How to Choose a Mutual Fund Scheme?
How to Choose a Mutual Fund Scheme?
Here some Parameters:
1. Ranking
2. Ratio analysis
3. Total expense ratio
4. Fund manager tenure and experience
5. Scheme asset size
Learn more about mutual funds
Advantages of Investing on Mutual Fund.
Professional Management – The primary advantage of funds (at least theoretically) is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investment.
Diversification – By owning shares in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of them can hurt you (think about Enron). Large mutual funds typically own hundreds of different stocks in many different industries. It wouldn’t be possible for an investor to build this kind of a portfolio with a small amount of money.
Economies of Scale – Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than you as an individual would pay.
Liquidity – Just like an individual stock, a mutual fund allows you to request that your shares be converted into cash at any time.
Simplicity – Buying a mutual fund is easy! Pretty well any bank has its own line of mutual funds, and the minimum investment is small. Most companies also have automatic purchase plans whereby as little as Rs 1000 can be invested on a monthly basis.
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