Tips For Choosing The Top Mutual Fund Companies
Planning for retirement is a difficult job for most people, considering the amount of money they would need to take care of themselves during old age. Things can appear to be even more challenging considering the ever-increasing cost of healthcare. Choosing the right mutual fund companies can however help you save a significant amount of money in the long-term even with small but regular investments.
There is a misconception that the simplest way to choose a fund is to look for the award winning mutual funds. According to experts, it is not the awards that matter, it is the method used for choosing the winners that matters. Usually, a rating firm would elaborate the criteria for choosing the winners. This could include the overall returns, the risk adjusted returns and capital safety. All these factors are crucial and they matter for each type of fund. In addition, all these factors have different levels of importance for different types of investors.
Next, you should evaluate the performance of the fund portfolio. This needs to be done on a regular basis keeping in view a number of factors. Firstly, you must look for the long-term track record and not the short-term record. This is crucial because the long-term performance can tell a lot more about the funds beyond the short-term performance. In addition, the long-term record can compensate for the investment style of a fund manager.
The next factor is to assess the track record of the fund against other similar funds. In simple terms, there is a difference in successfully managing a small and large fund.
The ideal mutual fund provides diversification across a multitude of asset classes, sectors and stocks. It has lower amount of risk as compared to a portfolio that is based on a specific stock, sector or asset class. it is possible to check the history of a fund and see if it has been maintaining a diversified portfolio or not.
This could be done by checking the monthly portfolio on the fund managers website. In addition, there are many fund trackers that can provide portfolio details of the top mutual funds in india.
You should also consider the charges, fees and the net returns from the funds you are planning to invest in. Every mutual fund manager is going to charge a certain fee against the services they provide. Look for the information under Expense Ratio and Exit Load because they indicate the fees to be charged on your investments.
Before making the investment, it is important to find out the timeframe until which the exit load would be charged. It must not be more than or equal to the time period for which you are making the investment. And such only the mutual funds best performing in the country can offer these services.
There is a misconception that the simplest way to choose a fund is to look for the award winning mutual funds. According to experts, it is not the awards that matter, it is the method used for choosing the winners that matters. Usually, a rating firm would elaborate the criteria for choosing the winners. This could include the overall returns, the risk adjusted returns and capital safety. All these factors are crucial and they matter for each type of fund. In addition, all these factors have different levels of importance for different types of investors.
Next, you should evaluate the performance of the fund portfolio. This needs to be done on a regular basis keeping in view a number of factors. Firstly, you must look for the long-term track record and not the short-term record. This is crucial because the long-term performance can tell a lot more about the funds beyond the short-term performance. In addition, the long-term record can compensate for the investment style of a fund manager.
The next factor is to assess the track record of the fund against other similar funds. In simple terms, there is a difference in successfully managing a small and large fund.
The ideal mutual fund provides diversification across a multitude of asset classes, sectors and stocks. It has lower amount of risk as compared to a portfolio that is based on a specific stock, sector or asset class. it is possible to check the history of a fund and see if it has been maintaining a diversified portfolio or not.
This could be done by checking the monthly portfolio on the fund managers website. In addition, there are many fund trackers that can provide portfolio details of the top mutual funds in india.
You should also consider the charges, fees and the net returns from the funds you are planning to invest in. Every mutual fund manager is going to charge a certain fee against the services they provide. Look for the information under Expense Ratio and Exit Load because they indicate the fees to be charged on your investments.
Before making the investment, it is important to find out the timeframe until which the exit load would be charged. It must not be more than or equal to the time period for which you are making the investment. And such only the mutual funds best performing in the country can offer these services.
Source...