If you are still thinking about whether to put your money in mutual funds after the March 2021 market crash. You need to understand that over time all the fluctuations even out. Professional investors always say that market timing is an essential aspect of investment. There is no appropriate time for investing in the top-performing mutual funds in India. Whenever you think of investing, that is the right time to invest. The market will never show signs of bouncing back. You will make sizable profits only if you can stay in the market for a long period.
Every moment is an opportunity to start your investment journey. Plan and invest strategically to keep yourself ahead of the rest. The following section of this article lists some of the best mutual funds in India. Top performing mutual funds in India 2021 have offered maximum returns over the last three years. However, the article is purely for informative purposes and not any recommendation. Always do the necessary research work before investing in a mutual fund or asset class.
What Are The Top Mutual Funds In India?
The best performing mutual funds India are those that offer consistent returns. They mostly outperform the top and similar funds in their category. In simpler terms, top mutual funds are those that provide maximum returns in their category. These happen to be the best value proposition for investors. The funds are not only capable of generating consistent returns but also the expense ratio of maintaining such funds is quite low.
Ways to Select Top Performing Mutual Funds
Below are some of the essential factors that you need to consider at the time of choosing the top performing mutual funds in India 2020.
- Monitoring Fund Record
As discussed before, top-performing funds usually have a consistent track record over 3 to 5 years. In most cases, the performance of these funds outperforms their benchmark and other funds. You must analyze the performance of the fund in the last few business cycles. The general practices to check the performance when the market is dipping. Moreover, the performance of these funds is also not influenced by market fluctuations. However, investors must understand that consistent performance does not ensure future returns.
- Evaluating Financial Ratio
At the time of investing in a fund checking the financial ratio is crucial. It is particularly important when the fund is one of the top-performing assets in its class. Read this article till the very end to understand the use of alpha and beta parameters.
- Evaluating Expense Ratio
The expense ratio of a fund scheme must be at par with the returns. Frequent shuffling of assets eventually increases the cost of investment as the fund managers charge higher transaction costs. It is recommended to check for the consistency and expense ratio to ensure that the included expenses are reasonable. If two funds have similar asset allocation and past performance then it is beneficial to invest in a fund with a low expense ratio.
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Finding the Right Funds for Your Needs
- Investment Objective
You must always invest in a mutual fund plan after careful assessment of your financial objectives. Once you are aware of your needs you need to figure out the objectives of the fund plan. This will help you in understanding whether it will provide you with the necessary returns at the right time. Mutual fund schemes are designed with specific objectives. It is entirely on the investor to evaluate their goals according to the mutual fund scheme. These considerations are essential for earning good returns at the right time.
- Fund History
You must check the fund history before investing in a mutual fund. Funds backed by an extensive history are considered better than others. Usually, mutual fund schemes are evaluated based on their performance over the last five years. These evaluations are particularly important when the market is down. However, fund history is not available for newly released assets. Experts always recommend investing in funds that are at least five years old.
- Financial Ratio
Risks and returns are an integral part of mutual fund investment. Here return is defined as the overall rise in the value of the capital investment. Likewise, the risk is the uncertainty associated with investing in funds. It also takes into consideration factors that can result in a complete loss of returns. Investors should always assess the risk-return potential and perform risk-return analysis using financial ratios. Alpha and Sharpe ratios help in finding detailed information. Sharpe ratio indicates excess returns offered by your fund alongside risk factors. Therefore funds with a higher Sharpe ratio are always preferred. On the other hand, the Alpha ratio indicates additional returns generated by the fund manager. Mutual fund plans with higher Alpha offer better returns.
- Proficiency of Fund Manager
Every mutual fund is managed by a professional fund manager. Fund managers are responsible for portfolio diversification and fund management. For every investment you make the fund manager plays a crucial role in its success. They are responsible for handling industry money with expertise. Fund managers are always backed by a team of analysts to ensure investing on maximum profit. Moreover, top 10 mutual fund advisor in India can identify opportunities to ensure maximum returns.
- Expense Ratio
The expense ratio is a vital element of mutual fund investments. It is a fee charged by a fund house for managing the investment. Usually, the expense ratio is a specific percentage of the total fund returns. The fund house deducts the amount from the returns earned by the investor. Higher expense ratios eat up a significant portion of returns. However, as per the guidelines of the securities and exchange board of India. Fund houses cannot charge more than a certain percentage from the investors.
Mutual funds have emerged as one of the most popular investment tools for millennial investors. It not only offers excellent returns but also gives a systematic platform for achieving financial objectives. Although, to achieve your desired financial objective or earn substantial profit investing in the right set of funds is necessary. This is where the above-mentioned strategy and factors come into play. Identifying the best-performing fund usually helps you earn sizable profits from your investments. Factors like finance ratio, expense ratio, fund history, and investment objective play an important role in the selection of funds and duration of the investment.
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