Mutual fund investments are a great way to increase wealth and achieve financial goals. They are investment vehicles that pool money from multiple investors to purchase a portfolio of securities such as stocks, bonds, or money market instruments. Mutual funds are managed by professional fund managers in the share market who make investment decisions on behalf of the investors, and you can invest in mutual funds online.
The Securities and Exchange Board of India (SEBI) regulate mutual fund investments and offer investors transparency and liquidity. Mutual funds in India can be a great option for investors who want to grow their wealth over the long term while minimising risk. However, it’s essential to monitor its performance regularly. It helps you decide whether to continue investing in the fund or to switch to a better-performing one.
Here’s how you can check your mutual fund India performance.
How to check mutual fund performance?
The best part about mutual funds is that you don’t need to track them as frequently as you might need while equity investing directly. However, it’s crucial to check the performance regularly for a healthy portfolio. Depending on your investment horizon, you must review it periodically. To do so, you can check the most commonly used methods.
- Check the Fund’s Benchmark
A benchmark is a standard against which you can compare your mutual fund’s performance. This metric depends on your mutual fund type. For example, if you have invested in an equity mutual fund, the benchmark could be BSE Sensex or NSE Nifty50. If you have invested in a debt mutual fund, the benchmark could be the CRISIL Composite Bond Fund Index.
Compare the fund returns with the benchmark. If the returns of your mutual fund are higher than the benchmark, it means that the fund has outperformed its benchmark. On the other hand, if the returns of your mutual fund are lower than the benchmark, it means that the mutual fund has underperformed its benchmark.
- Comparative Performance Analysis
It involves assessing other funds’ performance in the stock market that belong to the same category as the one in which you have invested. You can determine your mutual fund’s position by comparing these funds with yours. This comparison provides a general understanding of how other funds in the same category are performing, enabling you to evaluate your investments’ performance accordingly.
- Cyclical performance
Mutual funds that perform well during a bear market and quickly recover when the market begins to show signs of improvement are considered good. These funds demonstrate resilience and consistency in their performance and may not require frequent monitoring. In other words, their returns are stable and reliable, even during market downturns.
How to select a mutual fund?
Selecting a mutual fund requires careful consideration and research. Here are some general steps to follow:
- Define your investment goals and risk tolerance
- Assess your investment horizon
- Consider the fund’s investment style
- Evaluate the fund’s performance
- Review the fund’s fees and expenses
- Check the fund manager’s track record
- Review the fund’s holdings
By following these steps, you can invest in mutual funds online that align with your investment objectives, risk tolerance, and investment horizon. You can apply through various fund houses like the State Bank of India Mutual Fund, HDFC mutual fund, etc.
If you find underperforming funds while reviewing, consider the underlying factors and accordingly re-balance your portfolio if required. By monitoring your mutual fund’s performance and understanding the key metrics that impact fund performance, you can achieve your financial goals smoothly.
It’s important to remember that past performance does not guarantee future returns, and market fluctuations can impact your fund’s performance. Stay patient and maintain a long-term investment perspective while monitoring your fund’s performance.
