How to select one particular mutual fund for investment?

Suppose there are 4/5 mutual funds which all seem very good in terms of return. If I am planning for long term investment, how do I choose say 2 of them for investment through SIP? How to compare various important factors, in particular, how to decide if in future, the fund will perform well? (all MFs give warning like this: past performance is no indicator of future performance). Can you suggest any good websites which help in this regard?

5 Replies to “How to select one particular mutual fund for investment?”

  1. Do not get too hung up on which fund(s) you choose. Many studies have shown that fund choice has MUCH less impact on investing success than your investing habits (i.e., that you do not sell in market downturns, that you invest on a regular basis, etc.). If – for whatever reason – you decide down the road that you would rather have a different fund, it is easy enough to change funds (or add another).

    If the fund performances are roughly the same, go with the one(s) that have a lower expense ratio. Also, if you choose more than one, try to make sure that their investment styles don’t overlap (for example, don’t choose two large company growth funds).

    I hope that helps. Good luck!

  2. hi, if you are investing for the first time in mutual fund then go for a divesified equity mutual funds rathar than a sectoral fund which invest only in a particular sector say power, infrastrcuture etc. Secondly see the returns of the fund over a period of more than five years or better still since inception. Don’t judge any fund by looking at returns of only 1 or 2 years.Thirdly invest in mutual funds if you have an investment horizon of more than 5 years. Mutual funds have outperformed all other avenues if invested for a longer period. Regarding the warning of ” past performance is no indicator of future performance”, it is mandatory as per the securities and exchange board of india. Since the money is invested in the stock market, such warnings are given to safe guard the interest of the investors. If you are investing for a long period then you can expect a good return from mutual funds.

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