A mutual fund tracker is a feature that many FinTech platforms are offering that helps you keep track of all your mutual fund investments in one place. The mutual fund tracker helps you keep an eye on all your mutual fund investments, expenses, withdrawals, etc.
Following are the important features that you must look for in a mutual fund tracker:
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Make sure that the mutual fund tracker gives you an investment summary.
- Invested Amount: It is the total amount you have invested so far across various mutual funds.
- Current Value: It is the current value of all your mutual fund holdings.
- Total P/L and XIRR: It shows the total gains or losses from your investments. XIRR is the rate of return that your portfolio is generating.
- Performance of the market in the last 7 days/ 1 month: While tracking your investments, getting the overall market performance over the short term is always helpful. This will help you understand how volatile the markets have been. Has the market gone up or down during the last 7 days or one month?
- Performance of your portfolio during the same period: Knowing how your portfolio performed during the same period will help you understand how volatile the investments are. Let’s say the markets were up 3% in the last week, and your portfolio was also up by 2.9% during the same week. It means that your portfolio is doing well too.
Make sure the mutual fund tracker gives you a fund-wise summary of all your investments. Primarily it must include the following:
- Total Investment Amount: This is the value of your investment amount across each fund. This is the sum of all your SIPs in a mutual fund or the value of your lumpsum investment.
- Current Value: This is the current market value of all the fund units accumulated so far.
- Type of Fund: Direct or Regular.
- Percentage Weight of Each Fund: This shows the weightage of each fund in your investment portfolio. Say you invest in 5 funds in total. The weights across all the funds will not be the same. Fund A may form 30% of your investment portfolio, while Fund B only 10%. Thus, knowing the weights will help you determine portfolio exposure to funds.
- XIRR: The return from each fund, as of the date.
- Your Return Vs NIFTY 50: Here, you’ll be able to compare each fund’s return against Nifty 50. Knowing this helps you understand whether the fund outperforms Nifty or is underperforming.
A mutual fund tracker must give you an estimation of risk. In other words, based on your holding, the mutual fund tracker must be able to analyze portfolio risk levels. For example, investing across only mid-cap and small-cap funds will make your portfolio highly risky. Having some debt portion can lower the risk levels. You may be aware of each fund’s risk levels. But knowing your entire portfolio’s risk is very important.
You may invest across equity, debt and balanced funds. You may aim for a 50:50 exposure to equity and debt. But with market movements, the asset allocation mix changes. Let’s say, in a year’s time, your exposure is no longer 50:50 but has become 70:30. This may seem to be a high-risk proposition for you. Thus, you should be able to easily identify your portfolio mix and take necessary actions to rebalance it.
Once you know the asset allocation mix, next knowing the equity split is also quite useful to understand the investment portfolio better. Say you have invested only across small and mid-cap funds. And, your equity split is 50:50, which makes your investment portfolio highly risky. Having exposure across large-cap, mid-cap and small-cap will give your investment portfolio some diversification and necessary balance. Thus, knowing your equity split through the mutual fund tracker will help you adjust your portfolio allocation.
Ensure you are able to determine your sector mix through the mutual fund tracker. The sector mix will tell you if your portfolio is highly concentrated across any particular sector(s) or if it is well balanced across all the sectors and industries. Also, it is useful to have information about which sectors have performed well in your portfolio. For example, you may have 20% exposure to sectors that have gained the most in the last three years – IT, Finance, and Healthcare.
You should aim to have a portfolio with the least fees. For example, investing through regular funds will have a higher expense ratio as compared to direct investing. One way to reduce your costs is by investing in direct funds. The mutual fund tracker must identify any costs that you may incur from your investments and notify you. While liquidating your investments, being able to do it in the most tax-efficient and low-cost manner will have a significant impact on your overall returns.
These are the next steps that the mutual fund tracker must suggest for your investments. Let’s say you have a well-diversified investment portfolio with good equity and debt exposure. However, you have no tax-saving investments. The mutual fund tracker must suggest investing in ELSS funds (a tax saving scheme). Such insightful suggestions will help you create a more diversified portfolio and ensure that you can generate good returns.