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Mutual Fund Corner: How to de-clutter your portfolio

Updated : July 20, 2021 15:04:57 IST

In this episode of ‘Mutual Fund Corner’, CNBC-TV18 spoke to Kalpesh Ashar of Full Circle Financial Planners and Uday Dhoot, Partner, Venn Wealth, who answered the viewers’ mutual fund queries.

How can one declutter a portfolio, take it from ‘fat’ to ‘fit’ and trim the 'excess' schemes?

Kalpesh Ashar said, “This habit of constantly stacking up unnecessary schemes in a portfolio without ‘purpose’ has led to many portfolios just being excess in schemes and just excess in quantity and the quality is completely not there. Having too many schemes raises difficulties in monitoring the portfolio and having too many schemes can end up diluting overall portfolio returns.”

Uday Dhoot weighed in on how to calculate one's personal rate of return which is actually the most accurate way of finding out how well the portfolio has done.

Uday Dhoot said, “Excel has this function called the extended internal rate of return (XIRR) which we can sort of use to calculate our total portfolio returns. Basically, we put all the cash inflows, cash outflows together and then calculate the IRR. The reason, why this is important, is because at different points in time you are putting in money, taking out money, getting some dividends, some withdrawals, some redemptions, because of all of these transactions that are happening it is important that we know what my final IRR on the portfolio is and that is how you can do it through the use of XIRR.”

For the full interview, watch the accompanying video
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