Created on 16 Feb 2019

Wraps up in 2 Min

Read by 3.2k people

Updated on 24 Feb 2021

This special report has certain aspects of mutual funds that the mainstream media won’t tell you.

Here are the key things that you need to know.

  • Ensure that the fund you’re buying has a low turnover. High turnover literally means that the fund manager is trading with your money (trust me, you don’t want that).
  • Choose the AMC carefully, one that has the track record of managing most of its schemes successfully.
  • Ensure that your fund has a Good and Stable fund manager. If the fund manager of your scheme changes frequently, avoid that fund.
  • Look for funds with a lower expense ratio (less than 1.25% for direct plans is desirable) Remember, higher the expense ratio, lower the return.
  • Ensure that your fund is not a bull market wonder. Check that it has a good long-term track record of market beating performance, even during market crashes. Avoid the temptation to buy only because of recent performance.
  • Pay attention to the amount of diversification. Sometimes, fund managers tend to overdo it. Avoid funds with more than 50 stocks in their portfolio.
  • Check the track record of the AMC, if the AMC has 20 schemes, and only 2 of those are performing well, ignore that AMC. The 2 funds just got lucky.
  • Don’t Buy Regular Plans. They give lesser returns(due to higher commissions) and makes your adviser rich, not you.
  • Check the Price to Earnings Ratio of the Scheme. Lower P/E indicates the value investing style that has historically given better returns
  • If you’re buying a Small cap fund, (those are highly risky though) you should invest in a fund with the lower AUM. Small cap funds with a larger AUM find it harder to invest in the companies they actually want, due to lack of liquidity in those companies.
  • Avoid sector funds and Micro Cap funds. They might offer you slightly better returns in good times but can cause havoc to your portfolio during bad times.
  • Don’t hold more than 5 schemes, their underlying holdings may overlap and you don’t get any diversification benefit.
  • Don’t blindly trust your Agent. Some Distributors simply recommend you the fund in which they earn the highest Commission.

All the above-mentioned details about a fund can be found on ! That’s our favorite website to research good mutual fund schemes.

To get the research backed and unbiased mutual fund advise click here

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Ayushi Upadhyay

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A Keen Learner. Tiny, brainy, and studious, this quiet one stays in her zone until she pops. And once she does, boy, are her comebacks snappy! There is no financial question that she can't answer through her magical blog-writing. 

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