You often come across newspaper advertisements from fund houses stating that their fund performed exceedingly well over a one-year period, with some comparative chart. They sometimes also disclose their three- and five-year performance.<\/p>\n
On the face of it, it might appear impressive. But if you ignore the top-performing year and look for the average, the fund could have given mediocre returns.
\nAlways compare the fund\u2019s performance across market cycles with its benchmark and its peers.
\nAt times, a fund could have taken higher risk to achieve a higher return compared to its peers. Or, the fund could have churned the portfolio more often to earn returns.
\nBear in mind that high risk always does not guarantee high returns.
\nIf the fund had a higher portfolio turnover over a certain period, it means that its conviction about the stocks held in the portfolio is low or the fund is trying to time the market. Both are not good for investors.<\/p>\n
A classic example was in 2009, when to contain the downside, several fund houses turned to cash, but within a few months the market zoomed and they all underperformed. <\/p>\n
If you are investing in mutual funds directly, without taking the help of an advisor (to save cost) and are only looking at any one piece of information, such as current performance,it may not be right for long-term investment.
\nYou can still cut costs and invest directly, with sound advice from a knowledgeable and impartial advisor, for a small fee.<\/p>\n
At myassetsconsolidation.com, we will help you build a portfolio based on the risk you are willing to take. We will then suggest funds that will deliver results. We can say this with confidence. We have a team of experienced financial professionals. The chief of myassetsconsolidation.com, Suresh Parthasarathy, is a certified financial planner, with 20 years\u2019 experience guiding investors. He has researched more than 300 mutual funds and has been writing a popular column every Sunday on personal finance in India\u2019s leading financial daily, The Hindu Business Line for more than 8 years. <\/p>\n
To reach us write to info@myassetsconsolidation.com<\/p>\n","protected":false},"excerpt":{"rendered":"
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