But when exactly should investors do it?
Experts say the answer depends less on market noise and more on personal milestones, discipline, and evolving financial circumstances.
“Reassessing your portfolio isn’t just about market conditions,” says Sarvjeet Singh Virk, Co-founder & MD, Shoonya by Finvasia. “It’s about ensuring your investments reflect your evolving life goals and financial situation.”
Major life events — like retirement, a job change, buying a home, or funding a child’s education — often require a portfolio review.
Virk explains that risk tolerance may shift with these changes, calling for a more conservative or aggressive approach.
Regular checks, whether quarterly, semi-annually, or annually, can help ensure that portfolios reflect both market realities and personal needs.
“The focus should always be on securing long-term stability and achieving your evolving financial goals,” Virk adds.
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Avoid chasing returns
Shaily Gang, Head-Products at Tata Asset Management, cautions against rebalancing purely to chase performance. “To each asset class that underperformed, you would have another that outperformed,” she explains.
Instead, she recommends staying anchored to your original asset allocation, built around goals and risk appetite.
Gang highlights six clear situations when rebalancing makes sense:
Market movements that skew allocation
Sharp swings in equity, debt, or commodity markets can pull portfolios away from their intended mix. Rebalancing realigns them.
Life events or windfalls
Sudden gains or unexpected events may alter risk tolerance, requiring adjustments in investments.
Tax or regulatory changes
Shifts in taxation or the launch of new products with better post-tax returns (like debt funds with equity taxation) can call for portfolio changes.
Annual portfolio review
Even without big changes, markets naturally drift. A yearly check keeps allocations disciplined.
Sector opportunities
If a particular sector looks promising, investors may choose to increase their satellite portfolio allocation to capture the upside.
Exit strategies on sectors
When the market narrative weakens or a sector outlook turns negative, reducing satellite exposure and reinforcing core holdings makes sense.
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