What’s the cost of not rebalancing your portfolio?

Many investors hold on to underperforming funds longer than they should, thinking exiting them would:

→ Break the power of compounding

→ Attract extra taxes or exit loads

But the truth is, staying invested in underperforming funds costs you much more than that.

Let’s understand this with an example of 2 investors: One holds on to the underperforming fund, the other rebalances to better performing funds.

Investor A – Stays invested in an underperforming fund
• Invested: ₹10,00,000 (10L)
• Returns: 12% p.a.
• Total returns in 5Y: ₹7,62,341
• Capital gains taxes (incl. ₹1.25L/yr exemption): ₹79,667

Total wealth (after taxes): ₹16,82,674
CAGR: 10.97%

Investor B – Rebalances to better performing funds
• Invested: ₹10,00,000 (10L)
• Returns: 14% p.a. (rebalanced yearly)
• Total returns in 5Y: ₹9,18,549
• Capital gains taxes (incl. ₹1.25L/yr exemption): ₹36,693

Total wealth (after taxes): ₹18,81,856
CAGR: 13.48%

The difference? Investor B earns 2.51% higher CAGR.

As you can see, this is already a big difference. And after 30 years, it would be a 2x difference in your wealth.

Staying in underperforming funds with lower returns means weaker compounding over the years. Don’t let the fear of exiting now, cost you decades worth of wealth.

Power Rebalancing gives you a personalised, tax-optimised plan so your portfolio has exactly this advantage:

✅ Switch from lagging funds to top-ranked funds
✅ Within the same category (no risk profile change)
✅ Optimised for STCG tax and Exit load
✅ Reduce high exposure in your portfolio

If you are not an Elite member then Power Rebalancing could be the most valuable upgrade to your investing journey.