1. It would be apt to compare returns of a fund with its benchmark index and category peers, as well as risk parameters, over at least four quarters before deciding to switch or redeem it.
2. Elaborate multilayer systems and controls of a fund house, closely monitored by Sebi through mandated submission of reports and returns, do take care of our money prudently, but we should also ensure that our investments continue to remain relevant to our own goals and risk profile, through regular monitoring and reviewing, where online portfolio trackers, are very handy.
3. The details submitted by MFs in public domain, as directed by Sebi are also supposed to be ok as they can be subjected to scrutiny and penalty, leading to clientele loss, and can be depended upon.
4. The fund management of MFs definitely does matter to long-term investors, but this is not a one-man job and comprises of a team of professionals, including analysts, researchers, and the fund manager himself, and their collective inputs are necessary for a fund's investment ideas.
5. As a thumb rule, evaluating MFs through these 5 Ps is helpful - People, Process, Parent, Performance and Price(TER), and all other factors being equal, an inexpensive fund is preferable.
6. Peer group fund comparison, with similar investment objective and style, also enables a fair evaluation in the same category to decide a switch or redemption.
7. As it is a fact that none of our MFs are actually fully process driven in practice, hence the persisting importance of a fund manager and his changing positions too, but precedence should be given to the fund house pedigree over the individual running the scheme, as he is rarely the sole driver of the fund’s performance, especially when investing for very long-term goals.
8. As regards a particular fund, if it is one that very closely tracks the benchmark or has a very specific investment universe, then there should be very less cause for alarm.
9. But if the fund is a multi-cap fund or a mid- and small-cap one, then the role of bottom-up stock picking and making the right calls is extremely important, and a fund manager’s move in this case would be critical because it is his personal judgment that goes into adding alpha.
10. However, at the end of the day, it is the long-term earnings and ratings of peer funds that should matter for comparison by investors for selecting them in their portfolio.
2. Elaborate multilayer systems and controls of a fund house, closely monitored by Sebi through mandated submission of reports and returns, do take care of our money prudently, but we should also ensure that our investments continue to remain relevant to our own goals and risk profile, through regular monitoring and reviewing, where online portfolio trackers, are very handy.
3. The details submitted by MFs in public domain, as directed by Sebi are also supposed to be ok as they can be subjected to scrutiny and penalty, leading to clientele loss, and can be depended upon.
4. The fund management of MFs definitely does matter to long-term investors, but this is not a one-man job and comprises of a team of professionals, including analysts, researchers, and the fund manager himself, and their collective inputs are necessary for a fund's investment ideas.
5. As a thumb rule, evaluating MFs through these 5 Ps is helpful - People, Process, Parent, Performance and Price(TER), and all other factors being equal, an inexpensive fund is preferable.
6. Peer group fund comparison, with similar investment objective and style, also enables a fair evaluation in the same category to decide a switch or redemption.
7. As it is a fact that none of our MFs are actually fully process driven in practice, hence the persisting importance of a fund manager and his changing positions too, but precedence should be given to the fund house pedigree over the individual running the scheme, as he is rarely the sole driver of the fund’s performance, especially when investing for very long-term goals.
8. As regards a particular fund, if it is one that very closely tracks the benchmark or has a very specific investment universe, then there should be very less cause for alarm.
9. But if the fund is a multi-cap fund or a mid- and small-cap one, then the role of bottom-up stock picking and making the right calls is extremely important, and a fund manager’s move in this case would be critical because it is his personal judgment that goes into adding alpha.
10. However, at the end of the day, it is the long-term earnings and ratings of peer funds that should matter for comparison by investors for selecting them in their portfolio.