Advisors have a favourite mantra when it comes to equity. They repeatedly tell their clients that equity is for long-term investment and they should review their portfolio only once a quarter or so. It seems not many are paying heed. The study prepared by Final Mile in collaboration with FIFA shows that 41% of investors check their investments once a week or even earlier.
Of the investors surveyed, 4% of the respondents checked their portfolio more than once every day, 13% checked it daily, 9% more than once a week, and 15% checked their portfolio weekly. On the other extreme, only 6% of respondents said that they have never checked their portfolio.
The study draws the conclusion that such frequent checking of the portfolio may make investors susceptible to portfolio changes based on emotion. This may be detrimental to long-term wealth creation.
However, Nisreen Mamaji, of Moneyworks, believes that only new investors check their portfolio at such a feverish pace. “New investors in mutual funds keep on checking their investments every now and then. But they do not make any changes to their portfolio,” she said.
Ritesh Sheth, of Tejas Consultancy, however, believes that frequent monitoring of portfolio does affect investment decisions. “We have received a lot of queries in the past few weeks. In fact, a few investors asked us to redeem their investments after they see spectacular gains in their portfolio. This diverts them from their long term goals,” Ritesh said.
Equity market will always be volatile and hence advisors need to make sure that their client is aware of the short-term volatilities. “During initial engagement with a client, it is essential to set their expectation right from the beginning. We must make them understand about volatility and possibility of getting negative returns in short-term from equity funds,” said Shifali Satsangee of Funds Ve'daa.