How To Choose The Best Mutual Fund

DIVYA NAIR

05 Oct 2016

best Mutual Funds

Since there are more than 40 AMCs in India that offer over 18,000 schemes, it is tough to choose the right fund. To make this selection easy for you, we have indicated some of the basic parameters below which may help you identify the winning mutual fund for you:

a). Invest in Mutual Funds Based On Your Risk Capacity -

The selection of mutual funds should not depend on whether a fund is good or not, but should depend on investor’s risk profile. Investors with a high-risk appetite can invest in multi-cap funds, mid-cap funds, global funds, sector funds, etc. These are high-risk mutual funds but may provide high returns if invested in the long run. Similarly, medium risk takers can invest in large cap funds, balanced funds, debt funds etc, while investors with low-risk capacity can invest in balanced funds and debt funds.

b). Mutual Fund Performance -

Check the mutual fund’s performance in the last 3,5,7 or 10 years period. Also, investors should do a relative comparison on performance of the selected fund with its peers.

Some Of The Best Performing Mutual Funds In The Last 5 Years:

Mutual Fund Scheme Name 3 Months 6 Months 1 Year 3 Years 5 Years Expense Ratio
Birla SL Equity Fund(G) 16.2% 27.2% 21.1% 31.1% 20.2% 2.3%
Birla SL Advantage Fund(G) 16.2% 29.1% 21.4% 32.9% 20.0% 2.4%
SBI BlueChip Fund-Reg(G) 8.2% 18.8% 16.7% 26.2% 19.8% 2.0%
Birla SL Frontline Equity Fund(G) 10.7% 20.7% 16.4% 23.3% 18.1% 2.2%
Birla SL Top 100 Fund(G) 9.8% 19.7% 14.3% 23.7% 18.0% 2.3%
Reliance Top 200 Fund(G)) 11.2% 20.4% 10.7% 24.4% 17.5% 2.1%
BNP Paribas Equity Fund(G) 7.2% 16.0% 9.2% 21.4% 17.3% 2.3%
ICICI Pru Top 100 Fund(G) 13.1% 22.3% 20.9% 20.3% 17.3% 2.4%
Reliance Growth Fund(G) 12.7% 25.4% 13.6% 28.3% 17.2% 2.0%
ICICI Pru Focused BlueChip Eq Fund(G) 10.4% 21.2% 14.8% 20.5% 16.2% 2.2%
Average 11.6% 22.1% 15.9% 25.2% 18.2% 2.2%

Have a Look At The Performance Of Birla SL Equity Fund (G) Vs S&P BSE 200 Over The Last 10 Years:

Mutual Fund Performance - Birla SL Equity Mutual Fund vs S&P BSE 200

c). Fund Manager’s History -

Fund manager plays an important role in the fund’s performance for he manages the fund and decides where all the investor’s money would be allocated. Investors must check the fund manager’s educational qualification, past experiences, number of schemes managed by him and performance of other schemes managed by the fund manager. Investors can also do a relative comparison of the returns of different types of schemes handled by him.

d).Expense Ratio -

Lower the expense ration, the better. Mutual fund schemes bear all the fund management and distribution related expenses. This means, high expense ratio will affect the fund’s returns. Lower expenses benefit investors in the longer term.

e). AUM -

AUM or asset under management is the total amount invested in particular scheme by all investors. This parameter is different for debt and equity schemes. In equity, the usual asset size is hundreds of crores. While in debt, the asset size stands at thousands of crores as the investment value per investor is higher. Investors should choose schemes that have higher AUM as that would minimize risks emerging out of any major negative market condition.

Conclusion:

There are many equity schemes available that have given over 20% annualized return over the past few years. If only you had invested regularly in any one of them, you could have made big money over the years. But as they say, its never late than never. Consider the above mentioned parameters to pick the best suitable fund for you and keep investing in them for long-term to reap the benefits.

Have Referral Code?

Similar Blogs

  • Responses
  • Patidar Samaj

    - 2 hrs ago

    This article claims RJio was given a "Backdoor Entry" into the 4G Based Voice Routing. The peculiar aspect is without the Voice License, Rjio would have been a mere ISP. With the license, it is now a holistic communications service provider, with ability to exponentially scale the bouquet of products. The events indicate it was meticulously planned way before the auctions because the auctions were clear on the agenda: 4G for internet only.

