Investment always trumps over savings. However, as much as investing in mutual funds is a science to be mastered; it is also an art to be lived out. But, for first-time investors or otherwise, the market’s tempestuousness may seem a little too daunting to navigate. This is why expert portfolio or fund managers are available to assist their clients in successful investing.
Are you confused as to how to choose the right investment manager? This guide will dispel your confusion.
- Look at the manager’s history
Never make the mistake of analysing investment performance based on a single time frame; dig into your fund manager’s history. How have they performed over different market cycles? Go for the one that has shown good performance in both bull and bear markets. Also, look for consistency of performance. If it were a guessing game, even you’d be able to ace it, but it’s not!
- Credentials matter
As odd as it may sound, not every investment manager you find is qualified to be one in the first place. Before you apply for mutual funds online, make sure to go through your fund manager’s website – there, you will find information on their expert team of investors, their credentials, and experience. Choose only after being convinced of the team’s capabilities.
- The test for dogmatic behaviour
Generally, mutual funds managers fall into either of the two camps – one that believes in quantitative decision-making or playing by the rules, whereas the other that relies more on experience and intuition. The question you need to be asking is how exactly your fund manager makes investment decisions. Be wary of those that are too dogmatic about either of the two beliefs as not striking a balance is fraught with risks.
- Thorough market knowledge
It is no news that the mutual funds India market is highly volatile. As such, your fund manager must have complete knowledge of the market. This can be determined by simply getting to know their investment style. Do they only vouch for the growth style of investment, or maybe the value style, or a combination of the two known as the Growth at Reasonable Price (GARP) style? Now, each of the three styles is important for different market scenarios. A fund manager with thorough knowledge will adopt a three-way approach, choosing the best one depending upon the current market scenario.
- Size of your manager’s portfolio
Another critical factor to take into account is your fund manager’s stocks. Ideally, your fund manager must take concentrated high-conviction positions in his stocks instead of owning stocks of several companies in a half-hearted manner. To outperform in the market, your manager’s portfolio should be diverse yet few enough so that some stellar performers may make a difference.
Finally, whether it be equity or debt funds, or Systematic Investment Plan (SIP), ensure that your fund manager is 100% transparent with you. Ready to invest in MFs? Compare different schemes via apps and choose the ideal one based on your risk tolerance, investment strategy, and other requirements – start investing today!