Don’t go for new funds this year: With rising stock markets, there are fund houses that will launch new funds. It seems that this year, as markets rose, around 30 equity new fund offers, or NFOs, hit the market till May. According to experts it is best to stay away from NFOs. This is true of all funds, even if they have a big corpus. There are many investors who usually think or are made to think that the NFO price of Rs 10 per unit is low and so they should prefer NFOs to established funds whose NAVs are usually higher. But mutual funds are different from stocks. The price of a stock is determined by demand and supply while that of a mutual fund unit depends upon the value of the underlying assets. Investors should understand that what matters is how much return the fund is giving, whether the unit price is Rs 10, Rs 100 or Rs 1,000 doesn't matter.

Performance of different schemes this year

1. Sector OR Thematic funds: One of the main purposes of investing in mutual funds is

Sector funds carry a high concentration risk. It has the capacity to substantially outperform diversified funds. However, at the same time, they may get hit harder in downturns. Investors should understand that due to cyclical nature of businesses, a few sectors will do better than others at any given point in time. No sector index has topped the charts for long. Thematic funds, however, have a broader investment universe compared to sector funds. But investors chase the top performing theme and buy when it has already had a good run.