With over 40 mutual fund houses at their disposal, it is often difficult for investors to make the right choice while making MF investments. Worse, the abundant information in print, electronic and web media only adds to the confusion, far from resolving doubts. Hence we summarize below three key points to facilitate your choice-making process:
Yes "past performance is not a true indicator of future performance”, nevertheless an influential factor in choosing the right mutual fund house. Consistency of performance makes one more confident about the future prospects of the mutual fund. A careful study of the track record on different parameters will tell you about the fund’s vision, mission and values more than any third-party predictions.
One should look for the real rationale behind any scheme. Does it really aim to leverage on new opportunities or is it merely trying to cash in on the market sentiment. If a MF scheme launch has been timed to happen during a market upswing, you have good reason to probe the fund’s rationale in greater depth.
The fund manager(s) managing the schemes are its heart and soul. Do run through the profiles and learn about their academic and professional backgrounds. If a fund manager has made frequent switch-overs - from one fund house to another - you should be wary as these shifts can hugely impact fund performance.