Sharekhan Blog

Equity Mutual Fund Investment The Process To Select The Best Product

  • Jan 31, 2024

Mutual funds investment merges the money of various investors and puts it into stocks, debts, bonds, and many other things.The fund is managed by a qualified and trained money manager who seeks to develop returns for the investors based on the fund's investment strategy.

By investing in mutual funds, individuals gain access to a broad range of investments, which can reduce the risk of every single stock or bond.

In this blog, we will associate with you through the steps to make sure you choose a mutual fund that aligns with your financial longing and provides a sense of security amidst the market's stream.

1. Clarify Your Financial Goals

You must have a keen understanding that your goal is the first smear in creating a standard personalised investment. What are your goals? Is it a short-term or long-term? Or What is the purpose of the investment?

When you invest, remember your target by acknowledging how to choose the best mutual fund by selecting the mutual fund type with your expected returns, whether it's a debt mutual fund, equity mutual fund or hybrid mutual fund.

2. Assess Your Risk Comfort

Every financial journey involves a degree of risk. Risk comfort refers to the risk that the investors are willing to take with their investment. Risk factors are directly proportional, so you must balance your desired returns against your ability to comfort risk.

3. Equity Funds

Equity funds give you a greater return, unlike other low-risk funds. It comes with a high potential to diversify your portfolio and wealth creation journey. However, mutual funds are known to perform well in the long term whereas your understanding of the market can help you choose the right scheme and earn higher returns.

4. Delve into Historical Performance

Our journey includes a look back at the historical performance of potential funds. Although the fund history is an indicator that future performance cannot guarantee high returns. There should also be an analysis of the general industry and market aims that affect the fund's performance. However, reviewing the fund's bulletin gives a fair idea for the future and helps to choose the best funds.

5. Fund Manager

The fund manager almost makes investment decisions in many mutual fund schemes by going through their track record, investment philosophy, and how they align with the financial escalation. Knowing who your fund manager is and their investing style will help you make a better decision.

6. Cost Considerations

Our financial journey is not just about returns; it's about optimising costs. Think of the expense ratio as the ticket price of our symphony. A lower cost ensures more of the returns play in your financial melody.

7. Consistency in Returns

As we craft your portfolio, consistency in returns becomes the force. A good mutual fund generates consistently good returns for investors in a certain amount of time. Investors are looking for funds generating consistent returns during market growth and downfall.

8. Fund Size and Agility - Balancing Act

Consider the fund's size as the balance in our financial act. While larger funds benefit from scale, we want to ensure they maintain agility. These funds have a larger probability of higher returns. Consider the fund which suits the best options to meet your specific needs.

9. Navigate Exit Load and Redemption Policies

Mutual fund companies charge fees from the investors to make money. It will be charged at the time of purchase or on the investment sales. When you buy a share at the initial investment, a front-end load fee needs to be paid, as same as when you sell a share in the fund, a back-end load fee needs to be paid

10. Conduct Regular Reviews

Without a doubt, investing in mutual funds carries danger, just like any other investment. Investing in funds can be a terrific method to attain your financial objective by providing you with research and investing in wise choices.


As we conclude this personalised guide, envision your financial journey as a symphony, a unique composition reflecting your dreams, aspirations, and a secure financial future.

A fund that performed well yesterday might not do well tomorrow or the day after, as it makes investing tricky. You can entrust the services of a financial advisor or research the market to find a good and sustainable one. However, remember to review the performance occasionally and align it to your investment goals.

Selecting a mutual fund may seem terrifying, but researching and understanding your purpose makes it easier. If you carry out this with intensity before selecting a fund, you'll increase your chances of success.

Team Sharekhan
by Team Sharekhan

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