Thread by @TradeNinvesting

Lot of people want to invest in #mutualfunds but there is always a question?
How to select the MF?

So, aa MF to invest in by reading Below🧵🧵..

#Thread

Like & Retweet if you found Value in Thread..🙌🙌

Factors for Selecting a Mutual Fund Category-

1. INVESTMENT OBJECTIVE

Refers to an investor’s #Financial goal which aims to accomplish with the MF Inv.
It can be any short or long-term financial aspiration of the #investors

#mutualfunds

2. TIME HORIZON

Refers to period which an investor wishes to keep #MONEY invested in a MF
It can be either short as 1 day or as long as more than 5 yrs
Different fund work best for different time horizons

#Investment #invest #mutualfunds

Because some funds invest in shorter dated debt & others invest in longer dated debt.
#equity funds should be chosen if the inv horizon is more than 5 yrs.

The market can be volatile in the short term but tends to provide higher earnings growth over time.

#StockMarket

3. RISK TOLERANCE

Refers to the amt of #risk an #investor is willing to take with money.
SEBI in 2015 made mandatory for all MF houses to display a riskometer which consists of 5 levels of risk associated with the invested principal amount.

#mutualfunds #Investment

Factors for Choosing Best #MutualFund Scheme-

1) PERFORMANCE AGAINST BENCHMARK

A benchmark of MF is standard against which its performance & stock allocation are compared.
The benchmark index guide the investment philosophy of the scheme.

#investment

Thus asset allocation of a benchmark index should match the Inv objective of the scheme.
For instance the benchmark index of a large cap #MutualFund should be an index of large cap stocks & the benchmark of a MF focused on banking #stocks should be a banking index.

2) PERFORMANCE AGAINST CATEGORY

Another factor important while selecting a MF is its performance in comparison to its peer group
This helps in getting understanding of the fund’s performance
Comparison should only be among the same type of #mutualfunds schemes

3) CONSISTENCY OF PERFORMANCE

A good MF is one which is able to generate good returns for investors consistently over a period of time & not just whirlwind #Return
The fund should be capable of providing consistent returns in both bullish & bearish periods of the #StockMarket

4) FUND MANAGER EXPERIENCE

Important factor to considered while selecting a MF is performance of its #fund manager & how long he has been at its helm
For this #investor should look at the manager’s experience with the fund in question & with other funds currently managed

5) AMC TRACK RECORD

AMC is company which manages a #mutualfunds scheme.

Many decisions are made at AMC level by the CIO of the AMC.
A poorly selected stock is present in several schemes owned by AMC because the selection has been made at AMC level.

#stocks

Thus, it is important to check the track record of an AMC while selecting a #mutualfunds scheme.

6) Scheme’s AUM

AUM of a #mutualfunds scheme refers to value of assets
In other words, it simply means how many subscriptions the scheme has received.
In the equity category, especially in small cap funds, a large AUM can make it hard for the fund to enter and exit companies.

On the other hand, larger sizes of AUM is favourable in case of liquid and short term debt funds as it makes the fund less vulnerable to redemptions made by large #investors .

7) Expense Ratio

The expense ratio of a fund reflects the fee charged by a AMC for the administration, management, promotion and distribution of a MF.

#mutualfunds #stocks

All expenses incurred in the running of the fund are included in this figure. This figure is capped at 2.25% of the total #fund assets by capital markets regulator #Sebi .

Direct plans of #mutualfunds schemes have lower expense ratio than the regular plans because no distribution commission is paid in the case of direct plans.
In general, lower the expense ratio, the higher are the net returns of a MF scheme.

#stocks #Investment

Here is the list of top 10 schemes:

Credits- newsharemarket.com