Five-minute guide to reviewing your portfolio

Published by Steve McDowell on 24 August 2010.
Last updated on 23 August 2011


Vital life events tend to reflect on our investment portfolio: the arrival of a child perhaps, or moving house, impending marriage or divorce. However, just as we routinely MOT our cars, we should do the same with our nest eggs.

Q: When should I do a review?

Review your savings and investments when you receive your six-monthly statement, and make a pledge to carry out regular reviews.

Q: Why should I reassess my investments?

Failing to review investments is the most common mistake made by investors; they invest in a fund and then simply forget about it. It's crucial that the performance of your funds is reviewed regularly.

Times change and so do wider economic circumstances; managers move on and investments can go off the boil. Your personal circumstances will also change.

Q: How do I know when to switch?

Define your goals. Do you need capital growth or income at present? Are you approaching retirement and looking for a less risky portfolio?

Fund performance is also an issue. Compare the current performance of your fund with its sector average and benchmark index. This is easy to do on a comparison site such as or

However, it's important to recognise that even the best funds and managers can go through periods of under-performance. It doesn't necessarily mean you should move.

A look at current 'dog funds' lists, such as Bestinvest's Spot the Dog (, could help you decide whether to hold on or switch.

Q: What should my portfolio look like?

As ever, balance across asset types – cash, bonds, property, UK and international equities – is the key. Spreading the risk means your portfolio is less likely to be seriously damaged by any particular poorly performing fund or asset type.

For example, if you're in your thirties, with time to ride out stockmarket volatility, you might have around 70% of your portfolio in equities, with the remainder in cash, bonds and property.

Q: What charges might I face?

The most common charge is the annual management charge, typically 1.5% a year on actively managed funds (less on tracker funds which follow an entire index).

But to get a more accurate idea of the costs coming out of your investment, look at the total expense ratio, which includes other annual expenses.

Watch out for funds with performance-related charges that kick in when the manager has met a particular goal. A fund needs to produce consistently strong performance to justify high or additional charges.

The easiest way to keep initial charges (typically 5% when you buy a fund) down is to use a fund supermarket such as Insteractive Investor or Fidelity FundsNetwork. Switching funds within supermarkets is usually also cheap.

Q: What else should I watch out for?

Be aware of manager moves. In an active fund, where the manager is picking and choosing stocks, you really need to consider whether to take action if he moves on.

If your fund is underperforming, it may just be that the manager's style or the fund's brief is working against it in the current market. This doesn't necessarily mean you should switch funds.

Q: What traps should I be aware of?

Some big-name fund groups spend more on marketing than they do on getting their performance right, so look beyond the name.

Another thing to be wary of is following fashions – trendy funds may be worthwhile investments, but make sure you retain a properly balanced portfolio.

Assessing your risk profile

Broadly, investors can be classified as risk-averse, medium-risk or adventurous. Risk-profiling tools can be found on websites such as Questions you'll have to consider include:

  • Are you willing to risk a significant amount of your wealth in order to get a good return?
  • Would you still consider making risky investments even if you made a significant loss on an investment?
  • Compared with other people, are you prepared to take higher financial risks?

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