Mutual Fund Comparison - What to Look At

You may compare Mutual Funds plans by taking into account the following factors:

Benchmark

A benchmark is a measure by which you may assess a mutual fund's performance. You may compare the returns a fund has earned to what it should have provided in an ideal world. Since SEBI requires it, funds must reveal their benchmarks, which you may use to analyse fund performance as an investor. Sensex and Nifty are the two most popular benchmarks.

Risk

When comparing funds, you must take into account the investment's dangers. The hazards connected with market fluctuations, i.e., increasing, declining, or static Net Asset Value (NAV), as well as your own risk tolerance levels, are referred to as risk. While increased risk normally means bigger profits, this rule does not apply to fixed-income funds. Risk-adjusted returns must be used to compare funds.

Expense Ratio

Professional fund managers and fund houses demand a fee for their services. Expense ratios cover a wide range of costs, including entry and exit loads, fund management commissions, and so on. Expense ratios that are too high might cut into your earnings. When you invest in funds in the same category, you usually have to pay lower cost ratios. Additionally, cost ratios varies per fund category. The expense ratio of passively managed index funds, for example, is lower than that of actively managed funds.

Personal Aspects

When comparing Mutual Funds, you must take into account both fund-specific and personal considerations. After identifying your investment objectives and desired investment horizons, as well as your risk-bearing abilities, make your investment options. While low-risk investors may prefer Debt Mutual Funds, which provide consistent but lower returns, aggressive investors may prefer Equity Funds. Hybrid Funds are another option if you want to balance your risk levels.

Last but not least,

Look at the past returns of the mutual funds.