Diving Deeper into Equity Fund Selection: Key Factors Every Investor Should Consider

New Delhi (India), May 6: When choosing equity mutual funds, it’s easy to be swayed by past performance alone. However, relying solely on historical returns may not provide a complete picture of a fund’s potential. To make informed investment decisions, consider these essential factors beyond past returns:

• Risk Analysis:Assess the fund’s risk profile using metrics like ‘Maximum Drawdown’ and ‘Standard Deviation’ to understand potential losses and volatility. Comparing these risks with benchmarks or similar funds can provide valuable insights.
• Risk-Adjusted Returns:Look beyond absolute performance numbers and analyze how effectively the fund generates returns relative to the risks taken. Metrics such as the Sharpe and Sortino ratios offer a more comprehensive view of risk-adjusted returns.
• Expense Ratio:Evaluate the fund’s expense ratio, which reflects the percentage of assets used for operating expenses. While a lower expense ratio is generally preferred, consider it in conjunction with other factors to gauge overall value.
• Portfolio Diversification:Examine the fund’s asset allocation and sector exposure to ensure it aligns with your investment objectives and risk tolerance. Diversification can help mitigate risk by spreading investments across different sectors.
• Fund Size and Liquidity:Consider the fund’s size and liquidity, as larger funds may face challenges in nimble resource allocation, while liquidity is crucial for efficient trade execution.

Where to Conduct Comprehensive Research on Equity Funds?

For in-depth analysis and insights based on these critical factors and more, explore Dezerv’s mutual fund research platform. Dezerv, a trusted wealth management company headquartered in Mumbai, offers free access to information on over 2000 schemes. Leverage Dezerv’s platform to evaluate mutual funds based on quantitative metrics and make well-informed investment decisions tailored to your financial goals.

Visit the Dezerv website to access detailed information on equity funds and enhance your investment strategy with data-driven research and analysis.

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