Ways to boost portfolio returns with mutual funds

When it comes to investments, mutual funds are perhaps one of the best options. It doesn’t matter whether you are a beginner or a veteran investor. They offer you an opportunity to invest in a diversified portfolio, liquidity, low costs, regulated and products suitable to varied categories of investors.

No matter whether your investment objective is short-term or long-term, mutual funds can fulfil both purposes. Mutual funds offer ease of investments with low ticket size, which enables small retail investors to have easy access to various asset classes by investing as low as Rs 100 per month. However, the prime question is as to how one can get the best returns out of mutual fund investments. Having said, there are some of the golden investing tips and rules to maximise performance. In this article, we would discuss various ways to maximise your portfolio returns with mutual funds.

Passive investing

Passive investing, as a concept, is much more matured in developing nations. However, in developing nations like India, it is still in the infancy phase due to a lack of financial literacy. Having said, one of the best ways to cut the noise is to invest in the index via index funds or exchange-traded funds (ETF). This will help you to get at least index returns, where many funds around the globe are still struggling to beat the index on a consistent basis. However, it is advisable to stick to large-cap indices such as Nifty 50 and Sensex as of now.

Systematic investment plan (SIP)

When you find yourself short of time and knowledge, then the best way is to invest is via a systematic investment plan (SIP) wherein, you do not need to time the market. In fact, when the markets are up, you would buy fewer units for more prices and when the markets are down, you would buy more units for lesser prices. This helps you in getting the benefit of rupee cost averaging. This in turn helps you to reduce the market risks.

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Diversification

Diversification is one of the best ways, in which, you can maximise your portfolio returns. Depending on a single asset class might lead you to some serious trouble if the situations are unfavourable for that particular asset class and eventually, its performance would also tumble. Therefore, diversification is the key. As we know, different asset classes behave differently in varied market conditions. Hence, it is prudent to invest your money across different asset classes such as equity, debt, gold, real estate, etc. in order to reduce your investment risk to a great extent.