Which mutual fund plan to buy to get good returns? Here is all the help you will need
For those investors, who are confused with which mutual fund plan to buy, index mutual funds are a better option. In this plan, one gets returns in sync with the index growth during the investment period.
Mutual fund investments are linked to markets, then why not invest in those plans, which are directly linked with their performance? For those investors, who are confused with which mutual fund plan to buy, index mutual funds are a better option. In this plan, one gets returns in sync with the index growth during the investment period. According to the tax and investment experts, its passive investment in equity market.
Speaking on the Index Mutual Funds, Kartik Jhaveri, Director — Wealth Management at Transcend Consulting (India) said, "Index Mutual Fund is a bunch of stocks from the same index being offered by the Mutual fund houses. it doesn't have any fund manager means the return one can expect in this type of mutual fund is directly proportional to the index performance at the stock market."
However, he said that the fund manager is hired by the mutual fund houses to outperform the market. So, when the market is not moving fast, fund managers become important because it has been found that an index is not moving but some stocks would be moving. So, in such circumstances, Index Mutual Funds give lesser return than the customary mutual funds.
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On how much difference one can expect between a managed mutual fund and an Index Mutual Fund, Jhaveri said, "In long-term perspective say more than 10 years, the difference could be to the tune of 3 per cent to 10 per cent, depending upon the acumen and experience of the fund manager."
However, Jitendra Solanki, a SEBI registered investment expert said, "Index Mutual Funds have been coined to get better returns when even fund managers are unable to give handsome returns. For example, in last three to four years, large-cap Index Mutual Funds have given better returns than a fund managed mutual funds. So, it's better to diversify one's investment rather sticking to one type of investment.
"My suggestion to the mutual fund investors is to pick Index Mutual Funds when they are investing in large-cap, but stick to fund managed customary mutual funds in mid-cap and small-cap segment," said Jitendra Solanki.
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