Knowing the Performance of a Mutual Fund Scheme: The performance of a scheme is reflected in its Net Asset Value (NAV), which is disclosed on daily basis in case of open-ended schemes, and on weekly basis, in case of close-ended schemes. The NAVs of mutual funds are required to be published in newspapers. The NAVs are also available on the web-sites of mutual funds. All mutual funds are also required to put their NAVs on the web-site of Association of Mutual Funds in India (AMFI) (Website: http://www.amfiindia.com/) and, thus, the investors can access NAVs of all mutual funds at one place.

The mutual funds are also required to publish their performance in the form of half-yearly results, which also include their returns / yields over a period of time, i.e., last six months, 1 year, 3 years, 5 years, and since inception of schemes.

Investors can also look into other details like percentage of expenses of total assets as these have an affect on the yield and other useful information in the same half-yearly format. The mutual funds are also required to send annual report or abridged annual report to the unit holders at the end of the year. Various studies on mutual fund schemes including yields of different schemes are being published by the financial newspapers on a weekly basis. Apart from these, many research agencies also publish research reports on performance of mutual funds including the ranking of various schemes in terms of their performance.

Investors should study these reports and keep themselves informed about the performance of various schemes of different mutual funds. Investors can compare the performance of their schemes with those of other mutual funds under the same category. They can also compare the performance of equity-oriented schemes with the benchmarks like BSE Sensitive Index, S&P, CNX, Nifty, etc. On the basis of performance of the mutual funds, the investors should decide when to enter or exit from a mutual fund scheme.

Knowing Mutual Fund's Investment Plan

The mutual funds are required to disclose full portfolios of all of their schemes on half-yearly basis which are published in the newspapers. Some mutual funds send the portfolios to their unit holders. The scheme portfolio shows investment made in each security, i.e., equity, debentures, money market instruments, government securities, etc., and their quantity, market value, and % to NAV. These portfolio statements are also required to disclose illiquid securities in the portfolio, investment made in rated and unrated debt securities, Non-Performing Assets (NPAs), etc. Some of the mutual funds send newsletters to the unit holders on quarterly basis, which also contain portfolios of the schemes.

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* Contributed by: -
R. Sethumadhavan,
M.A, MBA, M.Phil, Ph.D.,
Faculty - Management Studies,
Tamilnadu College of Engineering, Coimbatore.
Article posted on October 4, 2008.