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Now that you know all about this effective investment tool, download the ETMONEY app to start investing in mutual funds as per your investment objective.If you're invested in any of the funds in our "Magnificent Retirement Mutual Funds" list, congratulations on owning some of the best managed and top-performing mutual funds. And if we revolve our research around the fact that has been discussed above, then selecting the right fund is not a tedious task at all. Instead of chasing the illusion of the best mutual fund, the right investment approach is to look for the right fund as per your investment requirement. If you exercise these cautions while selecting a mutual fund, the funds that are the right fit for you will be easier to select, and you call them the best mutual funds for you. However, if the fund manager is not that efficient, then the fund might not perform that well in the future. If the fund manager is good, then that particular fund will do well.
#Best performing mutual funds 2020 how to
The fund manager plays a key role on how your mutual fund is performing, as he/she is the point person to decide on which stocks or securities to invest and how to distribute the money for a particular mutual fund. A good fund manager has the ability to turn the worst-performing mutual fund to the best performing fund.
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Third, check who the fund manager responsible for the particular fund is. And for the third year, it provided a return of 5.5 percent.Īmong the two funds, the first fund is better than the second, as its return consistency is better.
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Meanwhile, for another fund, the first-year returns are 12 percent, second year’s return was 1 percent. And in the third year, the returns are 10 percent. For example, the return for a particular fund in the first year is 9 percent.
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Second, check whether the fund’s returns are consistent or not. So, this fund is not suitable for investment as it does not have the downside protection. But, in the second year, its returns are -30 percent. For example, let’s suppose that returns for a particular fund are 25 percent in the first year. Now after you have already selected the mutual fund category as per your investment horizon and risk appetite, here you might ponder how do I choose the fund that is suitable for your investment? Here are the 3 thing to check while selecting a mutual fund #Number 1: Downside protection:įor this, the first thing that you need to check is the fund’s downside protection. Selecting mutual funds as per investment horizonĮxperts often suggests, you should invest in equity mutual funds only when your investment horizon is more than five years. Meanwhile, if your investment horizon is about three to five years, then you should invest in hybrid funds. You can consider investing in small or mid cap funds only when your investment horizon is more than seven years. For such a short time horizon, you should never invest in small or mid-cap funds. Once you answer these questions, you can understand which mutual fund category is the right fit as per your investment objective.įor example, if your investment horizon is only one to three years, then you should invest in debt funds. And you can find that by answering 2 questions: Now, the way to go about investing is finding a fund that is in sync with your investment goals. So while choosing a mutual fund for investing your money, it is necessary to determine your investment objective The right way to invest- Find the mutual fund that will help you meet your investment goals The fund which might be the right fit for you, is not necessarily the right option for another investor. The popular saying goes – one shoe does not fit all. But this is not the right way to invest in mutual funds. Normally it has been observed that a retail investor looks at the returns of all the funds for the last one to three years, and invests in the fund that has provided best returns during this period. And while chasing this illusion, they missed the chances to fulfill their financial and investment objectives. Many retail investors have realized big losses chasing the illusion of the best mutual funds. Similarly, today’s worst-performing mutual fund might become the best performing mutual fund tomorrow. This is solely because the mutual fund which is performing well today does not come with the guarantee that it will continue to perform in the same manner, or would generate great returns in the future. The concept of best mutual funds is a myth as the best mutual funds do not exist. In this blog, we will talk about how to select the right mutual fund as per your investment objectives.