- Vibha
- 09 Sep 19
- Investor

What do you look for when investing in mutual funds?
Most investors look for the track record of the fund in 'outperforming' the benchmark index. However, investors may be committing a massive blunder by fleeing from recent losers and flocking to winners, primarily if they act on relatively short-term results.
The 'outperforming' metric of a fund is based on the records of the investment portfolio over time, compared with its peer's performance or the benchmark index. Since it is vital in creating a diverse and secure investment portfolio, it only makes sense to learn the ins and outs of trying to outperform.
As an investor, it is natural to look at the past performance of the product before investing money. And, there is nothing wrong with it. However, the problem arises when one tries to capitalise only in such funds.
The market comprises of several kinds of investment products, which follow a particular growth plan - few are momentum-driven, whereas some are value-focused. To create a diversified investment portfolio, one needs to identify the types and features of funds to develop the right set.
An alternate way to deal with fund management would mean a different trajectory of returns. Moreover, it is in this context that trying to look for out performers every time is not necessarily in the interest of the investor. Ideally, an investor should have a blend of different mandates so that they complement each other, ultimately reducing the market risk of volatility and uncertainty.