The AMCs like LKP Securities, have experienced
and specialist fund managers to manage crucial investments received from
investors. In other words, the professional dealers in mutual funds select some
best mutual funds to invest pool money from
interested investors and invest them in various profitable bonds, stocks, and
other related avenues.
Each Mutual Fund is valued at its current Net
Asset Value (NAV), based on which the investors are authorized to purchase or redeem
the funds. Since the Net Asset Value of each and every Mutual fund varies on a
daily basis, it is extremely crucial to keep an eagle’s eye on it daily. Mutual
fund securities are governed by the parameters and guidelines by the Securities
and Exchange Board of India (SEBI), making them one of the safest investment
deals. Why invest in Mutual Funds? The answer to this question lies in a simple
factual statement that it allows the investors to diversify their investment
portfolio at a comparatively lower investment amount.
How to select good
stock mutual funds that are expected to perform in 2020?
Though the investment in mutual funds is a
risky business, it permits a high value of return in each investment option.
However, it is of paramount importance to understand and analyze various
factors before making an informed decision. Here we have discussed them to help
you make the right decision.
- Bracket your goals/objectives beforehand: The objective behind
your investment quota, the goals you are aiming to fulfill with the expected
return, plays an extremely important role in decoding your investment plans.
Are you looking for a short term or long term investment plan? Are you planning
to use the expected return for your higher education or as a treasure to be
used after retirement? There could be thousands of reasons and goals for which
individuals partake in mutual funds, and about 1500+ mutual funds to help them
meet their goals, but for that to happen it is very important to first
recognize your personal objective before jumping in the funds'''''''''''''''''''''''''''''''' pool. For
instance, if you have retirement as the final goal, you should invest in a long
term scheme of mutual funds, exceeding 10 years, and so forth.
- Degree of risk tolerance: Mutual Funds indeed are subject to
market risks, making risk a fundamental factor that has a considerable impact
on any investment decision. The investors that are not willing to undertake a
certain degree of risk, should restrain themselves from taking part in mutual
funds, which will also keep them at bay with high returns. Mutual Funds are
significant investment opportunities for the investors that have a thing for
risk tolerance, making way for higher returns. The new birds in the nest of
Mutual Funds can start with investing in funds that are not very risky like
Debt Funds, which invest in bonds and other government securities making them
less risky, or Large Cap Equity funds that use the money to invest in companies
that have large market capitalization, making them subject to lesser market
volatility. However, one should always keep in mind before starting with an
investment that no funds are entirely free from risks.
- Performance of the Funds: One of the best ways to
identify the potential risk and gains associated with any fund, is by
determining the potential of the fund. Start with judging the rate of the
potential of each fund and then graphing out the rate of accomplishment as is
achieved by the fund in the past. Pinpoint the growth chart of any fund for a
period of three or five years to have a clear marking of its performance in the
present time. Nevertheless, the mapping out of funds performance is only a
method of drawing the probability of its returns and is not certainly
indicative of its returns in the future.
- AUM and Costs: AUM, known as Assets Under Management which is
used to determine the size of the funds, the absolute number of benefits held
by the funds, and accordingly put resources in securities. This clearly shows
the potential of the fund for the future.
- Go for managerial expertise: While there is no
certain method to draw an outline on the prospective risk and benefits that a
fund carries in the investment market, both of them can be carefully avoided or
invited, respectively with the help of an expert hand. There are two methods of
managing any fund, they are active management and passive management, both of
them bring their own set of advantages to the table and you should make a
decision as to which method you want for your funds. The jobs of specialist
managers in mutual funds are to evaluate and analyze the sectors of the
economy, their upcoming growth trend, companies surviving in various sectors,
etc, before making any advancement. To place beneficial bets in the market, it
is very important for the manager to be experienced in the field in order to
understand the market movements precisely.
There are two methods of investment in Mutual
Funds - SIP and lump sum investment, famously known as a one-time investment.
Like the name suggests, a one-time investment allows the investors to pour in
their investment amount in the security all at once without any confusion or
monthly system. SIP or Systematic Investment Plan allows potential investors to
invest in the fund at regular intervals. Whichever investment plan is best for
any individual should be left to the respective individual to decide based upon
their preferences, style of investment, etc.
If you have an appetite for high risk and have
a considerable amount of money kept idle in your safe case, you can opt for a
lump sum method of investment. If you are someone who is comfortable with
making bits of appointment over chunks of the period, SIP could be your ideal
The risk of investing is comparatively higher
in the lump sum mode of investment as the purchase price is average out in SIP,
keeping it at a distance with the risk of investing, majorly when the market is
high. Even when the market is downtrodden post the deposit in SIP, a SIP
investment lets an individual enjoy bigger units of mutual funds in the next
installment and so forth. So, now when the market recovers you are eligible for
greater return which is not available in the lump sum mode of investment.
LKP Securities, however, provides an advanced
and more systematic route of SIP, known as SPIP - Seven Picks Investment Plans
which is a product of pure cash market that combines both fundamental and
technical analysis of the market for a better result, popularly known as
Techno-Funda analysis, you can start your investment with a number of just Rs,
2,10,00 which proves to be adequate for an entire year.
Mutual Funds have witnessed some considerable
growth in India over past years due to which, there have been changes at
regular intervals in the field of mutual funds. The rating of a mutual fund is
judged on the parameters of both qualitative and quantitative factors as
returns, expense ratio, size of the asset, rate of standard deviation, etc. The
compiled summation of all these factors makes a mutual fund best performing.