Don't look at six-month or one-year returns of the fund, rather check its performance as compared to the category average during different phases of the market, advises Dhirendra Kumar
I wish to gain more insights into investing in mutual funds. Also, I would like to know how to select the best mutual fund scheme.
A good mutual fund is the one that goes up more when the market is up and goes down a little less when the market stumbles. If it does it over the complete market cycle, then you end up being a winner. When you are looking at a fund, don't look at the last six-month or one-year returns. You should check the return in the rising phase as well as in the falling phase. You should also check whether it is doing good in comparison to the category average during all these phases. You should also check whether the same fund manager was there when the fund was rising more than the market and falling less during the market stumble. And all these details are available on Value Research Online. You can also check them in the form of graphs there.