What is the correct method to select a good fund? Is a balanced fund better than an equity diversified fund currently?<br> -AK Panchal
Fund ratings are a good stepping stone when it comes to choosing mutual funds. Funds with a high rating have good performance history that you can rely on, even though they don’t guarantee future returns. While the price of a mutual fund as well as the returns earned by it change on a daily basis, the Value Research Fund Rating assigned to them is revised only monthly. Our rating methodology has been devised in a way to keep the ratings from fluctuating too much. Coming to your second question, balanced funds provide greater stability than equity funds because of their debt component. What you choose depends on your risk profile. If you're completely averse to volatility, stay away from any kind of market-linked investment.
This article was originally published on June 21, 2012.
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