Mutual funds: 7 essential factors that affect MF selection
mutual fund investment can be a challenging task, particularly when faced with a selection of over 1400 schemes. How do you go about making this decision? What criteria do you consider when determining which fund to invest in, the amount of money to allocate, the method of investment, and the duration for which you intend to keep your money invested in the fund? Examining past performance is merely one aspect to contemplate when making mutual fund investments.
Investing involves more than just concentrating on returns. Various factors come into play, such as the fund house’s sustained performance, its investment strategy, its approach to investing, and the rate of portfolio turnover aligned with economic cycles.
A thorough evaluation should take into account a wider array of factors, including: Sustained performance: The steadiness in performance serves as a crucial indicator of a mutual fund’s resilience and its capability to navigate diverse market conditions. A fund that consistently produces positive returns, even in the face of market downturns, showcases a strong investment strategy and a proficient management team.
Assessing a fund’s reliability involves examining its performance in various market conditions and over different time frames. A fund that has consistently exceeded its benchmark or peer group performance over an extended period, spanning both bullish and bearish market phases, is more likely to maintain a trend of producing favourable returns in the future.
Investment strategy: Understanding a fund’s investment strategy is essential for aligning your investment goals with the fund’s objectives. This includes gaining insights into the fund’s risk profile and potential returns through an understanding of
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