Asset management calculator

Two jobs, one page

Managing a set of assets comes down to two decisions a reader has to make themselves. The first is the mix: how much of the money sits in equity, how much in debt, how much in gold, and anything else. The second is the cost of the products that hold the money. This page does not pick a mix for you and it does not quote a fee. It does the arithmetic once you have picked. Allocation and rebalance tells you what is in the way of your target. Fee drag tells you what the yearly fee costs over the holding period.

Both modes run on the figures you enter. Nothing is fetched. Nothing is stored. The defaults are sample inputs, not a mix anyone is pointing you at.

Allocation and rebalance: the arithmetic

Every row is a class. You name it, enter its current value, and set the share you want it to hold of the full portfolio. The page adds up the values to get the total, computes each class's target value as the total multiplied by its target per cent divided by one hundred, and prints the drift as the current value minus the target value. A positive drift is an amount to reduce. A negative drift is an amount to add. The language on the page says Add or Reduce, because this is arithmetic on the mix you already have.

If your targets do not add to one hundred, the page does not reject the entry. It computes the drifts on your numbers exactly as you wrote them, and prints a note that the sum of targets is not one hundred. A portfolio with unassigned share is still useful to see on the screen, so you know what the unassigned share is.

Worked example you can check

The page's sample defaults are ₹4,00,000 of equity, ₹3,00,000 of debt and ₹1,00,000 of gold (starter values, not a suggested mix). The total is ₹8,00,000, so the current shares are 50 per cent, 37.5 per cent and 12.5 per cent. The targets are 60 per cent, 30 per cent and 10 per cent, which turn into target values of ₹4,80,000 for equity, ₹2,40,000 for debt and ₹80,000 for gold.

Adding ₹80,000 to equity and reducing debt by ₹60,000 and gold by ₹20,000 restores the targets without raising fresh money. The total stays at ₹8,00,000.

Fee drag: the arithmetic

The fee drag mode treats a lump-sum investment as growing at a net annual rate equal to the gross assumed rate minus the annual fee. The value after y years is the amount multiplied by one plus the net rate, raised to the power y. The same amount at the same gross rate, with no fee, is the amount multiplied by one plus the gross rate, raised to the power y. The drag is the second figure minus the first.

The default run is an ₹10,00,000 investment at an assumed 12 per cent gross return and a 1.5 per cent annual fee, held for ten years. The net rate is 10.5 per cent, the value after ten years is about ₹27,14,081, and the same investment at 12 per cent gross with no fee reaches about ₹31,05,848. The ₹3,91,767 difference is the drag of the fee, money the reader paid out of return over the decade.

Where the fee comes from in a mutual fund

In an Indian mutual fund the fee a reader pays is the scheme's Total Expense Ratio. A TER is a base expense ratio plus brokerage plus regulatory levies plus statutory levies. The base expense ratio is an upper bound set by scheme category and the scheme's assets under management. A reader who wants the exact TER applicable to a scheme reads it in the scheme's own fact sheet. The number that goes on this page is the total annual fee the reader expects to pay, however the product arrives at it.

How each input moves the answer

In rebalance mode, the two levers are the current value of each class and its target share. Changing a current value changes the total and shifts every drift. Changing a target changes that class's target value and leaves the current shares alone. If a class is already within half a rupee of target, the page prints Hold as the move. In fee mode, years is the strongest lever: the drag grows faster than in a straight line because the lost return itself does not compound. Across twenty years, a 1.5 per cent fee on an assumed 12 per cent gross doubles the drag seen at ten years and more.

What this calculator leaves out

• Tax on rebalancing trades. Selling units to reduce a class and buying units of another may trigger capital gains tax; the mutual fund returns calculator works on cash flows, and the tax position depends on the fund type and holding period.
• Transaction costs. Brokerage, STT and GST on a sale are charged separately from a scheme's TER.
• Market movement between the read and the trade. The page reflects today's values.
• SIPs. For top-ups over time, the portfolio growth calculator grows each holding on its own rate and monthly addition.
• Phases of saving across a career. The investment calculator chains lump sums and SIPs across phases.

A rebalance plan needs more than the arithmetic

The move column prints a clean rupee amount, but a real rebalance has to deal with exit loads on the units being sold, capital gains that may be due, the liquidity of each class and the fact that market prices move between the moment the page is read and the moment the trade is placed. The page's job is to make the targets and the drifts legible. The larger decision of when to rebalance, and whether the targets themselves are still right, is a conversation with a qualified adviser.

Frequently asked questions

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