How to evaluate a mutual fund before investing?


I am 24-years-old and have recently started working. My monthly income is Rs 1.3 lakh. I am looking to invest about 50,000 rupees every month in mutual funds through SIP. My investment horizon is five to 10 years. Please suggest a mix of largecap, multicap and balanced funds for me. Also, I want to understand how should I evaluate a mutual fund before investing?
— Rohan Jain


Devang Kakkad , Head- Investment Advisory, Equirus Wealth, responds:


Congratulations on starting with your investments early. It is also equally important to be disciplined about your SIPs. Given your age and investment horizon, I suggest you look at a blend of largecap and multicap funds.

Basis our inhouse research, select largecap, multicap and balanced funds that you could consider investing in are:

Largecap funds:

• Axis Bluechip Fund

• ICICI Prudential Bluechip Fund

Multicap funds:

• Mirae Asset India Equity Fund

• UTI Equity Fund Fund

Balanced Funds:

• Edelweiss Balanced Advantage Fund

• ICICI Prudential Balanced Advantage Fund

Our inhouse research team analyses various quantitative and qualitative parameters for evaluating various mutual funds schemes. To begin with, you could at least start evaluating mutual funds basis the quantitative parameters such as a) Mean return, volatility & sharpe ratios; b) Portfolio concentration analysis and exposure to sensitive sectors; c) Liquidity analysis; d) Asset quality.

All the quantitative data points mentioned are available in the monthly fund factsheet or widely available online. In addition, qualitative factors that our research team considers while shortlisting funds include a) fund house’s due diligence and b) engagement with fund manager.



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