Portfolio Checkpoints to Review Before Q1 Ends

A Q1 Portfolio Checkup: What to Review Before Quarter-End

The end of the first quarter is one of the most underestimated moments in the calendar of the individual investor in the United States.

While many people focus on portfolio reviews only at year-end or after major market moves, the close of Q1 offers a strategic checkpoint.

It is early enough to correct course, yet supported by enough real data to inform decisions.

Why review your portfolio before Q1 ends

The beginning of the year often brings meaningful adjustments, including updated expectations, institutional rebalancing, and risk repricing.

In addition, many investors set goals in January but only notice misalignments once the year is already well underway.

Reviewing the portfolio before the end of Q1 helps prevent flawed decisions from carrying forward for months.

1. Asset allocation: does it still make sense?

The first checkpoint is to assess whether your current asset allocation still aligns with your risk profile, time horizon, and objectives.

Key questions:

• Has the balance between equities, fixed income, and cash changed?
• Has any asset class grown more than planned?
• Has overall portfolio risk increased unintentionally?

Strong early-year market moves can inflate certain positions. Even without new contributions, the portfolio may drift away from its original design.

2. Relative performance, not absolute

In Q1, it’s common to focus only on nominal gains or losses. What truly matters, however, is relative performance.

Evaluate:

• Your portfolio versus relevant benchmarks (S&P 500, Bloomberg Aggregate, etc.)
• Performance by asset class
• Individual position contributions

Before making changes, understand why each component performed the way it did.

3. Rebalancing: discipline, not prediction

Rebalancing is not about predicting markets—it’s about maintaining discipline.

Before Q1 ends, check for deviations beyond predefined limits, positions that have become uncomfortably concentrated, and excessive exposure to a single sector.

Periodic rebalancing reduces concentration risk and helps systematically realize gains—something that is difficult to do emotionally without clear rules.

4. Interest rate risk exposure

In the U.S. financial system, interest rate risk strongly affects bonds, mortgage-backed securities, REITs, and rate-sensitive equities.

Before Q1 concludes, assess:

• Average duration of your fixed-income holdings
• Portfolio sensitivity to yield changes
• Indirect exposure through ETFs and funds

5. Liquidity and opportunity reserves

Liquidity is another critical checkpoint. Ask yourself:

• Do you have sufficient cash for emergencies?
• Is there dry powder available for opportunities?
• Do any investments require near-term liquidity?

After the start of the year, many investors realize they are overallocated, with limited flexibility to respond to unexpected events or tactical opportunities.

6. Tax efficiency

Even outside the filing season, tax efficiency deserves attention before Q1 ends. Items to review include:

• Unexpected fund distributions
• Excessive turnover in taxable accounts
• Early tax-loss harvesting opportunities
• Asset location (taxable vs. tax-advantaged accounts)

Decisions made early in the year compound over time. Adjusting sooner reduces future surprises.

7. Contributions and annual limits

Before Q1 ends, review contributions to 401(k), IRA, and HSA accounts, your contribution pace relative to annual limits, and whether you’ve captured your employer match.

Delaying this review can lead to rushed contributions later in the year—or worse, missed tax benefits.

8. Alignment between strategy and behavior

Perhaps the most overlooked checkpoint is investor behavior. Reflect honestly:

• Did you change positions due to market noise?
• Did you make trades outside your original plan?
• Does your written strategy still reflect your actual decisions?

When behavior diverges from strategy, the issue isn’t the market—it’s the process.

9. Invisible concentration risk

Concentration isn’t always obvious. Evaluate:

• Repeated exposure to the same sector across different ETFs
• High correlation among supposedly diversified assets
• Excessive reliance on a small number of names or themes

A portfolio can appear diversified on the surface while being concentrated in common risk drivers.

10. Updating goals and timelines

Personal changes matter as much as market changes. Before Q1 ends, consider income changes, short- and mid-term goals, future liquidity needs, and shifts in risk tolerance.

Quick checklist before Q1 ends

✔ Asset allocation
✔ Relative performance
✔ Rebalancing needs
✔ Interest rate exposure
✔ Available liquidity
✔ Tax efficiency
✔ Contribution pace
✔ Behavioral alignment
✔ Concentration risk
✔ Goal updates

Written by

Gabriel Gonçalves