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Choosing a Scheme for Investment from a Number of Schemes Available

As already mentioned, the investors must read the offer document of the mutual fund scheme very carefully. They may also look into the past track-record of performance of the scheme
or other schemes of the same mutual fund. They may also compare the performance with other schemes having similar investment objectives. Though past performance of a scheme is not an indicator of its future performance, and good performance in the past may or may not be sustained in the future, this is one of the important factors for making investment decisions.

In case of debt-oriented schemes, apart from looking into past returns, the investors should also see the quality of debt instruments which is reflected in their rating. A scheme with lower rate of return but having investments in better rated instruments may be safer. Similarly, in equities schemes also, investors may look for quality of portfolio. They may also seek advice of experts.

Information on Mutual Funds

Almost all the mutual funds have their own web sites. Investors can also access the NAVs, half-yearly results and portfolios of all mutual funds at the web-site of Association of Mutual Funds in India (AMFI) (Website: http://www.amfiindia.com/). AMFI has also published use full it literature for the investors.

Investors can log on to the web-site of SEBI (Website: http://www.sebi.gov.in/) and go to "Mutual Funds" Section for information on SEBI regulations and guidelines, data on mutual funds, draft offer documents filed by mutual funds, addresses of mutual funds, etc. Also, in the annual reports of SEBI available on the web-site, a lot of information on mutual funds is given. There are a number of other web-sites which give a lot of information of various schemes of mutual funds including yields over a period of time. Many newspapers also publish useful information on mutual funds on daily and weekly basis. Investors may approach their agents and distributors to guide them in this regard.

Concluded.

* 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.