Mutual Fund Comparison is the process of comparing various mutual funds schemes and finding out the one that suits the best of an individual’s needs. Mutual funds are subject to market risk, so to avoid the loss of money, in that case, certain factors should be analyzed carefully before investing in any schemes. Some such factors are as follows:
1. Clients should analyze their needs first:
Before going through the schemes, clients should decide their needs first. It will help them to prune the lists of schemes in short. Clients can filter the schemes based on criterion such as the amount of returns, the time of investments etc. By doing so, they can browse through more potential schemes for themselves.
2. Clients should research about the fund house:
The money invested in mutual funds is invested by particular fund houses known as Asset Management Company or AMCs. These AMCs manage their investor’s funds through their own fund managers. Researching about the reputation of the AMCs can assure the clients about its authenticity. To get more effective data, clients are advised to go through a long-term evaluation of the fund houses.
3. Gain knowledge about the fund performance:
After verifying the AMC, the next thing the client should research about is how good the returns of those schemes are. Usually, the information of the same is available on the fund’s website. There are many Mutual Fund that believes in transparency, put all their information on the website for the ease of the clients. Clients should go through that carefully. Equity funds should be judged based on long-term data perspective usually of 3 to 5 years. Debt funds can be judged on a short or medium term data.
4. Gain knowledge about the fund manager:
The expertise of a fund manager is the key factor that makes the mutual fund investments successful. Before investing in the schemes, the history of the fund manager should be analyzed properly. A great fund manager holds the ability to convert the dead funds into high returning funds by his or her experience and performance.
Mutual Fund Comparison consist of various other aspects too other than the 4 mentioned above. But these criteria affect the mutual fund’s success the most and that is why these 4 points should be taken care of properly. If the comparison is done properly, it can fetch a great fortune to the investor.