'Silent portfolio killer': This CA says your trusted MF might be your biggest financial blind spot

Even top mutual funds can quietly erode your returns if you don’t know when to exit — and most retail investors don’t.

Chartered Accountant and educator Meenal Goel is challenging a widespread belief among retail investors: that simply picking the right mutual funds guarantees wealth creation.

“The truth,” she wrote in a recent LinkedIn post, “is that even the best-performing funds today can slip over time.” Her message underscores a key blind spot in many portfolios — the failure to exit underperforming funds at the right time.

Even top-performing mutual funds may not remain at the top indefinitely. Past performance is no guarantee of future results, and a fund’s trajectory can change due to market shifts, fund manager exits, or sector slowdowns. That makes regular portfolio reviews not just smart — but essential.

But for retail investors, exiting underperformers isn’t simple.

Capital gains taxes can make selling costly, especially if the investment has appreciated. Timing exits perfectly is notoriously difficult, and the emotional weight of regret and loss aversion often holds people back from making necessary changes.

“Exiting an underperforming fund is tricky — tax implications, timing uncertainties, and the fear of making the wrong move often hold people back,” Goel said.

Financial advisors typically recommend ongoing monitoring, not a “buy and forget” mindset. Regular portfolio optimization — when done with care around taxes, costs, and emotions — can help reduce long-term underperformance.

Goel’s takeaway: even funds that seem “good enough” can be quietly limiting returns. “Seeing my missed gains made me understand there’s always room to optimise,” she wrote.