I'm told that once I invest in a fund, I should periodically (like annually) monitor the performance of the fund and exit it if it's consistently under-performing its index or the median fund in its category. If not, I don't want to churn my portfolio.
Now, are there any widely accepted criteria on when a fund is under-performing enough that you should exit it? A fund can under-perform in one year, so that's not a good criterion. Two years?
And to what extent is under-performance allowed? Maybe if a fund loses 10% in the first year when the index went up 10%, you'd immediately exit it, rather than giving it another year?
Are there any norms for this?
This is with reference to India, if it matters.