Helping You Build Wealth With Honest Research
Since 1996. Read On...

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Revealed
India's Third Giant Leap

This Could be One of the Biggest Opportunities for Investors




Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.

AD

How to choose the best mutual funds?
Fri, 22 Aug Pre-Open

Mutual funds are supposed to make life easier for you, the equity investor, right?

In theory, that's what they are supposed to do. By taking away the job of actively choosing the right stocks for investment from investors who have neither the time nor the skills to do so.

Thus in the process enabling investors to invest in equities without the headaches involved.

But while they do help you sidestep the pains of stock picking, for the average investor, mutual fund picking ends up becoming a task no less arduous.

The numerous mutual funds houses, multiplied by the sheer number of mutual fund schemes offered by each mutual fund house, and you have a seemingly endless list of permutations and combinations.

So how does one choose the best mutual fund?

While we do not have an expertise in mutual funds, there are indeed a few common sense principles you can follow to help you along the way -

  1. Look at funds only from fund houses that are renowned names and have long track records. This could be a great initial filter to increase the probability that your funds will be managed in the right way.

  2. When looking at past performance, anything below 5 years could be completely meaningless. This is because in shorter time frames, even funds that do not have a sound process of picking stocks in place, could have a market beating performance. But as the flavor of the markets changes, longer term performance could be radically different.

  3. Invest in diversified funds rather than sector and theme based funds. If you do not have the expertise to pick stocks, there's no reason to assume that you will have the expertise to pick the right sectors to stake your money on.

  4. All else being equal, choose funds that have relatively lower expense ratios amongst the lot. The expense ratio is the amount of money the fund will charge you (as a percentage of the value of your funds) to manage your money.

  5. Do not invest all your money in one or two funds. Pick at least 5 funds carefully chosen with the above things in mind and spread your investment over these.
There is a lot more complexity and detail one could go into and keep track of as far as mutual funds are concerned.

However, if you are like the average investor, just like you do not have the time or expertise to do a detailed analysis for picking your own stocks, you will probably also not have the time or expertise to do a threadbare analysis of mutual funds. However the above principles will you hold you in good stead as broader guideposts to use while picking your equity mutual funds.

How do you choose the best mutual funds? Do share your views on the Equitymaster club.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "How to choose the best mutual funds?". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited).

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Research Private Limited (formerly Equitymaster Agora Research Private Limited) (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.