positive and you can choose to take the right action at the right time!
Maintain a Personal Tracking System
Although tools and technology can help you build an efficient system for monitoring your fund performance, a good practice can be to develop your method of record-keeping.

  • By using spreadsheets or investment tracking apps.
  • Recording purchase dates, amounts, and periodic performance.

A good method to actively manage your funds!

Regularly Reassess Your Goals

Performance tracking should align with your investment objectives. Periodically review if the fund still meets your financial goals and is up to your desired expectations. Assess if your risk tolerance has changed and if the fund still aligns with it.

Reassessing your goals at periodic intervals helps you in your long-term financial planning.

Seek Professional Advice When Needed

Don’t hesitate to consult experts if you’re unsure about interpreting data or making decisions based on performance. For complex portfolios or when significant life changes affect your investment strategy. Advisors are seasoned professionals who can be hired and you can easily delegate the responsibility to them. Seek periodic assessments of your portfolio and ask them to do all the research on your behalf to help you achieve your financial goals.

Remember, while regular tracking is important, avoid making impulsive decisions based on short-term fluctuations. Mutual fund investments are typically best suited for long-term wealth creation.

In the next chapter, we shall learn how mutual funds are taxed!

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