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Tata Capital > Blog > How To Maximise Mutual Fund Returns?

How To Maximise Mutual Fund Returns?

How To Maximise Mutual Fund Returns?

Asking questions like how to calculate return on a mutual fund and how to maximize returns is incredibly important, especially if you are getting started with investing. The reason is that this is the way you can focus on growing your funds.

The answer to both the above questions - how to calculate return on mutual funds and how to maximize the returns on your mutual funds may lie with the fund manager. That's because a fund manager -

  • curates a mutual fund portfolio based on your unique financial goals
  • protects your funds
  • regularly monitors the growth and performance of your mutual funds
  • builds out the mutual fund investment strategy

But that doesn’t mean you solely rely on the expertise of a fund manager to grow your funds. Here are a few things you can proactively do to get maximum return in a mutual fund.

Five things you can do to get better mutual fund returns

1. Set up SIPs

If it is your first time investing, it's best to put a small amount into a SIP or a Systematic Investment Plan. You can set up SIPs for as little as Rs. 500 and make monthly payments towards it for a pre-specified period. Most fund houses even allow you to set up auto-pay on your bank account for your SIP. This helps you build a healthy investing habit.

Unlike lump-sum investments, you never have to check the market for lows before investing in a SIP. Suppose you do not have previous experience with investing. In that case, you will have to Google questions like how to calculate return on mutual funds to ensure you get a satisfactory return. You can also use the Moneyfy SIP mutual fund calculator to help you out

Fortunately, SIPs work on money cost averaging. This means that funds get invested in the same security regardless of the price. In other words, the time of investing the funds does not matter. You will get returns based on the prevailing market conditions.

2. Diversify your portfolio

Putting all your money into one mutual fund asset class can increase the risks associated with investing. Why? Because if the asset class performs poorly, your returns get affected.

In contrast, when you invest in multiple asset classes or diversify your investments, you split the performance risk. For instance, you can invest in small-cap funds with high risks and high returns and a stable investment form like gold funds. This is called portfolio diversification, and it is an excellent mutual fund investment strategy if you are looking to balance out risks and returns across your holdings.

But before you do, remember to check the returns you will get post-diversification before investing. This can be as easy as typing how to calculate the return on mutual funds on your browser or using the SIP mutual fund calculator on the Moneyfy app. Many websites offer mutual fund calculators to do exactly that.

When the market performs well, you get good returns from your small-cap investments, but even if the market tanks, the gold funds do well and give you returns. Diversifying your portfolio in this way ensures you get some level of baseline returns, no matter the market conditions. Naturally, the greater the diversification, the safer your investment portfolio.

3. Review fund performance regularly

This is one of the most important steps you need to include when charting out your mutual fund investment strategy. After all, the easiest way to lose your money when investing is by putting funds in a laggard scheme that does not offer good returns in the long term. This is why you must regularly check our fund performance. Learn how to calculate the return on mutual funds first.

Then, compare mutual funds' returns over the past year with the benchmark and the peer funds. Ideally, your fund's performance should be better than theirs if you want max returns in mutual funds. But if your investments have shown little growth over three years, you might want to redeem them and invest in better-performing funds.

4. Have a mutual fund exit plan

One can get started with investing at any point. But to get the max return in a mutual fund, they should have an exit plan in place. Having an exit plan means investors don’t wait for market conditions to be favorable to withdraw their funds. Instead, they withdraw funds as soon as they meet their financial goals without worrying about market factors to get maximum returns.

Most investors opt for strategically shifting their funds to less volatile investments from a year before they need the funds.

Remember that an exit plan isn’t only for when you withdraw your funds since you reach your financial goals. You can also make exit plans for situations like financial emergencies, change in fund managers if you have an underperforming fund, or you need to rebalance your investment portfolio.

5. Choose between debt and equity investments

If you want max return on mutual funds, remember to add a mix of debt and equity funds to your mutual fund portfolio. And develop a mutual fund strategy for it. Why? Because doing this helps you curate a portfolio according to your risk appetite.

Remember, debt mutual funds are typically safer since they generate predictable returns over time. Equity funds, on the other hand, allow you to invest directly into company stocks. Although their returns are unpredictable and depend on market fluctuations, you could get returns between 10-15% if you choose the right scheme. Learn how to calculate the return on a mutual fund before investing in any scheme. And choose schemes only where returns are guaranteed.

Adding a mix of debt and equity funds to your mutual fund portfolio will help you average out your risks and returns. So, if your mutual fund strategy does not yet feature debt and equity funds, this is your call to update it.


While the above tips help new investors like you get more out of their mutual fund investments, your mutual fund investment strategy will be successful only if you invest in top-performing funds in the first place.

If you're unsure where to look for top-performing funds or how to start investing, turn to the Moneyfy app from Tata Capital. This app not only helps you invest conveniently from the comfort of your home. Supplement your mutual fund strategy with smart investing. Download the Moneyfy app from the AppStore today!

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