How To Select The Best Mutual Funds

Hey, are you interested to invest your money? But you don’t know where to invest your money. This article will help you.

For the past two years, I am researching the different types of investment products. 

Here today I am writing about the complete details about mutual funds.

What are Mutual Funds

If you don’t want to invest directly in financial markets you can choose mutual funds.

Mutual funds are one type of investment product. 

Here Mutual Fund companies collect money from the public and then purchase the selected Stocks, Bonds, and Debentures in different industries. Markets usually perform well over a long period.

The share prices will go up and down in the short term. Mutual Funds will perform better in long term perspective.

From the past decade, the market capitalization of the mutual funds increasing exponentially and also giving More Than 15% returns yearly.

Why Mutual Funds

As a Newbie, you didn’t have any knowledge about the Financial markets. In the financial markets, we have a number of options available. 

They are 

  • Fixed deposits
  • Post office saving schemes
  • Employee provident fund
  • bonds
  • Real Estate
  • Mutual Funds
  • Stocks

These are the major investment opportunities in Financial Markets. Based on your risk appetite you can invest in different financial products. Deposits, Bonds, and Provident funds giving less than 10 percent only.

If you are expecting more returns in the long-term, stocks are the best option but as a newbie, it is very risky. To solve this problem Mutual funds were introduced. 

For this work, they take the fee from you. 

Types of Mutual Funds

In the financial markets different types of Mutual funds available.

Mainly we consider three types of funds 

  • Open-Ended Fund
  • Closed-Ended Fund
  • Interval Funds

Open-Ended Fund:

In the open-ended fund, you can invest your money at any time. There are no restrictions to join this fund scheme. You can purchase the units at any time and Redeem the units at any time. Based on the market conditions the Units will change.

Closed-Ended Fund

In the Closed-ended fund, you can invest your money at a fixed period. You can’t redeem your investments before maturity. If you are willing to buy closed-ended funds you can buy during the New Fund Offer(NFO).

Interval Funds

It is the closed-ended fund. But a specific period of time it becomes an open-ended fund. During this period of time only you can buy these funds.

Mutual Fund Products Available In Market

Here basically different types of mutual funds products available in the market.

Based on market capitalization:

large cap:

Here the company value should be more than 20000 crores. This is also called blue chip funds. In over the long period of time it gives better returns. The risk apetitie is low .

Mid cap:

Here the market capitalization of the company is between 5000 crores to 2000 crore. It is medium risk funds. But over the period give good returns.

Small cap:

Here the market capitalization of the company is less than 5000 crores. this companies are very high risk and high rewarded companies. These are the companies based on market capitalization.

Based on the Sectors And Industries:

Sectors funds invest their money in the different sectors like Infrastructure, retail, pharma,banking,technology.Here the fund companies will Select the companies based cusomer risk analysis.

Based on The Investment Style:

This strategy using to create wealth and passive this style basically two types

Growth Funds:

Growth companies focus on wealth creation. The main aim of this fund capital appreciation over the long term.

Dividend Yield Funds:

The goal of this fund is to create passive income for the investors. Mutual fund companies will invest our money in High dividend yield companies. Here companies will share their profits to mutual fund companies. Mutual funds companies send the profits to investor’s portfolios.

Benefits of Mutual Funds

  • Mutual Funds are very flexible to invest
  • Tax exemptions are available for ELSS funds
  • Liquidity is possible
  • Transparency is high

Demerits of Mutual funds

  • Risk is high compared to the fixed deposits and Provident Funds
  • High Expenses for buying mutual funds
  • The Lock-in period is also high for short term investors


These are the different types of mutual funds available in the markets. If we compared to the other investments mutual funds are the best opportunity to invest.

How to Select A mutual Fund: 

  • Based On Your Risk Nature( High, Medium, Low)
  • Based On Your Financial Goal
  • Based On Fund type
  • Based On Fund Manager Experience
  • Past Performance Of The Fund
  • Expense Ratio Of The Fund

These are the measurements that we should take before selecting the mutual funds.

What is your opinion on this article. Comment below if you have any questions Or doubts.

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