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How to Choose a Mutual Fund Scheme?


Individuals who are looking to invest in Mutual Fund schemes must read the offer documents completely to understand the product.


Mutual Fund scheme can be categorized based on the risk and tenure. Define your investment goal and risk appetite and select the funds based on that.

How to Choose a Mutual Fund Scheme?

One can select a fund type that best suit your need such as income schemes, liquid schemes, tax saving schemes, equity schemes etc.

One can look for these seven factors while choosing a Mutual Fund

1) Based on the past performance

Look at the past performance and compare with other schemes of the same Mutual fund. This will give you the idea on the performance managed by the fund managers.

However, experts say that past performance does not guarantee the future performance.

2) Debt Instruments

Apart from past performance, one should look at rating in the debt instruments. A scheme with good rating with high returns is better and safe instruments.

3) Equity Instruments

In case of equity, need to look at the portfolio and may seek expert advice in case of any difficulty.


4) Look for details

Most of the Mutual fund have their own site, one can look for detailed information. If not, one can find all the details on the AMFII site. Can also log in SEBI and choose mutual Fund tab.

5) NAV

Some of the investors have the tendency to prefer a scheme that is available at lower NAV compared to the one available at higher NAV.

Investors should know that lower or higher NAVs of similar type schemes of different mutual funds have no relevance.

What is Net Asset Value (NAV) of Mutual Funds?What is Net Asset Value (NAV) of Mutual Funds?

6) Asset Allocation

Asset allocation should be done based on the tenure, risk and investment objective. However, one can make changes in the asset allocation based on the market trend.

7) Other factors

Investors should choose a scheme based on its merit considering performance track record of the mutual fund, service standards, professional management, etc.

The price at which you can enter and exit the scheme and its impact on overall return.

Read more about: mutual fund nav asset allocation
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