Things to watch while selecting fund from single category

Post SEBI’s circular about the categorisation and reclassification many of fund houses have now standardised the scheme structure to adhere to the new norms. With the implementation of these changes, now investors can look forward to standardizing the structure of funds within a particular category. Many of the individual schemes during the period have undergone many changes to imply the category they belong to.

So investor must be wise while selecting the schemes from now and have to look into some undivided factors which can be a good guide for investors for making an investment decision. Here are a few things that investors should consider before investing in a fund.

Portfolio and investment objective

Nowadays every mutual fund house discloses all the scheme related information on their official website as well as investors are also provided with the monthly fund factsheet. The factsheet discloses the information about the changes in the portfolio. Which states the asset allocation of the fund. Investors need to check the investment objective of the scheme and the asset allocation simultaneously. This helps the investor to determine the strategy of the fund manager to reach their ultimate investment objective with the investments made in individual securities.

Fund manager

Every fund manager comes up with his unique approach and view of the portfolio and the selection of the constituents of the same. Fund manager plays a key role in maintaining the consistency in the portfolio. So if the scheme sees more changes in respect to the fund managers, it is likely to be more inconsistent. So investors should always look at the fund managers and the tenure of the fund managers while selecting a scheme from the same category.

Consistency in the performance

Even if the past performance is not an indicator of the future performance, the factor always forms a guiding aspect while selecting the scheme for the investment. The consistency in beating the benchmark over a period of time guides investor about the efficiency and capabilities of the fund manager which can be very useful for any investor. So one should look at the consistency in the performance among the peers while selecting the fund from the similar category.