Mutual funds’ diversification and high returns have made them a popular option among modern investors. Nonetheless, it is important to keep in mind as an investor that no single plan or even combination of schemes is right for everyone. An investor’s investing goals and comfort level with risk are two key considerations when choosing a sundaram mutual fund scheme.
Choosing a mutual fund involves two steps: settling on a broad category and then narrowing in on a specific plan within that group. Here are some things for an investor to think about before choosing a mutual fund:
- How To Pick the Right Mutual Funds
Once an appropriate mutual fund category has been determined based on investment goals, a time horizon, and a comfort level with risk, the investor can then select a specific mutual fund scheme within that category using the following criteria:
1. Results About the Standard –
When analysing the performance of a mutual fund to determine whether or not the fund was successful, it is helpful to have a benchmark index to compare the fund’s performance to. The investment strategy of the programme uses the benchmark index as its primary point of reference. Therefore, the asset allocation of a benchmark index has to be in line with the investment goal of the plan in order to be considered valid. For instance, a large-cap mutual fund’s benchmark index should consist of other large-cap companies, while a banking-focused mutual fund’s benchmark index should consist of other banking stocks.
The Total Returns Index (TRI) subset of indices is required as a benchmark for mutual funds by SEBI. For TRIs to function, dividends must be reinvestment in the sundaram midcap fund immediately upon declaration. This factor takes into consideration the fact that corporations occasionally issue dividends. Consequently, these Price Indices serve as superior standards (PI).
2. Category Performance –
The mutual fund scheme’s performance relative to its active peer group is another consideration of equal weight. As a result, you can learn more about the fund’s overall performance. Only mutual fund schemes that are similar in terms of investment strategy type should be compared. A large-cap equity mutual fund, for instance, can be compared only to other large-cap equity mutual funds, and not to mid-cap or debt mutual funds.
3. Dependability In Outcomes –
A solid mutual fund provides stable returns for its investors over time as opposed to short-term gains. The fund should generate returns reliably during both market upswings and downturns.
4. The Background of The Fund Manager –
An investor can do this by researching the manager’s track record with the fund in issue as well as other funds he or she is presently managing or has previously managed.
- ConclusionÂ
A mutual fund scheme is managed by an Asset Management Company (AMC), often called a fund house. The HDFC Equity, HDFC Top 100, and HDFC Small Cap Funds are all managed by the HDFC Mutual Fund, which is an AMC. The AMC’s Chief Investment Officer (CIO) makes several important decisions on the institutional level. Due to the centralization of stock selection at the AMC level, a single badly chosen stock may end up in multiple schemes held by the same AMC. When choosing a mutual fund plan, it is crucial to research AMC’s performance history.
