How to Select the Best Performing Mutual Funds

1. How to Select the Best Performing Mutual Funds It is general perception of any person to conduct research before selecting the best investment options. It is so because the individual wants to be assured about the genuineness of the investments that he will be making. Mutual funds are most sought after investment and selecting the best one is not a cake walk affair.

2. In fact cornering the Best Performing Mutual Fund is like selecting the right life partner. Any wrong decision can wipe out personal wealth. Also volatility of the performance of mutual funds makes the things more difficult. Some people select mutual fund on the basis of their rankings while other select on the basis of the returns they offer.

3. 1. Investment Objective: • One should understand the investment objective as why we are investing and this objective may be long term, short term or linked to any events like wedding etc. Based on this objective the risk factor can be decided. In other words, how much risk one can take with the investments.

4. 2. Outlook for Economy: • Based on outlook for the economy in future, one can select sub class of mutual fund. This step is purely judgmental based on current situation as no one can predict the scenario accurately. One should just listen to the mind before making any assumption in this step.

5. 3. Rankings: • Mutual Funds India are listed as per certain ranks in tune to their performance. Normally mutual funds are ranked on various factors with highest weightage to returns, so the best method is to pick the top 2 ranking mutual funds that your trust the most and then select mutual funds within shortlisted sub class that have 5 star or 4 star and pick the common between the two; which is your final listings on ranking front.

6. 4. Asset Under Management: • Net assets of any fund provides fair idea of the confidence level of the investors in mutual fund scheme and this trust is build over the time period. Also the fund houses deploy best fund managers for best schemes with high Asset under management (AUM). So based on this aspect, you can drop mutual fund schemes with below average AUM in particular mutual fund sub class. 

7. 5. Exit Load: • It is vital to check exit load of mutual fund scheme as one might require money before investment horizon. It is advisable to drop schemes that has stringent exit load from the shortlisted ones and that do not suit your requirements. It is best to retain the schemes with minimum exit loads requirements.

8. 6. Consistent performance: • For ranking of mutual funds or for any analysis, one Year return of any mutual fund is taken into account. It is advisable to check the consistency in the performance and for that one should check 3 year and 5 year returns of the scheme so that one gets the clear picture if the mutual fund scheme is consistent in performance or not?

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