If you are investing in regular plans of mutual fund schemes from a single aggregator portal, you can have an easy way of looking at your consolidated mutual fund portfolio.
By the way, there is no reason why you should be investing in regular plans of MF schemes if you are a Do-it-yourself investor.
However, if you are investing in direct plans of MF schemes from AMC websites or multiple investment portals, looking at your consolidated portfolio is a constant hassle.
For instance, I use MF Utility for my mutual fund transaction.
MFU provides an excellent interface for transactions. However, presentation is quite basic. For instance, you cannot even figure out the cost of your investment. Even though I can manage through other sources of information, I cannot understate the importance of better analytics for my consolidated portfolio.
By the way, there are many investment portals that let you invest in direct plans and provide a much better portfolio analytics. Such portals charge a nominal cost. The only issue is that, with many of them, you can only see the consolidated view of investments made through that very portal.
If you are not keen on incurring such nominal charges and continue to invest through AMC websites or MFU, you may have to compromise on presentation quality of consolidated portfolio.
I came across a website SimpleMoney.in that can provide an easy solution to this issue. We get account statements in our e-mail once we execute any Purchase/Redeem/Switch transaction.
The website can fetch such information from your inbox (with your permission of course) and present good analytics about your portfolio.
I heard about SimpleMoney in an advisor conference. Happened to check out the website and connect with Pranshu Maheshwari, CEO, SimpleMoney over e-mail. Invited him to write a guest post on the website and explain the product to the audience.
Point to Note: Do not consider this guest post as my endorsement of the product. I do not use the website regularly. You can check out the website. If you like the product, go ahead.
You can visit Pranshu’s Linkedin Profile. If you have any queries, you can write to Pranshu at pranshu@simplemoney.in.
Over to Pranshu.
What’s the right way to track your portfolio?
Portfolio tracking is an essential part of any investment plan. Good tracking helps investors ensure that they are on track for achieving their investment goals. It is also be immensely satisfying to see your savings and investments grow over time. However it is important for investors to go beyond checking their balances.
What should you track?
Portfolio Returns
An important aspect of portfolio tracking is measuring the performance of your portfolio and ensuring that it is aligned with your investment goals.
XIRR is an excellent metric to compare the performance of different investments, particularly if the investment horizons differ. Absolute returns in rupees are helpful for personal satisfaction, and for keeping track of the available funds.
Performance against Benchmark
It is important to benchmark your portfolio’s performance against the market. This will help you see if your chosen products are performing well.
Care should be taken to ensure that funds and asset classes are appropriately compared. For instance, small-cap funds can be compared with the BSE Small Cap Index, but should not be compared with the BSE Sensex.
Asset Allocation
The third aspect is keeping track of asset allocation. This encompasses not only the allocation between debt and equity funds, but also the allotment to sub-categories such as large cap funds, mid cap funds etc.
This allocation must always be done with specific goals in mind. Furthermore, since different asset classes will provide different returns, your portfolio will need to be re-balanced periodically by switching or redeeming funds.
Capital Gains and Exit Load Information
Finally, for the purposes of switching and redeeming units, you need to keep exit loads, capital gains taxes and lock-in periods in mind. It is important to align the exit loads and lock-in periods of your chosen funds with your goals.
Knowing how many units are available to be redeemed provides peace of mind, and makes rebalancing easier. Knowing when the units will be free of the exit load can help you avoid paying unnecessary penalties.
Finally, knowing how much exit load will need to be paid on redemptions will help you judge whether it is worth paying the load to close a bad investment.
Why is this difficult?
Comprehensive portfolio tracking, as described above, is difficult. For an investor with more than just a few folios, it is cumbersome and dangerous to do this using excel spreadsheets. Tracking anything beyond basic balances and returns is impossible.
One option is to login directly to the fund house websites and see the information. However this is hampered by poor user interfaces and a lack of uniformity in the information provided.
Furthermore, the emergence of new investment platforms has fragmented our investment data. The shift in the market from regular plans to direct plans has made it possible for people to purchase mutual funds online directly from the AMCs.
Various platforms such as MF Utility have emerged on which investors can invest in direct plans for these funds as well. Furthermore, new forms of advisory services have emerged, such as robo-advisory and consultations provided by Registered Investment Advisors (RIAs).
This has improved access to the investment markets, but has made comprehensive portfolio tracking impossible for those who use multiple portals.
For me personally, benchmarking the performance of my portfolio against the market required downloading and cleaning a lot of disparate data, as well as several well crafted excel spreadsheets. This could take almost an entire afternoon, and still didn’t work well.
A spreadsheet error deluded me into thinking that I was 20% richer than I actually was; discovering the truth was a nasty surprise.
Due to these inconveniences, I didn’t check my portfolio often enough – and was greeted by more nasty surprises when I did.
How can it be fixed?
To fix some of these frustrations for ourselves, we built SimpleMoney. SimpleMoney tracks your portfolio by reading the investment statements in your inbox, eliminating the need for data entry or uploading of information.
All you need to do is login, and your portfolio will be loaded automatically. New investments and transactions are added automatically too.
We’ve built in detailed analytics, to make it easy for you to track every aspect of your portfolio. SimpleMoney will track your returns, benchmark them against the market, and help you with your capital gains taxes and exit loads.
SimpleMoney is free, and it takes just ten seconds of work to track your entire portfolio – we’d love for you to try it out and let us know what you think!
Snapshots from SimpleMoney
