KNOWLEDGE CENTRE

Top things to consider when selecting a mutual fund
1

Goals

Knowing whether your goals are short-term (new bike or a vacation) or long-term (child’s wedding or retirement) enables you to pick a fund that can deliver within the required timeframe.

2

Diversification

Mutual funds offer investors an opportunity to invest in a range of assets: equity, bonds, cash or commodities like gold and precious metals. You could consider investing across a variety of stocks and sectors to reduce your risk as well as to increase your potential for rewards.

3

Past Performance

Although past performance of a fund is not an assurance of future performance, it nevertheless offers information about the fund’s capabilities, its consistency in delivering returns and the likelihood of a similar future performance.

4

Risk

Every fund offer document carries a ‘Riskometer’ that indicates what levels of risk a fund will take in order to achieve its objective. It’s important for an investor to consider whether he/she is willing to bear the risk and whether his/her current financial health, age and needs will permit that level of risk.

5

Fees and Expenses

All mutual funds charge investors a fee for managing the fund and other administrative expenses. This is expressed as the expense ratio in an offer document. The lower the fees charged by a mutual fund the higher the realized returns. Actively managed funds tend to charge a higher fee than passively managed funds (within the maximum fee directed by SEBI).

Mutual Fund investments are subject to market risks, please read all scheme related documents carefully.