How To Select Mutual Funds for Yourself?

Source

Whenever you are looking to select Mutual Funds it is important to look into three things that will make your Framework. The first and foremost criteria are obviously to choose Mutual Funds that are giving the highest returns as you should always look into getting as much as possible. The second point to consider is to check how much RISK is required for this Mutual Fund to get that Return on your Investment as we know that RISK and RETURN are directly proportional to each other. Finally, the third point is to check how much you will be paying to the Fund Manager for maintaining your Mutual Fund as that little Expense Ratio can quickly cut through your Profits in the long run.

Now if you combine all three criteria you will get a solid framework that you can look into while selecting a Good Mutual Fund for Yourself. So you should look into the Rolling 3 Year Returns of the Mutual Fund as it will give you a clear idea as to what its RETURN is compared to other Mutual Funds. The next will be ALPHA and BETA which determines the RETURN and VOLATILITY of a Mutual Fund, ALPHA should always be higher than 1 as it means that it has consistently beaten its Benchmark and the BETA should always be Low which means that the Mutual Fund has Low Volatility. The next step is to look into TER which stands for Total Expense Ratio which as the name suggests is the Expense Ratio the Fund Manager charges you for maintaining the FUND.

If you look carefully into all three metrics I am quite sure that you can find a bunch of Mutual Funds that are quite good and gives decent Returns on your investments.