Steps for choosing the right mutual fund scheme

  • Clarity of Objectives – Investors should be clear in their objectives – what they want to achieve from their investment is it income, liquidity, capital gain, tax saving or a combination of these.

  • Do not be Swayed by Peripherals – Investors should exercise their judgment based on a study of financial papers and periodicals instead of being guided by agents who may have a higher stake in a particular scheme due to the higher rates of commission.
  • Go through the Investment Mix Carefully – Investors should ensure that the fund portfolio consists of quality instruments and the composition is according to the fund’s objectives. This information can be derived from the quarterly and annual reports in the case of existing schemes and in case of a new issue, the proposed composition can be known from the prospectus.
  • Past Record is not always reliable but analyzing the previous Trend is important to understand and predict the future performance.
  • Know your Fund Managers -Investors should look for professional competence and expertise apart from experience in the composition of the asset management company of a mutual fund which has floated the scheme

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