Struggling to find the right mutual fund for your goals?

Mutual fund investments are more popular than ever. As of 2022, there are more than 6 crore SIP accounts in India. Every day, AMCs and fund houses are coming up with novel funds, trying to attract more investors. Similarly, investors are also looking for the best schemes to diversify their portfolios and maximise their returns.

However, it is easy to get lost in the sea of investment options. Not all high-rated mutual fund schemes may align with your current financial objectives, risk capacity, or investment horizons.  And to make the most of your invested money, it is best to select only a few schemes instead of spreading yourself too thin.

So, how to choose the best mutual fund schemes for your portfolio? To help you, here are our top 10 mutual funds tips that will help you make a smarter investment decision. 

#1 Look at past performance

While past performance does not guarantee future performance, how a fund has fared in the past can help you understand how well it has been managed. Also, it has been observed that funds that have shown excellent performance manage to outperform themselves in the long term.

#2 Look for consistent returns

Suppose you have to choose between fund A and fund B. You can start by looking at how they have performed in the past few years. Let us assume their performance looks something like this:

Fund schemeCAGR (FY 2018-19)CAGR (FY 2019-20)CAGR (FY 2020-21)

How to select best mutual fund out of the two? Go for the one that shows consistent returns and is more predictable. So, in this case, fund A is the better choice.

#3 The mutual fund should align with your financial goals

Investing blindly gets you nowhere! So, select a mutual fund that fits into your long-term financial plan in terms of capital gains, liquidity, taxation, and risk.

#4 Understand the associated risk

Highly volatile funds generate high returns, but also pose significant investment risk. So, before you invest, assess your risk appetite. Research and compare fund ratings, risk levels, and past returns.

#5 Consistency of fund managers

If the fund manager of a mutual fund scheme keeps changing, it is likely that the AMC or fund house is not performing well. So, if you see a lot of replacements in the fund managers, it is best to avoid investing in that fund.

#6 Assess the fund manager’s performance

If possible, examine other funds managed by the fund managers, especially if they have taken over the fund recently. If you see that their previous funds have performed well under their tenure, you can determine if their investment style is right for you.

#7 Be careful of expense ratios

The expense ratio is a fee you pay to the fund manager for managing the mutual fund’s portfolio. A high expense ratio can bring your returns down significantly. So, choose a fund with an optimal expense ratio.

#8 Monitor your investments

Do not invest and forget. Monitor your returns every month, compare them with expected returns, and take note of market conditions. Then, you can increase or decrease your investment amounts, or start investing in a better fund.

#9 Know the additional costs before investing

 Your mutual fund’s investment costs can significantly affect its performance over time. When you redeem mutual fund units, you also have to incur some additional expenses such as the exit load charges and the expense ratio. By knowing in advance what the fees are, you can assess how they will affect each unit’s NAV over time and determine if the fund is right for you.

#10 Create a portfolio

Create a well-balanced and diverse mutual fund portfolio with the right mix of equity funds, debt funds, liquid funds, variable funds etc. You should also revaluate your portfolio to maximize your returns.


Now that you know how to pick the best mutual funds for your portfolio, you can go ahead and start investing! If you looking to invest, check out Tata Capital’s Moneyfy. Moneyfy allows you to assess your risk profile and use goal-based investment tools to invest wisely. Set a financial goal, use the SIP calculator to understand and plan the best investment course for yourself, and select from the top-rated funds in India. Invest on the go via Tata Capital’s Moneyfy App. Download now!

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