Feb 06, 2017 3 min read

How to Select the Best Mutual Funds in India?

By reading this blog you will come to know how you can select the best mutual fund plan for your portfolio in the right way.
Are you planning to buy mutual fund schemes in India, but aren’t sure which fund to opt for? Well, you are not alone, many of our clients have the same query from us. We have been trying to help and advice investors for taking a better decision for a long time. Here, in this blog, you will find some basic parameters which would assist you in buying the best mutual funds in India.

Which Mutual Funds are the Best?

Well, for you to start making a choice among the top-performing schemes, you first need to know exactly which funds are the best-performing. Everyone considers the scheme with highest returns to be the best one for investment offered by best performing mutual funds in India. By evaluating the latest returns of the schemes, people select them for their portfolio and then fail to earn better returns.

There are some investors who consider the star ratings given by the research agency to select the funds. But you need to understand that star rating and returns are some of the parameters which can be considered for making a better choice. To select the right fund for your financial goals, the following are the basis on which you can make a better choice.

1. Ratio Analysis:- The Sharpe index ratio, standard deviation, Alpha and beta are some of the major measures that need to be calculated while selecting the funds. Where standard deviation gives a gross idea about the chances of variation in the returns from the expected profits, Alpha tells us what excess or less the fund managers has generated in the scheme in comparison to the benchmark. In this way, you can easily evaluate the risk and return proportions of the scheme to be selected.

2. Total Expenses: - Every scheme has some costs or expenses, which are related to the management, distribution or selling of the scheme. Higher the expense ratio, less are the returns or profits. Thus, one must buy the scheme with high expense ratio unless he/she gets extraordinary returns or benefits on such fund.

3. Ranking & Rating:- Performance is one of the basis on which a scheme is selected. The mutual funds that you are going to buy have to be considered after taking a review over its ranking and rating in the industry in comparison with its peers. For that, investors must take a look at the rank or rate held by the scheme on a quarterly basis. You must compare the funds with their peers in terms of ranking and returns in the long term.

4.Fund Manager’s Experience:- It is quite important for every investor to make sure that the mutual fund investment plan which he/she has selected is managed by an expert. Our money is ultimately managed by the fund managers, and thus it is important to know the experience, knowledge and tenure of the manager who is taking care of the scheme’s performance.

5. AUM of the Scheme:- This parameter works differently in debt and equity mutual funds. The AUM amounting hundreds of crore can be considered in equity mutual funds, but for debt funds, it has to be in the range of thousands of crore. The reason being is that in debt investment the value per investor is large in number. Less AUM is sometimes riskier as you don’t know who are the investors and what quantum they have invested. This way, there are chances of losing money. But if the scheme is new, then this parameter has to be considered accordingly.

Accordingly, while selecting the best mutual fund schemes in India, you need to confirm on the above-mentioned parameters. By following them, it would be easier for you to select the right fund to achieve your financial goals.

MySIPonline is providing the online services of mutual fund investments to the investors, and we have a professional team of fund analysts as well. You must take our financial advisory services to make your investment fruitful. They will assist you in making higher profits for achieving your financial goals over time.