Monitoring fund performance

Many investors, having made the crucial investment, then walk away and forget it.  As a general rule, the more active you are in managing your investments, the better your returns in the long run.

How do I monitor? 

Morningstar provides a facility for reviewing Australian fund performance by period, sector and manager.

Most fund managers carry unit prices at their websites. For instance, the investment performance of Vanguard's products including historical data, can be found here. (What we like about Vanguard's reporting is that it also shows income distributions, performance net of fees, fees, and performance after tax. )

Bear in mind that viewing fund returns in isolation is not ideal. Returns should be compared with a benchmark, such as a market index or competitors' funds in the same asset class. It is very difficult to find fund performance data, net of fees, that is presented in a consistent and comparable format as Vanguard does.

So monitor your unit prices, gross returns, fees and be aware of how competitive funds are performing and how the market as a whole is travelling in that asset class. This may be a little simplistic, but if your fund is invested in Australian equities and the All Ords is down 10% and your fund is down by less than 10%, then you probably have no reason for complaint.

Why should I bother to monitor?

The main reason for monitoring your fund's performance is to assess the extent to which the fund is performing in terms of its own goals and more importantly your financial objectives.

If it is not measuring up, you then have to decide what action, if any, you need to take.  Remember  that markets are volatile and go through periods of negative returns from time to time.

Any action you take should recognise the nature of the problem and may range from letting it be for a while to switching to another fund or pulling your money out and seeking a better place for it.