INSUBCONTINENT EXCLUSIVE:
When it comes to a mutual fund, everyone
wants to know which is the best performing mutual fund now
Do we need to invest only in the best performing mutual fund No.Do we need to change our portfolio every now and then to invest only in the
currently best performing mutual fund No.Are there any criteria we need to see before selecting a mutual fund Yes.Contemporary is
Temporary"Every tomorrow has been uncertain." - Warren BuffetBest performing mutual fund in contemporary market is temporary
Today we can say which one is the best performing mutual fund
But, we can't say the same in future.In reality shows, the judges will announce "the best performer of the week" award every week
But there is no assurance that the same person will get the award every week
Mutual fund is also like that
It will change once in a while
We can't say the best performing mutual fund of this year will be the same after five years."There is nothing permanent except
change."-Heraclitus.Past Performance of a Mutual Fund:Here, I want to compare the best performing mutual fund with a cricket match.The past
performance of a mutual fund is like the review of the previous match where we can highlight the plus and minus.The currently best
performing mutual fund is like a Live Match
But the live match will eventually come to an end.Investing in currently best performing mutual fund is like assuming the winner of the
upcoming match based on the live match
We can't be sure whether the same team is going to win the next match.It doesn't mean you should ignore the past performance of a mutual
fund.Performance of mutual funds is one of the factors (and not the only factor) which helps you to choose the right mutual fund
Don't chase only the best performing mutual fund.Beyond Best performing Mutual Fund to select a Mutual Fund:There are some important
parameters beyond the past performance of a mutual fund that we have to look
We need to consider things like our goals, needs, liquidity, other investment plans, and tax planning
We just can't blindly invest in a mutual fund for the best performance
We should consider all the above things before investing in the mutual fund.Best for You:"It is not enough to do your best; you must know
what to do, and then do your best"- W
Edwards DemingWho doesn't want the bestEveryone wants it, including me
But, which one is the bestLump-sum or SIP InvestmentLong-term or short-term InvestmentMutual fund or equity investmentWe have more than one
What we choose matters.Everyone has different goals, income and expenses.Long-term investment can be suitable for one person
But, we can't say the same for another person.The same applies to the best performing mutual fund.It may be the best for another person,
but, there is no assurance it will be suitable for your requirements too.A best performing mutual fund scheme may be the best for your
But there's no assurance that the same scheme will be the best for you too because your needs will be different from your friend.So choose
your best to meet your needs, and not just the best.You don't have to invest in some mutual fund because of its performance
Like I mentioned before, your needs are different from your friend or others
So, your investment scheme may be different from your friend or others.Long-Lasting performance:Yesterday's best performance is today's past
We don't know if today's best performing fund will retain the same performance tomorrow
An average performing fund may become the best performing fund tomorrow
We always can't depend on the best performing fund
Instead, we can focus on the fund which has been doing great consistently in the mutual fund world for a long time
But, it can't be the worst fund in the meantime.Existing portfolio:"Strength lies in differences, not in similarities"- Stephen CoveyThink
before selecting the same mutual fund scheme you already have because of its current performance
What will you do if the fund starts underperformingHaving two mutual fund schemes in same nature is like having the same dress in two
different colours.Instead, you can diversify into a different category of the fund based on your existing portfolio.Final Thoughts:"The
biggest adventure you can take is to live the life of your dreams." - Oprah WinfreyYour dreams are part of your life, and they give meaning
Your investment is a tool which helps you to reach your dreams
Just remember, investments are not ends in themselves
They help you to understand the superior goals in life.To achieve superior goals of our life, we need complete and comprehensive financial
plan which covers everything from goal setting to execution towards the achievement of your goals.Consider all these factors along with the
list of best performing mutual fund schemes
It will help you to choose a fund which is the best for you instead of looking at the list of best performing mutual fund schemes.(K
Ramalingam is the chief financial planner at Holistic Investment Planners, a financial planning and wealth management company.)Disclaimer:
The opinions expressed within this article are the personal opinions of the author
The facts and opinions appearing in the article do not reflect the views of TheIndianSubcontinent and TheIndianSubcontinent does not assume
