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So, when you are making a mutual fund investment, lay emphasis on consistent long-term outperformance against peers.Ĭompare the performance against Benchmark Returns: Every mutual fund scheme has a benchmark against which it tracks and evaluates its performance. Now, Axis Bluechip Fund has actually underperformed its peers in the last one year, but look at its 3-year and 5-year outperformance. The below table shows the peer comparison for Axis Bluechip Fund, one of the best large-cap funds in 2021.Īxis Bluechip Fund - Regular Plan - GrowthĪditya Birla Sun Life Frontline Equity Fund-Growth large-cap funds with mid or small-cap funds and arrive at a conclusion. You should not compare apples to oranges, i.e. But remember to keep the comparison fair. If it cannot beat its peers consistently, then the fund is not worth investing in. So, how do you analyse a fund's past performance? There are three ways to do this:Ĭompare performance against the peers within the same Category and Sub-category: This is your mutual fund's first test. This is because past performance is not necessarily indicative of how the fund will perform in the future. However, when you evaluate a fund's past performance, ensure that you do not give undue importance to this aspect when making mutual fund investments. This is because the equity markets are constantly evolving and changing. Note, we use the word set realistic expectations and not determine future returns. Studying a fund's past performance will help you set realistic expectations of its future performance. After all, the end goal of a mutual fund investment is to make money, i.e. Past Performance: This is the first thing investors look at while selecting mutual funds. The first criteria to select quality mutual funds is ' past performance'. Let us start with quantitative factors, i.e.
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How to Select Best Equity Mutual Funds - Quantitative & Qualitative Factors Behind Successful Mutual Fund Investment In this article, we will discuss in detail how you should select top equity funds for your portfolio. Well, it is time you said goodbye to your old ways of selecting mutual fund investments blindly. You need to perform both quantitative and qualitative analysis while selecting equity funds to build a truly winning and superior mutual fund portfolio. They are driven by market fundamentals and technical factors which change every day making selecting equity funds a tricky job. Is this fund really required in my portfolio?ĭoes this mutual fund investment match my risk profile, investment objective and time horizon?ĭoes this mutual fund investment fit in well with the asset allocation best suited for me?Ī lot of hard work and analysis goes into every successful mutual fund investment, especially equity mutual funds. Is this mutual fund scheme really unique? Ask yourself or your investment adviser/mutual fund distributor: How do you do this? By asking these questions every time you make a mutual fund investment. You must learn the nitty-gritty of mutual fund investments to be able to zero in on the best mutual fund if you want to create a winning equity mutual fund portfolio. Selecting a mutual fund is an art and science that is tough to learn but rewarding in the long run. They have different investment styles, strategies, objectives, risk-reward ratios, and investment costs that need closer examining. Contrary to popular opinion and what distributors would like you to believe, all mutual funds are not the same. Well, if your answer to any of the above questions is yes, then you are in for a surprise. What is your thought process behind picking a mutual fund from more than 2,500 schemes available? Do you base your mutual fund investment on the popular children's game "eenie meenie miney mo"? Or are you blinded by the star ratings given to mutual fund schemes?ĭo you make mutual fund investments based on hearsay or advice from your relatives, colleagues or train companions? Or do you believe that selecting a mutual fund is a no-brainer?Īfter all, they are managed by expert fund managers, so what is the point of managing something that is already managed by experts, some of you might say.
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10 Basic Tips To Pick Right Mutual Funds For Your Portfolio.The Complete Guide to Public Provident Fund (PPF) – Edition 2021.