Choosing a mutual fund is very crucial and while selecting a mutual fund following factors shall be kept in mind:
For how long the fund has been in business - the longer the better, for in general more one is engaged in a particular trade more intimately one knows that business. UTI Mutual Fund is the pioneer in India.
Nature of Ownership:
I will prefer and advise government owned or public sector (PSU) mutual funds for the following two reasons:
Though slow and inefficient in providing good customer service, generally PSUs do not take customers on a ride through the fine print in the contracts.
In case the organisation gets into financial troubles, the government will step in with the rescue-act.
Size does matter. Bigger the size safer it is. One can take the assets under management (AUM) as the parameter to measure the size. India’s Top Ten Mutual Funds command over 80% of the total assets under management.
- Diversity produces safety
- Index funds are passive and therefore involve lower fund administration cost
|A Few Mutual Fund Examples|