• Quotes

  • NAVs

  • News

  • Messages

  • Opinions

  • Notices

  • Videos

Feedback
Make this your Home
Investing in Mutual Funds Understanding Mutual Funds Mutual Fund Investing Checklist MF FAQs
  You are here  :   easyMF    Learn    Investing in Mutual Funds
Investing in Mutual Funds
Expert Articles    

Step1

 Step2

 Step3
  
Selecting a mutual fund
What's strategy got to do with selecting a mutual fund? Shouldn't you just go and invest in the best performing fund? The answer is no. Mutual fund investing requires as much strategic input as any other investment option. But the advantage is that the strategy here is a natural extension of your asset allocation plan (use our Asset Allocator to understand what your optimum asset allocation plan should be, based on your personal risk profile). moneycontrol recommends the following process:
  Identify funds whose investment objectives match your asset allocation needs
Just as you would buy a computer that fits your needs and budget, you should choose a mutual fund that meets your risk tolerance (need) and your risk capacity (budget) levels (i.e. has similar investment objectives as your own). Typical investment objectives of mutual funds include fixed income or equity, general equity or sector-focused, high risk or low risk, blue-chips or turnarounds, long-term or short-term liquidity focus. You can use moneycontrol’s Find-A-Fund query module to find funds whose investment objectives match yours.
  Evaluate past performance, look for consistency
Although past performance is no guarantee for the future, it is a useful way of assessing how well or badly a fund has performed in comparison to its stated objectives and peer group. A good way to do this would be to identify the five best performing funds (within your selected investment objectives) over various periods, say 3 months, 6 months, one year, two years and three years. Shortlist funds that appear in the top 5 in each of these time horizons as they would have thus demonstrated their ability to be not only good but also, consistent performers. You can engage in such research through moneycontrol's Find-A-Fund query module.
  Diversify
Don't just zero in on one mutual fund (to avoid the risk of being overly dependent on any one fund). Pick two, preferably three mutual funds that would match your investment objective in each asset allocation category and spread your investment. We recommend a 60:40 split if you have shortlisted 2 funds and a 50:30:20 split if you have shortlisted 3 funds for investment.
  Consider Fund Costs
The cost of investing through a mutual fund is not insignificant and deserves due consideration, especially when it comes to fixed income funds. Management fees, annual expenses of the fund and sales loads can take away a significant portion of your returns. As a general rule, 1% towards management fees and 0.6% towards other annual expenses should be acceptable. Carefully examine load the fee a fund charges for getting in and out of the fund. Again, you can query on entry and exit loads under our Find-A-Fund query module.
In Step 3 we discuss Invest, monitor and review.
Print
 
Moneycontrol - Planning Desk RHS

Dekha Hai Maine Tumhe
It's The Time To Disco
Gunmaster G-9
Dard-E-Disco
Sara Zamana
Jimmy Jimmy Jimmy Aaja
Auva Auva Koi Yahan Nache
more disco songs
Stay on top of news
wherever you are
Follow news on a company or a topic
Set SMS alert
Newsletters

Daily Markets Newsletter

Sample   Subscribe Now

Daily Portfolio Update

  Subscribe Now

MF Newsletters

Sample   Subscribe Now

PF Newsletters

  Subscribe Now

Your Stocks
To SMS your queries to us Type YS < Your Query > SMS to 51818
Stocks to be discussed next:   ABG Shipyard |  Bajaj Hindustan |  Jaiprakash Asso |  JSW Steel |  Suzlon Energy |  Patni Computer |  Unitech 
  • Most Read
  • Most Watched
Chat with Experts
Steve Forbes

Editor-in-Chief , Forbes
(24 Nov- 18:30hrs) 

Upcoming Chat

Nov 25 | 04:00 PM
Ramesh Damani

Nov 30 | 12:00 PM
Hemant Luthra

Dec 01 | 11:00 AM
Harsh Mariwala

All Schedule  |  Previous Transcripts

What the stars foretell

Bejan Daruwalla

Ganeshaspeaks: Market prediction for Nov 23

View all astrologers