Přehled trhů
Spring Portfolio Cleanup: Review, Simplify, and Check Costs
Key takeaways
- An annual portfolio review is a hygiene practice, not a reaction to the market.
- Allocation drift occurs naturally — assets grow at different rates and change their weight in the portfolio.
- Fewer positions are usually better than a fragmented portfolio with dozens of holdings.
- Check TER, tracking difference, and broker fees — something may have become cheaper.
- The spring review also includes a tax overview and preparation for the potential holding-period test.
A spring portfolio cleanup is a regular annual inspection: you check whether the allocation matches the plan, whether you are paying reasonable fees, and whether the portfolio holds only what belongs there. This is not a reaction to the market — it is maintenance.
Step 1: Check allocation drift
If you started with an 80% equity / 20% bond allocation but equities grew more strongly over the year, the current ratio might be 87 / 13. That is drift — the natural change in weights caused by the different performance of components. Assess whether the deviation has exceeded your tolerance (typically ±5 percentage points) and whether rebalancing is needed. More on portfolio construction in the article how to build your first portfolio.
Step 2: Simplify a fragmented portfolio
Many investors gradually accumulate dozens of positions — different ETFs, older purchases, experimental bets. The result is a complex whole that is hard to monitor and rebalance.
- Check for overlaps — if you hold an S&P 500 ETF and a global ETF, you are exposed to US equities twice.
- Consider consolidating into fewer but higher-quality funds.
- Eliminate positions you added impulsively and that would not pass your criteria today.
Step 3: Check costs
The ETF market evolves — funds become cheaper, new brokers offer better terms. Once a year it is worth reviewing:
- TER of your funds — does a cheaper alternative exist?
- Tracking difference — did the fund lag behind its index more than the TER would suggest?
- Broker fees — has a new broker arrived with a better offering?
More detail on costs in the article on hidden investing costs.
Step 4: Tax overview
Note which positions are approaching or have already passed the three-year holding test. Positions held for 3+ years can be sold free of capital gains tax. Also check whether you have recorded dividends from distributing funds — these are subject to 15% withholding tax and can be declared in your tax return. More on taxes in the ETF tax overview for the Czech Republic.
FAQ
How often should I review my portfolio?
Ideally once a year, or following a significant life change (new job, child, an upcoming large expense). There is no need to react to every market move — a regular annual review is sufficient.
What is allocation drift?
The natural change in the weight of assets in a portfolio caused by their differing performance. If equities grow faster than bonds, their share in the portfolio rises above the target — making the portfolio riskier than intended.
How do I simplify an overgrown portfolio?
Identify overlaps (the same assets in different funds), eliminate impulsive purchases that would not pass your criteria today, and consolidate into fewer but more robustly diversified funds.