Mutual fund investment strategies:Best way of investment in funds


People are wiling to investment in mutual funds to earn higher returns but they commit some mistakes due to which they suffer losses instead of profits. There are certain mutual funds investing strategies which must be considered by an investor and avoid certain mistakes while making investment.

Fluctuation period in share market is worst for investors. In such condition, investors should act wisely and select best investment option only after gathering complete information. Lest come to know that what are the mistakes which an investor makes and mistakes to be avoided while making investment.

Investment strategies & do not's in mutual investments


Don't invest according to short term performance:
It has been observed that investors consider the trend of assets in short term. Investors should not dominate the short term market trends on their long term investments. For example, if an investor invests in diversified equity fund, then his investment term period should be of 5 years. Investor should gather information about quality of investment process, record of fund manager and of asset Management Company along with other factors.

Our advice: It is suggested by our experts not to make investment strategies based on the performance of fund or any other asset in last month or last quarter.

Investment in an asset and effect of its maturity:
Nowadays, there are common discussions of investment in mutual funds and its maturity amount. Which category got most number of investments and which one got minimum investments is also discussed a lot. The investments in which maximum number of investments are made is believed to be best investment option. But it has a factor. Let us understand it with the help of an example.

There has been great outflow in equity fund in last 18 months but it is wrong to say that investment in equity fund is no more beneficial. However, it is correct to study the asset-flow to understand the trend of investment in a particular time period but it is not recommended to take investment decisions on short term trend basis. Don't forget that the trend can change anytime.

Imitating the portfolio of fund manager:
Another trend which is picking acceleration day by day is those investors try to minimize the portfolio of some successful fund manager. Investors get greedy to earn higher returns and invest in those shares in which some successful fund manger had invested. Such type of investment strategy is termed as Coattail investment. Such investors consider only one factor that fund manager had earned smart returns by investing in those shares but he get unable to understand that why fund manager had invested in those particular shares only. Also, investor cannot know the weightage of such shares in manger's portfolio. He remains unaware of the factor that when fund manager had sod the shares due to which reason or changed his portfolio. Thus he suffers losses instead of gains.

If you take care of above mentioned tips and avoid these mistakes while investing in mutual fund, then you can earn higher returns.

Wish you happy investing.


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