Dhirendra Kumar suggests ways to differentiate between funds with similar returns
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How can one choose or differentiate between two funds in a category giving similar returns?
I would say that look at the fund's performance in both the rising and falling phase of the market. For example - say two funds are giving a 15 per cent annualised return over the last six years. Now, one fund derived most of its return in a rising market but lost reasonably in the falling phase but still has given this return. On the other hand, the second fund did the complete opposite. Although it did not go up dramatically during the rising trend, it was able to withstand the decline much better. So, it depends on your comfort level.
The second thing which I would look at is the consistency of the fund manager managing the money. If there has been a change, worry about it. And if both the funds are the same on all of these points, then choose any of them.