5 Things To Check Before Investing In Mutual Funds

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It's never an easy task to invest in stock markets, either directly or through mutual funds. You have to pick the right fund-house, scheme and the timing right to get the desired returns.

Here are 5 important things to check before you invest in the best mutual funds in India.

1. Your age and ability to take risk
The most important thing while investing in a mutual fund India is to check your age and ability to take risk. If you are in the 30s, you might want to take a risk by investing in equity mutual funds. On the other hand if you are in the 50s, you might want to invest in debt oriented mutual funds, which can offer almost certain fixed returns without your capital being eroded.

2.Track record for best performing mutual fund
Take a look at the track record of the fund and check how the fund has performed over 5 to 19 years period. If the fund has not performed well in the past, then you might want to avoid the scheme altogether.

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3.Asset allocation
Some schemes invest in debt, while others invest in equity and some balanced fund. If you like taking a risk go for equities, otherwise just buy a fund that puts all its money in corporate bonds, bank deposits, certificates of deposits or government securities.

4.Size of the mutual fund corpus and expenses
The larger the mutual fund corpus the better it is. This is because there are certain fixed costs, which will be spreader over the larger corpus and thus help to reduce costs.

5.Entry and Exit load
Each time you invest in a mutual fund scheme, there is a possibility that you would like to sell the same. When you buy or sell, there is an entry as well as exit load that is levied, which is nothing, but the charges that would be applicable to you. Not all top mutual fund schemes charge an exit load. But look out for those funds which charge lower entry load.

We have already seen mutual funds investments have yielded steady and excellent returns over many years, instead of investing directly in stocks. Your investment and returns, depends on your own need and objective.
Be a wise investor!

Nifty Total Returns Inverse Index

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An Inverse Index tries to provide inverse return of its underlying index. A broader index provides good
exposure to an economy, an inverse index on a broader index will provide the desired exposure when the
investor is bearish on the markets. We have already seen Alpha and Beta Indices provided by National Stock Exchange of India and now NSE India has introduced few more indices like Nifty TR 1x Inverse Index and Nifty TR 2x Inverse Index.

Nifty TR Inverse Index provides the investor an opportunity to create an position which gives inverse (opposite) returns as compare to Nifty TR Index. The index is designed to provide the inverse performance of the Nifty TR, representing a short position in the index.

Methodology:

Index value calculation -
Nifty TR 1x Inverse Index Value = Previous day’s Nifty TR 1x Inverse Index Value * (1+ Nifty TR 1x Inverse Index Return).

Graphical Representation:

nifty-inverse-index


Similar to Nifty TR 1x Inverse Index, there is one more index namely Nifty TR 2x Inverse Index, which is a Leveraged index is designed to generate multiple time return of the underlying index in situations where the investor borrows funds to generate index exposure beyond his/her cash position.

Hope we can expect Inverse mutual funds soon from Indian Mutual Fund Industry and these indices could act as benchmark to the schemes.