Know thyself. This is the first step to picking the right fund. Different funds suit different categories of investors. At a very basic level, high growth-high risk equity funds suit investors who have the ability to take risks whilst debt funds are meant for more conservative investors. Time horizon is another primary determinant of fund selection. Equity funds usually work for time-frames of five years or more, while debt funds are good for shorter periods. Many more investor characteristics come into play. Your tax bracket, residential status, other investments, goals and expenses - all have a bearing on fund selection.
Know the fund. This is the second major step in the fund selection process. Does it invest in large or small companies? Indian or foreign companies? Has its fund manager been there for a long time? How has it performed compared to its peers and benchmark? The Value Research fund pages and tools answer most of these questions but how do you constructively use the plethora of information we provide you there?
In the Money Hangout video above, we have addressed this question and many pivotal ones about picking the fund that is sahi for you. To simply know more about mutual fund investing, check out our column Mutual Fund Sahi Hai.