• Send Us A Tip
  • Calling all Tech Writers
  • Advertise
Saturday, June 21, 2025
  • Login
  • Register
TechStory
  • News
  • Crypto
  • Gadgets
  • Memes
  • Gaming
  • Cars
  • AI
  • Startups
  • Markets
  • How to
No Result
View All Result
  • News
  • Crypto
  • Gadgets
  • Memes
  • Gaming
  • Cars
  • AI
  • Startups
  • Markets
  • How to
No Result
View All Result
TechStory
No Result
View All Result
Home Business

How to Choose the Best Mutual Fund Schemes?

by Dipti Gore
December 16, 2017 - Updated On January 23, 2018
in Business
Reading Time: 3 mins read
0
How to Choose the Best Mutual Fund Schemes?
TwitterWhatsappLinkedin

choose best mutual fund schemes

You might also like

Apple in Early Talks to Acquire Perplexity AI, Its Largest Deal Yet

Eutelsat’s Shares Skyrocket as France Leads €1.35 Billion Investment in Satellite Future

Decade-Old Torrent Site Lands Greek Man in Prison Amid Renewed Piracy Crackdown

Are you thinking about investing in a mutual fund scheme? But aren’t sure which scheme is the most appropriate based on your goals? Don’t worry; you are not alone!

Finding the right fund amid hundreds of offers can be confounding. Any wrong choice will make you lose big money. So, how can you select the right mutual fund scheme and pass on the saying “Mutual Funds Sahi Hai” to your friends?

To achieve this objective, as an investor, you need to first identify your investment objective, the time horizon of investment and risk appetite. Having a fair idea of this will allow you to arrive at a mature investment plan.

Here are some must-remember parameters which will make the selection process more comfortable:

Know the risk-return trade-off

A good mutual fund is one which gives better returns than others for the same type of risk taken. If returns are not in proportion to the risks taken, it is not worth going for such a mutual fund scheme.

One of the indicators of risk-adjusted return is Sharpe ratio. This ratio is calculated by taking the excess return given by the fund over return given by a risk-free instrument divided by standard deviation.

Tip: Higher the Sharpe ratio, the better the risk-adjusted return is!

Research the fund’s performance

Gauge the returns given by the fund during different time periods and compare them with the benchmark index or other funds in the same category. Avoid funds whose returns are volatile, instead look for consistency and long track record.

Tip: For equity mutual funds, check three-five years performance, whereas for debt mutual funds check the returns over the short to medium term.

Look for portfolio diversification

Check the portfolio history of a particular scheme and see if the fund has been historically maintaining a well-diversified portfolio. Look at the monthly portfolio of a scheme on the fund house’s website.

Tip: Know if the scheme is providing adequate diversification across different asset classes, stocks, sectors in order to lower the risk level.

Know the Asset Under Management

Net assets of any scheme give a fair idea of the mutual fund scheme. You can cross-out mutual fund schemes with below average AUM. Less Asset Under Management in any scheme is very risky as you don’t know who the investors are. So, the exit of any big investor may impact the overall performance of such fund very badly.

Tip: Fund houses deploy their best fund managers for mutual fund schemes with high Asset Under Management.

Know the fund house

The fund house is responsible for managing our money and thus take us closer to our goals and secure our future. If the fund house fails in its objective, the money will be lost. Research the fund house with respect to its:

  • Investment approach
  • Types of schemes offered
  • If it is offering the same type of funds under different names

It also becomes essential to know all kinds of fees that you may face when purchasing a mutual fund scheme.

Tip: Although this information is available in the scheme information document, question either the fund house or its representative to get more detailed information.

Check the ‘Expense Ratio’

The expense ratio is the annual expenses incurred by the fund and is expressed in percentage of their average net asset. As the funds grow in size, the fixed costs associated with the fund get distributed amongst the investors, thus reducing the expenses.

Expense ratio drops till the asset reaches a certain threshold after which the expenses are typically stagnant.

Tip: To choose between two similar funds, check their expense ratio. Know that schemes with higher assets may have lower expense ratio than that of a small sized fund.

Conclusion:

If invested carefully, mutual funds are a great tool for long-term wealth creation and the saying “Mutual Funds Sahi Hai” remains true. However, it is vital to understand that investments in mutual funds are subjected to market risk. Timings play very crucial role in your returns, so study the scheme before investing.

Choosing the mutual fund may seem like a daunting task, but if you know your objectives and risk tolerance, then half the battle is won. If you analyse a particular scheme with the check-points mentioned above, you can minimise your risk by following a proper selection process.

The quote “Mutual Funds Sahi Hai”, will reap benefits when you do your research thoroughly. Happy Investing!

Tags: Asset ManagementinvestmentsMutual fundsPortfolio DiversificationROI
Tweet54SendShare15
Previous Post

Fintech startup Cash Suvidha raises $2.7 million in debt funding for expansion

Next Post

A VC Perspective – Technologies Driving Big Data Analytics

Dipti Gore

Recommended For You

Apple in Early Talks to Acquire Perplexity AI, Its Largest Deal Yet

by Thomas Babychan
June 21, 2025
0
Apple in Early Talks to Acquire Perplexity AI, Its Largest Deal Yet

In recent weeks, Apple has been engaged in private discussions about a potential acquisition of the AI search startup Perplexity, according to sources familiar with the matter. These...

Read more

Eutelsat’s Shares Skyrocket as France Leads €1.35 Billion Investment in Satellite Future

by Harikrishnan A
June 21, 2025
0
Eutelsat’s Shares Skyrocket as France Leads €1.35 Billion Investment in Satellite Future

Eutelsat, the European satellite company, made headlines this week as its stock surged an impressive 31% on Friday. The rally came right after the company announced it had...

Read more

Decade-Old Torrent Site Lands Greek Man in Prison Amid Renewed Piracy Crackdown

by Harikrishnan A
June 21, 2025
0
Decade-Old Torrent Site Lands Greek Man in Prison Amid Renewed Piracy Crackdown

In a courtroom in Piraeus, Greece, silence quickly turned to shock when three police officers stepped forward, handcuffed a 59-year-old man, and led him away. Moments earlier, the...

Read more
Next Post
A VC Perspective – Technologies Driving Big Data Analytics

A VC Perspective - Technologies Driving Big Data Analytics

Please login to join discussion

Techstory

Tech and Business News from around the world. Follow along for latest in the world of Tech, AI, Crypto, EVs, Business Personalities and more.
reach us at [email protected]

Advertise With Us

Reach out at - [email protected]

BROWSE BY TAG

#Crypto #howto 2024 acquisition AI amazon Apple bitcoin Business China cryptocurrency e-commerce electric vehicles Elon Musk Ethereum facebook flipkart funding Gaming Google India Instagram Investment ios iPhone IPO Market Markets Meta Microsoft News NFT samsung Social Media SpaceX startup startups tech technology Tesla TikTok trend trending twitter US

© 2024 Techstory.in

No Result
View All Result
  • News
  • Crypto
  • Gadgets
  • Memes
  • Gaming
  • Cars
  • AI
  • Startups
  • Markets
  • How to

© 2024 Techstory.in

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?