Skip to main content

How to choose a mutual fund ?

Invest Mutual Funds Online

Download Mutual Fund Application Forms

Step One

Begin by selecting the best asset class allocation for your personal situation. Then decide which investments fit into your allocation strategy.

Step Two

Place each fund into an asset class category. You may need to do some research. Fund prospectuses and proprietary websites are a good place to start.

Major categories include:

(1) International funds,

 (2) large-cap funds,

(3) small- and mid-cap funds,

(4) Bond funds,

(5) cash-equivalent funds, and possibly

(6) Real estate funds.

Step Three Assess fund quality. You're not just looking at returns (historical or recent). Here are four criteria for determining quality:

 

  1. Relative performance: Be sure you're comparing apples with apples and not with oranges. Compare a fund's historical and recent performance with those of similar funds from the same asset class. Make comparisons from different time periods, and also note the performance of indexes tracking the asset class during the same timeframe.
  2. Performance consistency: Looking at a fund's average yearly return. Look at how a fund did during bull markets and bear markets. For retirement investing, it's preferable to select mutual funds with good performance year after year rather than short bursts of superior performance combined with periods of sub-par returns.
  3. Manager tenure: Performance and returns are more important if they're associated with a fund manager or management team. A new fund manager at an existing mutual fund might enable continued consistency--or maybe not. Have you ever been to a restaurant under new management? Sometimes it's the same. Sometimes it's different but still good. Sometimes it's improved . . . and sometimes it's worse.
  4. Manager tenure: Performance and returns are more important if they're associated with a fund manager or management team. A new fund manager at an existing mutual fund might enable continued consistency--or maybe not. Have you ever been to a restaurant under new management? Sometimes it's the same. Sometimes it's different but still good. Sometimes it's improved . . . and sometimes it's worse.

4) Risk measures: Risk-based criteria help evaluate how funds perform, given the risks each fund takes. For example, assume fund A has historically produced greater performance during periods of market gains compared with fund B, but the performance has been at the expense of big risks. You can find risk-related statistics on many financial websites--or you can call the fund company

Next Step Research fund fees.

If you're examining net returns, fees are already factored into the research you've done. However, everything you're researching is in the past. Since you want to choose the best fund for the future, lower fees are preferable when other fund characteristics are relatively equal.

Step Four Determine asset size

When mutual funds grow past a certain point, in terms of assets under management, it generally becomes more difficult for fund managers to stay true to the funds' investing philosophies. Where is that "certain point"? There isn't one answer, but many funds close to new investors when managers believe they've reached it. But some funds don't ever close. They're industry behemoths that may be very successful but lack the agility to manoeuvre quickly in a changing market; and fund managers find it more difficult to purchase some investments that may be integral to a fund's philosophy. The effect of asset size depends heavily on asset class, so judge size relative to other funds in the same category, with a preference for funds that have more manageable levels.

Once you've selected the best funds from each asset class, you can follow your allocation strategy to decide what percentage of your investable dollars should go toward each fund. It takes some work to create a good portfolio just for your needs. Don't get discouraged. If you need help, look for a fee-only adviser to guide you toward the best investments for you

------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Popular posts from this blog

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...
Read more

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...
Read more

Capital Protection Oriented Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...
Read more

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...
Read more

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now