How to select Mutual funds

How to choose Best Mutual Fund Scheme

First , we need to identify our investment goal , time duration for goal and risk appetite  .Now , we need to baseline our factors to choose the best mutual fund:

1) Check performance Against Benchmark. For instance, the benchmark index of a large cap mutual fund should be an index of large cap stocks and the benchmark of a mutual fund focussed on banking stocks should be a banking index.SEBI has also mandated that mutual funds use the Total Returns Index (TRI) variant of indices as their benchmarks.

2) Category performance : Compare this MF performance in comparison to its active peer group. For instance, a large cap equity mutual fund can only be compared with other large cap mutual funds and not against mid cap funds or debt funds.

3) Rolling returns  :Consistency of Performance : It provides the accurate and transparent performance of mutual funds over a specific period. With this, you get to choose the mutual fund to invest your money in based on its performance and consistency.

4) Fund Manager’s Experience:An investor should look at the fund manager’s experience with the fund in question and with other funds currently managed or managed in the past by him/her.

5) AMC Track Record & Scheme AUM :It is important to check the track record of an AMC while selecting a mutual fund scheme. When it comes to equity funds, AUM is not an important factor to be considered. What is more important is the consistent performance of the fund across market cycles and the ability of the fund manager to deliver good returns despite varying AUM

7) Expense Ratio : Always prefer Direct plans of mutual fund schemes have lower expense ratio than the regular plans because no distribution commission is paid in the case of direct plans. In general, lower the expense ratio, the higher are the net returns of a mutual fund scheme.