Things To Keep In Mind While Choosing Good Mutual Fund

In the modern times it has become essential to move with the times and select modern methods of investment. The changed scenario across the globe makes investments in share markets seem a very wise option. However, due to the volatile nature of it, it is quite necessary that people select good mutual funds for investment. However, it is often seen that even now many people go for traditional investments which do not offer comparatively decent returns.

The selection of a mutual fund does not necessarily mean that it must be able to provide the best returns but also be able to deliver the maximum comparative returns given the risk profile which is acceptable. Thus, mutual funds for young investors or experienced individuals new to the segment must be done keeping the following in perspective:

•    The investor should at the outset be very clear and certain of the goals and objectives intended to be satisfied by the investments. In today’s scenario it is ideal to go for the best mutual funds for long term investment.
•    When selecting mutual funds one must not merely look at recent performances but also look at long term track records. One should perform peer as well as benchmark comparisons. Thus, a fund with ups and lows will not be as wise an option as one with mostly top quartile performances.

•    Mutual funds are a very safe option contrary to popular belief because the top mutual funds for long term investment or short term, are either open ended or close ended and tradable. Thus, one is never without an exit option.

•    One should also check the integrity of the sponsor or mutual fund promoters. The sponsors appoint trustees who in turn hire the AMC or asset management company. The three tier structure provides stability to the fund house. SEBI grants the permission only to people of credentials, yet it is advisable to do your own checks especially when opting for mutual funds for long term investment in India.

•    One should also make background checks in to the past track record of fund management teams since it is they who will select and design the portfolio for the corpus.

•    The fund management expenses have been restricted by SEBI with ceiling limits. It should ideally range about 1.9%. Hence, Investors who are investing in mutual funds for college in India, that is to pay for it, should along with all other types of investors keep track of the expense ratio.

Investors should also keep an eye on exit loads and tax implications when selecting mutual funds as investment options.

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