Whenever you think of investing in the mutual funds, you must know more about it apart from knowing that they appear in the list of recommended mutual funds. Although some of the funds which fall in these lists are good, using them as the sole basis to select a mutual fund for your portfolio is a mistake indeed. There are several lists which feature the top-performing funds over different time horizons, but, in order to make the best choice for your own portfolio you need to make some extra efforts.
In the recent past, the mutual fund industry has gained a huge ground due to several advantages that it offers to the investors. There is a fund for every financial need; one just has to dig deeper to find the right plan for oneself. Let’s find the major traits of the recommended investment funds for a sound portfolio.
1. Low Expenses
There are some factors in an investment vehicle which are under your control while some are not. For example, you cannot control the movement of stock indices in the market, while you can easily check out the expense ratio and make a choice accordingly. Various market experts have observed that the impact of low expenses in a fund’s performance is of great importance. In all the categories of mutual funds, the ones having low-cost outperformed the market than those with a high-cost. However, there are some exceptions too.
2. Strong Fund Management
No matter how adequately you choose the fund for your portfolio, if the investing style of the fund manager doesn't match with your requirements, you can never attain the desired returns. The top mutual funds not only have expert fund managers but also a strong group of analysts who keep doing research of the stocks and other investment avenues to grab the best opportunities, and take adequate steps of rebalancing whenever required.
3. Consistency of Investment Process
It is a must to fully understand the costs and investment strategies of the mutual fund before investing in it. For an actively managed fund, look at the process followed by the manager. It is essential to understand the fund’s investment process along with the reasons that why this process is unique and presumable better than the others. If you can’t find the answer to the question “Why should I invest in this plan,” then you should probably not invest in it.
4. Strong Relative Performance
You must remember the fact that apples can be compared better with other apples only. This means that to find an exact result of the comparison; two identical things should be compared. In mutual funds as well, you must make comparisons between the funds falling in the same category so that you can make out the best one out of the various alternatives available in that class.
The recommended investments funds are the ones which possess all the qualities that an investor desires for in a scheme. However, it is a must to make the selection as per your specific requirement. If you are looking for a short-term plan, then investing in equities won’t wok for you. Hence, be well aware of the investment tactics before taking any decision for your portfolio. After all, it involves money matters!
There are portals like MySIPonline which provides assistance to the investors for making an online investment in the recommended funds. You must get associated with them to experience the best way of investing in India.
