How much importance should I give to the past performance of any mutual fund?


#1

How much importance should I give to the past performance of any mutual fund?


#2

Past performance should not be a yardstick to select any mutual fund but that does not mean one should ignore the past performance. It is always a good idea to take an active look at the history of the fund, its performance, dividend ratio and sectors the fund has invested in. Although past performance does not guarantee future performance, it can give an idea about the overall performance of the fund in previous years in comparison to other funds in its asset class. Make sure to check the investment history and success rate of the mutual fund manager before deciding on a investing on any new mutual fund.


#3

Hi Niharika,

Even though performance is important for choosing a fund, that should not be the only criterion for choosing the fund. You need to look at other factors such as how it is performed when compared to the market, has it been able to beat its peers consistently, its portfolio concentration, turnover ratio, beta and standard deviation. If you don’t have enough knowledge about these, we suggest that you get the help of a financial planner.

Cheers,
BB Expert