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Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →A portfolio can lose value while a major index rises without anything being broken: the index may hold different investments, use different weights, or cover a different market than your portfolio. Before changing investments, compare the same dates and return basis, choose a benchmark that matches your strategy, and then check your allocation, holdings, and costs.
Start by checking whether the comparison is fair
“The market” is not a single portfolio. An index is designed to represent a particular market, sector, or group of investments, and indexes use different selection and weighting methods. A headline index such as the S&P 500 is therefore not automatically the right yardstick for a portfolio that includes bonds, international stocks, small-company stocks, cash, or a mix of asset classes. The SEC explains how index construction and index-fund approaches can differ in its Investor Bulletin: Index Funds.
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Match the dates and return basis
Compare the portfolio and benchmark over identical start and end dates. Also establish what each return figure includes: for example, whether it accounts for income, fees, and deposits or withdrawals. An account balance can fall after a withdrawal even if its investments gained value, so do not treat a change in balance as the same thing as investment performance. Check account records or ask the provider how its performance figure is calculated; there is no single calculation method established here for every account.
Choose a benchmark that fits the strategy
A useful benchmark reflects the portfolio’s stated strategy and the types of investments it holds. FINRA says mutual funds are measured against an appropriate market index or benchmark based on their stated strategy and investments. See FINRA’s overview of mutual funds. If your portfolio is diversified across stocks and bonds, comparing it only with a stock index can make a normal difference in asset mix look like underperformance.
Compare your actual portfolio with its intended mix
Write down the allocation you chose for your goals and risk tolerance, then compare it with the portfolio’s current holdings. Stocks, bonds, cash, and other asset categories can behave differently in the same market conditions. Diversification spreads exposure across investments; it does not make a portfolio track a rising stock index or prevent every decline. The SEC’s Beginners’ Guide to Asset Allocation, Diversification, and Rebalancing describes the relationship between allocation, diversification, and rebalancing.
Look for concentration or drift
Check whether a large share of the portfolio is in one company, asset class, sector, region, or other market segment. A concentrated portfolio can move very differently from a broad index. Also compare current weights with the plan: market movements may have shifted the mix away from its intended allocation. FINRA discusses diversification and allocation in its Asset Allocation and Diversification guide and offers guidance for unsettled markets in Investor Tips for Turbulent Markets.
Inspect the funds and the costs they carry
If the portfolio holds mutual funds or exchange-traded funds, review the fund’s prospectus and latest shareholder report. Look at its objective, benchmark, holdings, risks, fees, and trading costs, and compare the fund’s performance with the benchmark it actually follows. The SEC says fund materials are typically available from the fund company or financial professional and may also be found through EDGAR; its Index Funds page explains why an index fund’s return can differ from its index.
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As the SEC puts it, “An index fund may underperform its index because of fees and expenses, trading costs, and tracking error.” Check the costs that apply to your own account, including fund expenses, advisory or service charges, transaction charges, and applicable trading costs. Fees reduce the money left invested. The SEC’s July 23, 2025 bulletin, How Fees and Expenses Affect Your Investment Portfolio, explains how fees affect an investment portfolio. Ask your financial professional or provider to clarify charges you cannot identify in the documents.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Decide whether any action is justified
A short-term gap against a headline index is not, by itself, evidence that your plan has failed. First identify whether the difference comes from the benchmark, dates, asset mix, concentration, fund implementation, or costs. Then ask whether the facts that supported your original plan have changed.
Revisit the plan when your circumstances change
Consider whether your goal, financial situation, time horizon, or tolerance for risk has changed. Investor.gov says, “The most common reason for changing your asset allocation is a change in your time horizon,” and generally cautions against changing allocation solely because asset categories have recently performed differently. See the SEC’s guide to asset allocation and rebalancing.
Weigh the effects of rebalancing
Rebalancing means bringing the portfolio back toward its planned allocation, not chasing whichever category recently rose. You may be able to direct new contributions toward underweighted categories rather than sell existing investments. Selling or buying can involve transaction fees and tax consequences, so consider those effects before acting. FINRA notes that there is no official timetable for rebalancing and suggests considering it as part of an annual investment review: Asset Allocation and Diversification.
If you cannot reconcile the performance numbers, ask your provider or adviser to identify the benchmark, calculation period, return basis, holdings, and charges used in the comparison. General market guidance cannot establish the cause of a particular investor’s loss without the account’s dates, holdings, cash flows, and applicable fees.
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