BENGALURU: Are you thinking about investing in a mutual fund, but you are not sure how to go about it or which one is the most appropriate based on your needs? You're not alone. However, what you may not know is that the selection process is much easier than you think. But, deciding which option to go for is as critical, according to rediff.com.

Here are some five factors that will help you in deciding which Mutual Fund to go for.

Scheme Asset Size:

Scheme asset size is different for debt and equity schemes. However, in equity the comfortable asset size is hundreds of crores and in debt it should be in thousands of crores as the investment value per investor is higher in debt funds. 90 percent of total assets under management (AUM) of the mutual fund industry are invested in debt funds, so your selected scheme assets should also have a considerable AUM.

Less AUM in any scheme is very risky as you don’t know who the investors are and what quantum of investments they have in this particular scheme.

Tenure Of Fund Manager And Experience:

In any fund’s performance, a fund manager plays a very important role. Even though it is a processoriented approach, but still the fund manager is the ultimate decision maker and his experience and view point counts a lot. You should know who the fund manager of the scheme is, as well as his past track records.. If the fund manager of the scheme has recently been changed, don’t panic. 

Just keep a watch on his performance by looking at alpha and quarter to quarter performance.

Ratio Of Total Expense:

Expense ratio is very important factor to be looked at while selecting any mutual fund scheme. All fund management and distribution related expenses are borne by the scheme. Generally this means high expense ratio will affect the fund’s returns. Though mutual fund’s total expense ratio has been capped by SEBI, still the lower the better, unless we get some extraordinary return by paying higher expenses for fund management.

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