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How to select a Right mutual fund ?

Since past few year's the over all awareness about Equity has grown considerably and more and more new investor's are now ready to get in to it. This is the reason why Since past 1 year more than 2 Cr + demat accounts were opened by Younge ( Beginner ) Investors . Its encouraging for the asset class . But , As always happens with any asset class , Some time the feeling of missing out pushes us to get in to it . At such time we don't bother about the facts . In any market conditions impulsive buying must be take care of .


Why in Equity managing it is little hard , because unlike any other asset you don't have that kind of news flows coming in from print , Tv , Social media the way equity does . It's transparency is the biggest thing which no other asset class has , Because of this you are often tempted to see the news , check the TV SHOWS and seek for guidance from Youtube .

If you wish to buy any home then there are very limited source of information available to you , so you don't get much idea about the real picture , But for Equity you can know what's happening in the world markets in just few clicks ..



Then how we can select Right Mutual funds ? well there is always answer to Question ..


When you first get into investing, you have to have a clear idea of what it is you want to accomplish. Most people have long term financial goals like saving for retirement or saving for a second home or maybe to put the kids through college. You also have a time frame. You have 20 years to make this money, or if you get into investing at a younger age, you could have 40 or 50 years to spend investing before your goal comes due. These are all vitally important questions that you need to have answered before you start investing. They will tell you what sort of fund to select for your portfolio. Here are a few general tips for selecting a fund that’s right for you.Why in Equity managing it is little hard , because unlike any other asset you don't have that kind of news flows coming in from print , Tv , Social media the way equity does . It's transparency is the biggest thing which no other asset class has , Because of this you are often tempted to see the news , check the TV SHOWS and seek for guidance from Youtube .


Firstly , Understand what kind of risk profile you have , If your friend , Colleague invest aggresively , or does Equity trading then it does not mean you should also have the same profile , Every one has different financial levels , comforts and mindset to tackle fluctuations in the equity investing . So decide what type of financial risk profile you have ,


Check -

How comfortable you are when you see portfolio down by 60 - 80 % .

How is your income flow - consistant / fluctuating / one time etc .

What assets you have as of now

What is your age etc


Once done , if your answer is aggresive Investor and your goal is to have the most growth to your capital that you can get, than an aggressive mutual fund with higher allocation to equity or an international mutual fund is for you. Every scheme has its defined set of structure to work on and you can know the same from their documents . In india As you must have heard there are 3 catagories of the stocks -


Large cap

Mid cap

Small cap


As the name suggest large cap - Means Big companies with good track record

Midcap are those who have decent track and small is the catagory of company where there are lot of variations in their financial performance


So Aggresive Equity funds may have combination of the above catagories or may be focused on any one of it , These kinds of mutual funds invest in stocks that are hot and have a great potential for hitting it big. The chance for your capital to increase is very high, but the risk involved in such scheme will depend on nature of the holding it has and Equity allocation percentage defined. As such Equity schemes are Recommended for long-term investors who have minimum 10- 15 yrs horizon . it can be investor specific but never think of investing in equity mutual fund for short duration like 1/2/3 ... yrs or so . The schemes which tend to allocate maximum part of funds in stocks will have chances to show aggresive returns in long Run .


If you feels to have moderate risk profile then - You still have the option to invest in Equity schemes which have mixed profile . These are funds / schemes which invest part of the funds in to Equity and other part in to Fix return instruments ( i .e debt ) where they get assured returns on their investment . So the scheme generates performance from Equity + Assured interests . These Schemes are called as Hybrid funds ( balance funds ) and gives you the benefit of beating inflations with decent returns on your investment . As they have Equity component they are suggested for Duration of atleast 7 - 10 Yrs period.



If you You find your profile as conservative investor then you have to ensure schemes which have limited to Zero Equity Exposure and Higher part of Assured return or debt instruments . The Time horizon of 3 - 7 yrs for such scheme are suggested , There are Exception to this ex. schemes like Liquid funds / overnight funds / Low duration funds etc can be selected based on their Average Holding period of the debt instruments . These are Debt Funds or Hybrid versions of debt funds . The main feature which you get in debt fund is of indexation . It offers benefit of it and you can reduce your tax liability using it . Even if it is debt fund , it can have Volatality in it's Nav ( Means Net Asset Value ) based on the events related to Economy , Monetary policy . Government decision or Company specific . The lesser the duration of the holding instrument in the scheme portfolio , the less volatile is the Nav of that scheme .



Pls remember that , Investing is like child growth , It starts slowly , gradually and later gets more developed . So if you are just starting Don't hurry to jump in to for faster results . Every thing needs Time to grow , This applies here as well . You can start as begginer investor , Then move to middle level investor and can reach to upgrade level .


yes ! its never ending thing to make mistake , learn to re learn


Selecting the right mutual fund for you is a very important decision. You must have a clear idea of your goals to make the right choice. Once you know your position, you can be well on your way to enjoying success in mutual fund investing.


Lastly ,we may not able to analyse our profile always correctly , or pick the right schemes , So what we can correct our mistake and do it again , or Look for Right help

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