Assigning a small part of your income to investment schemes is a popular way to beat inflation. Long-term investments like Mutual Funds (MFs) use the power of compounding to win against inflations. Besides, you grow your wealth for a secure future.

There are numerous mutual funds to choose from in the market, with each fund offering various benefits. Most investors only look at the returns to compare mutual fund schemes, but many other factors affect the efficiency of a mutual fund investment. Let’s look at some of them.

Mutual funds comparison parameters


The return from your investment is a prime factor for mutual funds comparison. You can earn it through dividends on stocks, interest on bonds, or capital gains distributed among investors after the sale of the fund at a higher price. To compare funds, you can look at 1-year, 3-year and 5-year returns on these investment schemes. 

Investment horizon

This is a crucial variable in comparing mutual funds. It refers to the total time you must stay invested in a particular fund. So, for example, if you wish to invest for greater returns and have a high-risk appetite for a long time, then equity funds should be your first choice. On the other hand, fixed-income funds are better if you want short-term or regular returns from your mutual fund.

Expense ratio

You should also consider the various fees charged by fund companies in mutual fund comparison. The expense ratio tells you how much of the fund’s assets are used for operating expenses.  It will help you calculate your returns from a mutual fund more precisely. Some of these fees are:

Load: This is a sale fee charged by fund companies to investors during the purchase of shares (front-end load) or when you sell your shares in the fund (back-end load). This fee aims to discourage investors from buying and selling too often and cover administrative charges.

12 b-1: This fee is included in the share price at the point of sale. It covers promotion, sales, and other activities related to distributing these funds.


It’s vital to compare mutual fund performance before making a purchase. Benchmark offers a yardstick for you to evaluate the mutual fund’s performance against its expectation in the market. As per SEBI guidelines, they work as a target for mutual fund performance analysis and should be declared to the public regularly.

You can compare mutual funds online by comparing the index performance against the fund’s Net Asset Value (NAV). For example, if the index rose by 10%, but the fund’s NAV increased by 12%, then the fund outperformed the index. On the flip side, the fund has underperformed if the index fell by 10%, but the NAV decreased by 12%.

Risk factors

“Mutual funds are subject to market risks.” You must have read and heard this line multiple times in advertisements. Matching your risk capabilities to the scheme will ensure that you do not encounter an unaffordable loss in your investment. Compare mutual funds online with the help of the following risk measurement ratios:

Standard deviation: It assesses fund volatility by showing how much it has moved up or down from its average value.

Sharpe Ratio: This shows the returns generated against the additional risk taken on your portfolio.

Alpha: It shows how much more returns the fund can generate than its benchmark index.

Beta: This indicates the added risk that the fund is taking to generate the additional returns.

Now that you know all the essential parameters to compare mutual fund performance. Let’s get into the steps you should take to arrive at a perfect mutual fund for yourself.

Steps to compare mutual funds

Step 1: Select a fund type and style

Select a fund type for yourself according to your time horizon, risk capabilities, and return expectations. For example, you can choose a growth fund for higher returns with high risks or a fixed-income fund for consistent low-stakes returns.

Step 2: Compare funds for returns

Sporadic growths in a mutual fund investment indicate that the fund scheme does not produce consistent returns. You can evaluate returns from different schemes online to compare mutual funds.

Step 3: Dig into the fees and loads

The proportion of your assets assigned for operational expenses can affect your returns. Therefore, carefully review all the charges to compare mutual fund performance accurately.

Step 4: Choose a type of management

Whether you want your investments to be managed by a professional is also a crucial factor when you compare mutual funds. Actively managed portfolios have managers who make decisions about the assets in your fund. This method accelerates your funds against the benchmark index. On the other hand, passive management funds replicate the benchmark index’s performance without a portfolio manager. As a result, they have low turnovers and low costs.

The bottom line

Mutual fund comparisons take a considerable amount of time and effort. To make the process hassle-free, you can use the Moneyfy app by Tata Capital to compare mutual funds online. It has features to explore investments, research investment schemes, and compare returns, all under one roof.

The variety in investment schemes makes mutual fund comparison necessary for all investors. So, follow the steps mentioned above to compare funds according to your preferences and take decisions accordingly to make investments.

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