Load More

Banner

How To Choose The Best Mutual Fund

by Santosh Jayram | Oct 05, 2016
best Mutual Funds

Since there are more than 40 AMCs in India that offer over 18,000 schemes, it is tough to choose the right fund. To make this selection easy for you, we have indicated some of the basic parameters below which may help you identify the winning mutual fund for you:

a). Invest in Mutual Funds Based On Your Risk Capacity -

The selection of mutual funds should not depend on whether a fund is good or not, but should depend on investor’s risk profile. Investors with a high-risk appetite can invest in multi-cap funds, mid-cap funds, global funds, sector funds, etc. These are high-risk mutual funds but may provide high returns if invested in the long run. Similarly, medium risk takers can invest in large cap funds, balanced funds, debt funds etc, while investors with low-risk capacity can invest in balanced funds and debt funds.

b). Mutual Fund Performance -

Check the mutual fund’s performance in the last 3,5,7 or 10 years period. Also, investors should do a relative comparison on performance of the selected fund with its peers.

Some Of The Best Performing Mutual Funds In The Last 5 Years:

Mutual Fund Scheme Name 3 Months 6 Months 1 Year 3 Years 5 Years Expense Ratio
Birla SL Equity Fund(G) 16.2% 27.2% 21.1% 31.1% 20.2% 2.3%
Birla SL Advantage Fund(G) 16.2% 29.1% 21.4% 32.9% 20.0% 2.4%
SBI BlueChip Fund-Reg(G) 8.2% 18.8% 16.7% 26.2% 19.8% 2.0%
Birla SL Frontline Equity Fund(G) 10.7% 20.7% 16.4% 23.3% 18.1% 2.2%
Birla SL Top 100 Fund(G) 9.8% 19.7% 14.3% 23.7% 18.0% 2.3%
Reliance Top 200 Fund(G)) 11.2% 20.4% 10.7% 24.4% 17.5% 2.1%
BNP Paribas Equity Fund(G) 7.2% 16.0% 9.2% 21.4% 17.3% 2.3%
ICICI Pru Top 100 Fund(G) 13.1% 22.3% 20.9% 20.3% 17.3% 2.4%
Reliance Growth Fund(G) 12.7% 25.4% 13.6% 28.3% 17.2% 2.0%
ICICI Pru Focused BlueChip Eq Fund(G) 10.4% 21.2% 14.8% 20.5% 16.2% 2.2%
Average 11.6% 22.1% 15.9% 25.2% 18.2% 2.2%

Have a Look At The Performance Of Birla SL Equity Fund (G) Vs S&P BSE 200 Over The Last 10 Years:

Mutual Fund Performance - Birla SL Equity Mutual Fund vs S&P BSE 200

c). Fund Manager’s History -

Fund manager plays an important role in the fund’s performance for he manages the fund and decides where all the investor’s money would be allocated. Investors must check the fund manager’s educational qualification, past experiences, number of schemes managed by him and performance of other schemes managed by the fund manager. Investors can also do a relative comparison of the returns of different types of schemes handled by him.

d).Expense Ratio -

Lower the expense ration, the better. Mutual fund schemes bear all the fund management and distribution related expenses. This means, high expense ratio will affect the fund’s returns. Lower expenses benefit investors in the longer term.

e). AUM -

AUM or asset under management is the total amount invested in particular scheme by all investors. This parameter is different for debt and equity schemes. In equity, the usual asset size is hundreds of crores. While in debt, the asset size stands at thousands of crores as the investment value per investor is higher. Investors should choose schemes that have higher AUM as that would minimize risks emerging out of any major negative market condition.

Conclusion:

There are many equity schemes available that have given over 20% annualized return over the past few years. If only you had invested regularly in any one of them, you could have made big money over the years. But as they say, its never late than never. Consider the above mentioned parameters to pick the best suitable fund for you and keep investing in them for long-term to reap the benefits.

Leave a comment