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Key Criteria for Evaluating Mutual Funds: A Comprehensive Comparison Guide

How do you choose what to wear? You would choose based on factors like brand, fit, price, etc. How much more effort should one put in when it comes to making decisions about our investments if choosing an outfit requires such a lot of effort? It is crucial that you keep an eye on your assets so that you can make wise selections.

Let’s examine the factors to consider before investing in Indian mutual funds.

Risk profile: When making an investment, it is important to understand your risk tolerance and how you plan to achieve your financial objectives. Bear in mind that an investor’s income from mutual fund returns is taxable in India.

Consider investing in a hybrid fund if you like diversified investments. Consider investing in a debt fund if you’re seeking for a quick investment. But if you want to develop your wealth over the long term and are ready to face risks, you might want to think about investing in stocks.

Comparing mutual fund returns

Although past performance does not predict future mutual fund returns, consistency metrics should be used to assess a mutual fund’s performance in order to identify the type of fund.

The fund factsheet allows you to compare a mutual fund’s performance to its benchmark.

Finding a plan involves looking at the fund’s quartile ranking.

The top quartile of mutual fund returns for a given time is reserved for funds with the highest returns, while the bottom quartile is reserved for funds with the lowest returns. A fund is outperforming its peers if it has consistently placed in the top quartile for 4-6 quarters.

The amount of expected mutual fund returns for particular investing periods can be calculated using an investment return calculator.

Allocation of a portfolio

Examine where and how much each mutual fund invests in each asset, industry, and stock when comparing them to determine whether they are sufficiently diversified. Examine the fund’s portfolio to help with this.

Spending Ratio

The expenditure ratio of a scheme is another metric to evaluate mutual funds. Companies that manage your investments charge asset management fees. Given that the expenditure ratio is taken into account, this has an impact on the performance or mutual fund returns offered by a fund. You can think about selecting investments with a reduced expenditure ratio while keeping all other factors the same. Before redeeming the scheme, you should research the exit load assessed on it.

You are now prepared to comprehend “what” and “how to” compare mutual funds. An investment returns calculator aids you in your financial planning if you are a prospective investor by basing it on the projected investment returns.

If you are still unsure, talk to an AMC or seek the advice of a financial professional to help you create the ideal mutual fund portfolio.

Disclaimer: The opinions presented in this article or video are for informational purposes only and are not intended to serve as suggestions or recommendations for the reader to follow. No indicative yield on investments placed in the scheme is guaranteed, offered, or communicated by Quantum AMC or Quantum Mutual Fund (s). The opinions are not intended as investment advice, professional guidance, or as a recommendation that the reader buy or sell any particular financial instrument, product, or mutual fund unit. The article and video were created using publicly accessible data, internally generated information, and other sources that were considered reputable. Although no action has been requested based on this information, due care has been taken to ensure that the facts are correct and the opinions expressed are fair and reasonable as of the date. Before making any investments, readers of the article or video are urged to rely on facts and data gleaned from their own research, seek independent professional counsel, and make an educated decision. None of the Quantum Advisors, Quantum AMC, Quantum Trustee, or Quantum Mutual Fund, their Affiliates, or Representative shall have any liability for any direct, indirect, special, incidental, consequential, punitive, or exemplary losses or damages, including lost profits, resulting in any way from any action taken in reliance on the data, information, or opinions contained in the Article or video.

Investments in mutual funds are exposed to market risks; thoroughly read all papers pertaining to the scheme.