Best Mutual Funds in India to Invest in 2020

What are the Mutual Funds?

An asset management company AMC pools investments made by individual investors and institutional investors. With this pool of investments, an AMC forms a mutual fund

AMCs have fund managers who manage the invested amount and invest in stocks, securities, and bonds, etc on the behalf of investors.

Mutual fund investors are allocated units of the fund against the quantum of investment. These units can be re-invested or redeemed by investors on the maturity of the fund at the NAV.

Net asset value NAV is the market price of the fund. It is important because it represents the worth of each share of the fund. One can say just like shares have a share price, mutual funds have a NAV to represent it’s worth.

How to Select the Best Performing Mutual Funds in 2020?

An investor would ultimately want a mutual fund that provides a higher return. The entire selection process can be guided by three attributes which are an investor’s life goals, understanding of investment risk and investment horizon.

Investment Objective

An investor should first sort out his personal life goals and corresponding to the life goals an investment scheme must be chosen. Each scheme is different from the other and serves a different purpose.

Hence to arrive at a meaningful decision the fund’s objective must match an investor’s goals and risk appetite. A long term objective cannot be met with a short term scheme.

All the necessary details related to the scheme, its asset allocation, objective, and strategy are available in the key information document and scheme information document.

Fund History

The fund history is the track record of the fund’s performance in the past during the ups and downs of the market. This shows the strength of the fund during tough times.

A recently launched fund may or may not outperform the tough times i.e. bear runs in the market since it does not have dealt with such scenarios. On the other hand, a fund with a good history of generating consistent returns shows the accuracy of investment strategies.

To shortlist, an investor must check the track for the same period for which the investment horizon is decided. For example, if an investor is willing to invest for say 5 years he must check the track record of 5 years of the fund.

Expense Ratio

An annual fee is charged by the fund house manager for managing an investor’s funds, this is called expense ratio and expressed as a percentage. The final payoff to an investor will be the returns generated minus the expense ratio. The net amount is the final amount that an investor received.

A higher expense ratio would result in lower returns for an investor. Hence while considering a fund, an investor must choose a fund with a lower expense ratio compared to peer funds in the category.

Performance of fund manager

The fund manager’s involvement is critical in the performance of a fund. It is the fund manager’s responsibility to ensure the show is going smoothly. It is important to know the track record of the fund manager.

An investor must check the performance of the fund during the market rally and slump. Better fund management is showcased when a fund provides consistent returns and contains losses during the bear runs of the market.

How to invest in Best Mutual Funds?

An investor can invest a lump sum one time or through SIP periodically. An investor can choose to invest lump sum one time if he has considerable corpus to invest for a longer-term. While SIP is a regular investment over a period of time. An investor can choose to invest monthly, quarterly or half-yearly. SIP is recommended for the first time mutual fund investors.

Investing through Scripbox is made easy and paperless. All you need to do is follow the below steps and start investing.

1. 1. Sign in at scripbox.com
2. 2. Enter personal details like date of birth, gender
3. 3. Complete your KYC
4. 4. Add your bank details
5. 5. Create a new plan and start investing