How to Rebalance Your Mutual Fund Portfolio – And Why It Really Matters in 2025

By Admin

• 01 Aug, 2025

How to Rebalance Your Mutual Fund Portfolio – And Why It Really Matters in 2025

🔄 What Is Portfolio Rebalancing?

Portfolio rebalancing means realigning the weightage of your investments in various mutual funds to match your original or updated financial goals. Over time, market ups and downs can skew your desired asset allocation, exposing you to more risk—or reducing your potential returns.

Example: If you started with a 70:30 Equity:Debt ratio, a bullish equity market might make it 80:20. That’s when rebalancing is needed.

💡 Why Is Rebalancing Important?

✅ 1. Maintains Desired Risk Level

Your ideal asset allocation depends on your age, income, and risk profile. Rebalancing helps prevent unwanted overexposure to risky or underperforming assets.

✅ 2. Locks in Gains

It’s a disciplined way to book profits when markets are high and buy when prices are low—automatically following the golden rule of investing.

✅ 3. Keeps You Aligned With Your Goals

Your life goals (like retirement, education, home buying) evolve. Rebalancing ensures your portfolio evolves with them.

📈 When Should You Rebalance?

Experts generally recommend reviewing your mutual fund portfolio:

• At least once a year

• After major market movements (10%+ in either direction)

• When your goal changes (marriage, child, new income stream)

🛠️ How to Rebalance Your Mutual Fund Portfolio

🧩 Step 1: Review Your Current Allocation

Use your fund statements or portfolio tracker to assess your actual Equity-Debt allocation.

📉 Step 2: Identify the Deviation

If your actual ratio differs by more than 5-10% from the planned ratio, it’s time to rebalance.

🔄 Step 3: Reallocate Investments

You can:

• Switch between funds (many AMCs offer free switches)

• Redeem and re-invest in underweighted categories

• Redirect future SIPs to balance the portfolio gradually

✅ Step 4: Stay Disciplined

Rebalancing is not about market prediction. It’s a systematic way to protect gains and manage risk.

🧠 ProShield Expert Tip:

Rebalancing doesn’t mean chasing the best-performing fund. It means staying consistent with your personal goals—and letting market cycles work for you.

🛡️ Need Help With Rebalancing?

Let ProShield Invest help you review and rebalance your portfolio professionally. We tailor your portfolio to:

✔ Your goals
✔ Your risk appetite
✔ Your life stage

📞 Call us at: 011-69290568
📧 Email: contacts@proshieldinvest.in
🌐 Visit: www.proshieldinvest.in