4 Tips To Track The Progress Of Your Mutual Fund Investments

  Author: Kundan Kishore

For any investor, return is the vital aspect of any investment including investments in mutual funds. So, you will agree that keeping track of the performance of your mutual fund on regular basis is as important as selecting a well-performing fund. Here are some tips to help you to stay up to speed on the performance of your mutual fund investments.

Track investments regularly Regular monitoring of investment performance doesn’t mean round-the-clock vigil or a daily check. You can do it on a quarterly or half yearly basis. Of course, how you track the performance of the fund is vital.

Choose the right benchmark index Don’t let the growth in the net asset value (NAV) of your fund over a period of time, distract you. The right way to compare aa mutual fund performance is with respect to that of its benchmark. This gives you the clear picture of the performance of your scheme. Remember, your purpose of investing in a mutual fund is to get a better return than the market. When you look at the returns in absolute terms, you don’t get the correct picture.

Compare with peer funds Compare the performance of your mutual fund investments with that of peer funds. Otherwise, you might be guilty of comparing apples with oranges. For instance, if you have invested in a large-cap oriented mutual fund scheme, compare its performance with large-cap oriented schemes rather than mid-cap oriented ones.

Don’t compare lump sum and SIP returns When you opt for a systematic investment plan (SIP), you do not invest the whole amount at one go, but over a period of time. In contrast, in a lump sum investment, you invest the whole amount at one go. This results in difference in returns of the two.  Therefore, don’t compare SIP and lump sum returns since that will distort the picture for you.