Mutual funds are one of the most preferred investment avenues these days. With numerous funds available to choose from, the confusion starts right from the type and name of the mutual fund. For a layman, it is extremely difficult to understand each and every fund type and select the appropriate one. The ETMoney app is one of the leading applications available online which helps investors to invest in mutual funds by knowing each type. It is a direct mutual fund app that enables hassle-free investment alternatives to its audience.
Why compare mutual funds?
The investment objectives of every investor in the market are not the same. This is due to the different financial goals of each individual. One common goal and objective of any investor is to maximise the returns of their portfolio. A direct mutual fund app provides a clear comparison between mutual funds and their types and subtypes.
Having a crystal clear idea of the financial goals is necessary to reduce the risk for a particular investment. It may so happen that a mutual fund scheme is a good alternative for one investor but might be a very risky alternative for the other.
You may feel that you are spoilt for choice while selecting mutual funds. The most common types are debt, equity, and hybrid funds. Investments in mutual funds are generally for a long-term period and an individual’s hard-earned money is at stake when it comes to this investment option.
An ideal fund would be one that reduces the risk and maximises the returns for a portfolio. It is necessary to compare mutual funds for this reason. A direct mutual fund app like ETMoney app can aid this process.
What is the correct way to compare funds?
Using the wrong method of comparison can sometimes lead to the selection of the wrong fund. This might hinder the financial goals and expected returns from the investments.
There are some general thumb rules that you can follow -
It is important that you compare an apple with an apple. By this, we mean that always compare the same asset classes. For example, a debt fund has to be compared to a debt fund and an equity fund has to be compared to an equity fund. To prevent a wrong comparison, you need to first ascertain your investment horizon. Equity funds will have the highest investment horizon followed by hybrid and then debt funds.
For comparison of debt funds specifically, some additional points also have to be considered. These include modified duration and credit rating of the portfolio. Debt funds have a higher risk if they have a higher modified duration and vice versa. A higher credit rating for a portfolio is always preferable as the portfolio is stronger as compared to others.
Conclusion
Having to choose from many options is definitely a good thing but one needs to be aware of all the parameters that have to be evaluated. An individual might not be able to read all of the features a mutual fund offers, a comparison is available on applications that can be easily accessed online. ETMoney gives a clear and concise comparison of all the mutual funds and makes the investment process a bit less complicated. ETMoney also has additional services on their app such as advisory and various other investment alternatives available depending upon the needs of the investors. The application has online tools and calculators that help to know the exact percentage of returns and the sum that can be expected from a mutual fund.
Always remember to compare and make an informed decision with regard to investment in mutual fund investments with the ETMoney app.