Selecting mutual funds for long-term investments in turbulent market conditions requires careful evaluation of the fund's overall strategy and historical performance. Here are some things to think about:
Evaluating long-term performance
Do not be fixated on a fund’s past year returns. Evaluate the fund’s long-term performance. Look at the fund's performance over a longer period, ideally 5-10 years, to see how it has fared under various market situations. Next, compare fund’s returns to benchmark returns: Examine how the fund's returns compare to a relevant benchmark index (such as the Nifty 50 for large-cap funds). Consistently surpassing the benchmark is a good sign.
Are you conversant with the investment philosophies of the fund house? Recognize the development and value-adding approach and guiding principles of fund management. Verify that they align with your investing goals and risk tolerance. Analyse the risk control, select funds that have an effective risk management system to lower downside risk. Verifying the fund manager's experience is essential. Verify the experience and performance history of the fund manager. It is best to have a seasoned manager who has experience navigating market cycles.
There are other aspects to take into account in addition to the previously mentioned ones. Take the fund's expense ratio, for instance. Reduced spending ratios show that a larger portion of your funds are allocated to investment gains. The size of the fund is another crucial factor. Smaller funds may have more room for growth even though larger funds can provide stability.
When returns matter!
Selecting the next fund to add to your investment portfolio can be done in part by comparing fund returns across multiple financial websites. Using a range of criteria, such as returns, to evaluate mutual funds can assist you in making an informed choice.
Mutual fund schemes need to be assessed with a fair and impartial methodology that considers both qualitative and quantitative factors. Long-term success in quantitative analysis requires delving into qualitative issues, even though historical performance makes an attractive starting point.
Investors must be aware that past performance does not guarantee future outcomes. However, you can increase your chances of choosing a mutual fund plan that performs well over time, particularly in volatile markets, by considering both long-term results and the fund's investing strategy.
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ICICI Prudential Technology Fund gave the highest return of around 23.38% in five years. SBI Technology Opportunities Fund gave 21.50% return in the same period. Pharma & healthcare sector-based funds gave an average return of 22.38% in the last five years. DSP Healthcare Fund gave the highest return of around 25.58%.
Quant Small Cap Fund(G) tops the chart with over 39% returns followed by Quant Mid Cap Fund(G), Nippon India Small Cap Fund(G), Quant Flexi Cap Fund(G) and Motilal Oswal Midcap Fund-Reg(G) in the same pecking order. 1.
While investing in an ELSS it is very important to look at these ratios to understand whether the fund is worth investing in or not. Some of the common ratios that will help you to understand the risk and return potential of all the funds better are Standard Deviation, Sharpe Ratio, Treynor Ratio, etc.
Fund Performance: The Motilal Oswal Midcap Fund has given 36.38% annualized returns in the past three years and 28.69% in the last 5 years. The Motilal Oswal Midcap Fund comes under the Equity category of Motilal Oswal Mutual Funds.
Other ELSS mutual fund schemes which gave more than 25 per cent return are HDFC ELSS Tax Saver Fund (26.79%) and Motilal Oswal ELSS Tax Saver Fund (25.21%). At the same time, lowest returns were given by Kotak ELSS Tax Saver Fund (21.11%) and DSP ELSS Tax Saver Fund (21.29%).
The recent performance surge has lifted the category scorecard of healthcare funds, with an average return of 59% over a one-year period, a compounded annual growth rate (CAGR) of 18% over a three-year period, and 23% CAGR over a five-year period. This is as per the latest data from Value Research.
Introduction: My name is Tish Haag, I am a excited, delightful, curious, beautiful, agreeable, enchanting, fancy person who loves writing and wants to share my knowledge and understanding with you.
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