What are the important prospect for short or long term mutual fund investments - Company, policies, or the funds?
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Choosing the right mutual fund (MF) goes a long way in determining how profitable your investment would be. Selection of the right MFs depends upon a lot of factors like:
a. Your age
b. Your risk appetite
c. Size of the investable corpus
d. Financial goals to be fulfilled.
e. The time horizon based on your goals
f. Mode of investment (SIP/lumpsum)
g. Purpose of investment (eg: Tax planning)
Once you have understood these factors, then the next step is choosing the right MF to fulfil these objectives. Some of the criteria to select the right MF are:
i. Filter funds according to their expense ratio (the lower it is, the better)
ii. Look for a disciplined and experienced management team headed by a capable and skilled Fund manager
iii. Look at the size of the funds (should not be too small or too big)
iv. Historical returns (which should be higher than the benchmark)
v. Size of the fund.
vi. Focused vs diversified fund
vii. Sharpe ratio (should be significantly higher than the benchmark)
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