Tips for Choosing the Right Mutual Fund Company

by Mutualfund Advisor Mutual Fund Advisor

More and more investors are resorting to mutual funds because of security, diversification, convenience and lower costs. Another reason investors choose mutual fund is to provide the equity portion to their portfolio instead of going for individual shares.

Every individual’s foremost priority is to save and invest for future financial security. For many investors, very hectic lifestyle and lack of information becomes the hindrance in selecting the right investment product. For such people good Mutual Fund Companies provide skilled investment management at reasonable price.

However one should appoint an experienced Mutual Fund Distributor; who may guide in selecting the best mutual funds that provide good and secure returns. Here are few tips for selecting right mutual fund company:

1. Identifying Good fund Houses: Before cornering into a scheme of the choice, it is advisable to choose the fund houses; that one has got enough faith to invest the money. Try and locate the fund houses that have robust and good presence within the financial acumen and provide funds that have a long and consistent track record.

2. Goal Oriented Investment: Go for investments that your savings boost your ability to achieve your goals. See that the investment is in sync with the tenure of the goal and then decide the type of mutual funds like for e.g. for brief tenure, debt funds will be good option and for medium term tenure; balance funds with exposure to both debt and equity will be good option to go for.

3. Diversification: One of the main reasons that people go for mutual fund is its diversification nature across varied categories, stocks, sectors and even real estate as the wide range of portfolio has minimum risk as compared to portfolio biased towards specific stock, sector or asset category.

4. Consistency: A good mutual fund scheme is the one that manages consistently to outperform its benchmark over span of 3 to 5 years. Always look for consistency in performance over long tenures like 3, 5 and 10 years instead of short term returns.

5. Risk Return Trade Off: Investing in almost any security has risk factor clubbed with it and if the returns are not in proportion to the risks taken, then it is not worth going for such investments. A good mutual fund is the one; that provides higher returns as compared to the others for an equal amount of risk taken and balancing these factors would help one maximize the returns by taking calculated risks and for this one has to analyze the risk tolerance of funds.

6. Fees: For the services provided, mutual fund companies charge fees on investments and this fees have serious say in deciding net return on investment and thus before making investment in mutual funds, investors have to understand the fees structure and time frame.