How to Avoid Reviewing Financial Portfolio Incorrectly

Analyse your consolidated account statement of mutual funds carefully to prevent miscalculations

How to Avoid Reviewing Financial Portfolio Incorrectly
How to Avoid Reviewing Financial Portfolio Incorrectly
Himali Patel - 27 April 2021

Being a person of habit and discipline, some of the habits are hard to give up, irrespective of the current pandemic crisis. One such habit is reviewing my portfolio of financial assets to know where I stand, in terms of my money goals and objectives. Though I review it often, it was easier during the start of the financial year 2021-22, as it gave me a clear picture of my tax-saving investments.

When it comes to reviewing, I prefer to make it as simple as possible by taking a count of my investments that I have in various assets. It includes Fixed Deposits (FDs), Public Provident Funds (PPFs), recurring deposits, savings deposits, insurances (both health and life), stocks, and lastly in mutual funds. This sounds like a lot but this is just my way of taking count of each financial asset and analysing it separately and then summing it up with total assets and the returns till year to date I have gained.

Having said that, reviewing all of my deposits, company’s stocks and PPF’s is very convenient considering they all are linked to my same bank account. Just with a single click of the mouse, I get a detailed review of all of my deposits’ available balance, maturity amount, and my total investment as a whole. As I have annual premium plans, it is not that difficult to review my insurance plans. However, I am planning to get insurance plans with child benefits for my daughter's higher education in the coming years.

The same goes with the mutual fund, as I have three mutual fund portfolios, which I get through eCAS, which is sent in an email to my valid email id registered in the Know Your Customer (KYC) records. As per the Securities and Exchange Board of India (SEBI), the mutual fund houses are required to issue a consolidated account statement (CAS) for each calendar month to mutual fund unit holders, who have performed a financial transaction during that month in a dematerialised form.

While going through my account statement, my CAS only highlighted the mutual fund transaction which I made in the current month , that is, April and not the other two active portfolios’ balances, which I completely forgot. This led to the mismatch of my past total mutual fund investments with the current investments while reviewing.

CAS can be a very useful tool towards a better investment management strategy and tax planning; however, such unawareness and skipping of minor detail can make a dent in your reviewing process if not done carefully. As per the SEBI guidelines, an investor’s monthly CAS includes only those portfolios where financial transactions have taken place during that month.

So, if I have three portfolios and have made a financial transaction in only one, then the CAS will show only that active portfolio and not the other two. Further in case of absence of any financial transaction, as a mutual fund investor, no CAS will be issued for that month.

It is crucial to remember that only those investors are subject to received CAS, whose PAN details have been updated in the portfolio. That said, it is very imperative that next time when you review your mutual fund portfolio, don’t forget the past statements as well. In the end, we learn from our mistakes!

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