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How to choose a mutual fund

Investors are on the looking out for sizable returns with due consideration on their capital appreciation. Stock market provides fast track returns, but not everyone is comfortable with an idea to invest in stock markets due to the risk appetite and vibrant nature. Fixed income returns are there that provides sizeable returns but the pace of return might not be on the expected lines. Going through the mutual fund blog would combine the best of risk and returns. In modern times there are plenty of mutual funds in the market and instead of investing blindly doing conduct a proper research at your end in the choice of mutual funds. Let us observe the points to keep in mind while investing in mutual funds

The financial goals have to be spot on

Are you funding your car or planning to finance the education of your kid? Till you are clear on your financial goals it would be difficult to outline an investment horizon and formulate a mutual fund. If you are able to set financial goals it can help for better risk profiling. This would outline whether you are an aggressive or a cautious investor. In case if you are adverse to risk then a debt instrument  would be much better than equity based fund. But if your investment horizon is more than 5 years then equity based fund would suit you on all counts.

Clearly outline the reputation of the fund house and even the fund manager in question

Though the returns of any mutual fund is dependent on the movements of the market, an experienced fund house and a reliable fund manager can make a hell of a difference in times of distress. For this reason the big fund houses have been in this line of business with a reliable client base. The experienced fund managers would be able to interpret the loses and allocate funds in a proper manner across various channels. If the company is well established there are going to have standard process in place with a proper investment support with smooth processing of transactions.

Give equal consideration on who is your fund manager and find out more about their track record. Their decision is going to have a considerable impact on your investment portfolio.

Each mutual fund does have its own character tics that might differentiate it from others. Do compare the various schemes in order to evaluate the performance. Do study the past record of the mutual fund schemes; how it has gone on to perform during 3 and 5 year cycles. The key point to consider here is whether it has been performing on a consistent basis as compared to the peers. The quartile ranking of the fund is a vital component here which clearly specifies whether the fund has a higher ranking or not. Opt for funds that are ranked consistently in the higher quartile. On the websites of various fund houses these rankings are available and even the research organizations.

 

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