How to compare your Mutual Fund performance with other Mutual Funds

Keeping track of the performance of your Mutual Fund and comparing Mutual fund Performance is as important as selecting a Mutual Fund. However, very few Investors do the same. It has been found that most of the Investors only do an initial survey at the time of purchasing the mutual fund but forget about its performance after having purchased the Mutual Fund units.

It is highly advisable for everyone to track their Mutual Funds once every quarter and the following are the ways of tracking the performance of a Mutual Fund.

1. Choosing the right benchmark Index

Do not merely get happy by merely looking at the growth of the Net Asset Value (NAV) of the Mutual Fund. The performance of the Mutual Fund also needs to be compared vis-a-vis, its benchmark index. This tells you whether your scheme has outperformed the market or not. Otherwise, it could have under-performed the market and you would be ignorant which is the worst thing to happen for any Mutual fund Investor.

Mutual fund performance How to compare your Mutual Fund performance with other Mutual Funds

2. Don’t Compare Apples with Oranges

If you have invested your funds in Large Cap oriented Mutual Fund scheme, compare its performance with only other large cap oriented schemes and not that of the mid-cap ones. Quite often, mid-cap schemes outperform the large-cap ones, so you may think that your fund has under-performed which may not be the case. Similarly, don’t compare Debt funds with Equity Funds

3. Lump-Sum Vs 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. Suppose you have started an SIP of Rs. 1000 in a fund for 12 Months. By the end of the tenure you would have invested Rs. 12000. However, as this Investment was made over a period of 12 Months, each unit was bought at a different NAV and therefore got a different time period to grow.

In contrast, in a lump-sum investment, you invest the whole amount at one go at the then prevalent NAV and therefore your money got a different time period to grow which is more than the time period for the SIP to grow.

Tracking Mutual Funds Online

If you are familiar with computers, tracking the performance of your mutual fund online is much easier as there are many websites which offer portfolio tracking services free of cost. You just need to register yourself on the website and update your investment details such as the number of units and the NAV at the time of purchase.

The NAV automatically gets updated on a daily basis, so the website will give you an accurate idea of the fund’s performance.

Tracking Mutual Funds Offline

Even if you are not that tech-savvy to open financial portals, tracking the performance of your fund is not that difficult. All mutual fund houses provide you with their annual reports, half yearly reports and other newsletters which contain all details about the performance of the Mutual Funds. Apart from this, financial newspapers also publish NAV’s of various schemes.

Previous post:

Next post: