How to invest in mutual funds?

How to compare Mutual Funds?


Choosing a right Mutual Fund can be a tricky affair. With an array of products being offered in the market by different fund houses, it may be confusing for you while choosing or avoiding a fund. MoneyWorks4me’s unique method of comparing Mutual Funds on the most appropriate parameters will help you invest in Mutual Funds that match your needs and Risk Profile. Moreover, in-depth fundamental research will give you the conviction to hold the selected Mutual Funds over a longer period.

Step 1: Ensure you are doing an Apple-to-Apple comparison

While comparing two Funds, it’s important that you do an apple-to-apple comparison i.e. the same type of Funds or having the same Benchmark Index. Therefore, check this first. Here’s a comparison of two well-known Funds – HDFC Large Cap Fund & Tata Large Cap Fund. Both are Large-cap, but follow different Benchmark Indices, which is acceptable. So, both Funds are comparable.

Then, compare on Assets under management (AUM) which tells us, if they are of similar size or vastly different, next Expense ratio, and Entry/exit loads as these charges eat into your returns and the Turnover ratio which tells us % of holdings replaced over one year.

Bole Toh

Asset under Management (AUM) is slightly higher for HDFC Large Cap. The Expense Ratio and Exit Load are almost the same. So, size and expense-wise these two funds are similar. But, the Turnover ratio of Tata Large Cap Fund is considerably higher compared to HDFC Large Cap Fund. It shows that the Fund Manager changed 25% of his holding by new ones over one year.

...........Read More

To Continue reading please Log-in

Login with Facebook
MoneyWorks4Me logo
Login with LinkedIn
Login with Google
MoneyWorks4Me logo
OR

Comment Your Thoughts:

Comment Added Successfully!
Please enter valid data!

Comments:

Be the first one to comment!

© All rights reserved. No part of this book may be reproduced or modified in any form, including photocopying, recording, or by any information storage and retrieval system, or in any digital or electronic format without permission in writing from the Publisher or Author.

© 2024 The Alchemists Ark Pvt. Ltd. All rights reserved. MoneyWorks4Me ® is a registered trademark of The Alchemists Ark Pvt.Ltd.