How to choose the right mutual fund scheme?

Subscribe to GoodReturns
For Quick Alerts
Subscribe Now  
For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts
     How to choose the right mutual fund scheme?
    Choosing the right mutual fund scheme can always be a tricky affair. With so many mutual funds and so many schemes under each mutual fund, it's a herculean effort to pick the right one. Here are a few tips that could help you along the way.
     

    According to your risk appetite select a debt or equity fund

    First, begin by studying your risk appetite. If you have a penchant for risk, the advice would be to go in for a equity dedicated funds. These funds park bulk of the corpus into equities, which means you can end up with poor returns or superlative returns.

    Those with a lesser risk appetite could look at debt dedicated schemes which park their money in government securities or corporate debt. These debt dedicated schemes almost always offer you steady returns.

    If you want monthly income, it's best to go with monthly income plans that invest maximum of their total corpus in debt instruments.


    Choose the mutual fund

    Study the various mutual funds and go along with those that have a good track record.

    Study the track record of the fund manager

    There are some fund managers that have been managing the scheme since long and have a proven track record. If you have doubts do some research and get more information

    Study the portfolio of a scheme

    It is also good to study the portfolio of a scheme. If you find that the portfolio has stocks that are laggards and are unlikely to move up because of the dismal nature of the industry, avoid the scheme.

    Do not pay a high NAV

    If you feel that the stocks in the portfolio have already appreciated and you are paying a high net asset value (NAV), avoid the scheme. The NAV may have peaked and you could be buying into a scheme at the highest NAV.

     

    Check the past performance

    Though, past performance is no indication of future performance, it will more or less allows you to get a broad indication of the scheme.


    GoodReturns.in

    Read more about: mutual funds
    Story first published: Saturday, February 16, 2013, 9:39 [IST]
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more