mf portfolio: how to consolidate a mutual fund portfolio

Over the years, investors end up holding investments in multiple MF programs at different fund companies. These may include new fund offerings, tax-efficient investments, and more. Performance monitoring then becomes tedious and can also lead to over-diversification. Therefore, it makes sense to revamp the portfolio by shrinking this long list and resizing it.

Review your MF Portfolio

Before consolidating, it is worth reviewing the full list of funds with respect to their performance, investment objective and plan type. If the objective has been reached, one can decide to redeem. An MF advisor can help with the review and offer the most suitable consolidation advice.

Deciding to leave the schemas

If one holds several funds with the same objective, one can exit from the other funds and invest the proceeds in the one with a better performance history and a better risk profile. Similarly, plans held with different ownership patterns (joint/single, etc.) can be reviewed at a consolidated level. Accordingly, redemption can be made from one plan and moved to the other. This can be done online via the fund house or the IFA platform. Alternatively, the investor can complete the redemption form, sign it and submit it to the fund house/RTA.

Consolidate folios

Investments in the same fund house on different folios can be consolidated under one folio through the folio consolidation process. The form for this purpose can be obtained from the fund. All folios to be consolidated must be mentioned in the form. The form must be signed by all holders and submitted to the fund house or RTA.

Points to note

  • Any redemption or conversion may have tax implications in terms of long/short term capital gains.
  • By choosing the consolidation plan, one can also think of a direct plan that offers a lower expense ratio.

(Content on this page is courtesy of the Center for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)

Dolores W. Simon