How to Choose Best Financial Company for Investing in Mutual Funds

Planning to invest in mutual funds? Then it’s better to not choose a bank but a financial company that specialises in asset management, such as a fund house. You can safely invest in a reputed asset management company (AMC) because the capital market regulator, Securities and Exchange Board of India regulates these companies and the Association of Mutual Funds in India looks after the investors’ interests and educates them about investments.

That being said, here are a few tips to choose the best AMC for investing in mutual funds.

Check the AMC’s Reputation

An asset management company takes years to build its reputation. For instance, it may earn a good status after performing consistently for over 25 years. So, always check the reputation of the fund house.

Look for Options of Investment Mode

Opt for an asset management company that allows you to invest in mutual funds online on its website or app simply on your device from the comfort of your home.

Then check whether you can choose from different investment options like a one-time lumpsum investment and a Systematic Investment Plan (SIP) online. In the latter case, you can spread out your investments in small equal amounts over a long tenure and pay them at certain regular intervals (bi-annually, monthly or quarterly). SIP facilitates online automated investments directly from your account to the chosen fund scheme. You can grow your returns manifold with the effect of compounding. Also, you can beat market inflation through benefits like rupee cost averaging.

Check the Fund Manager’s Credentials

It’s important to check the investment style and track record of the AMC’s fund manager who’ll manage your fund’s trading activities. That’s because the performance of many fund schemes depends on the fund manager’s skill and investment style.

Look for Multiple Options of Products

Consider choosing an AMC that offers various kinds of mutual fund products to choose from. Check out important categories like New Fund Offers/Funds from Operations (NFO/FFO), exchange-traded funds (ETFs), retirement funds, top trending funds, and most importantly, funds by asset class (such as equities, debts, gold funds and liquid funds). See whether you can compare the performances of the mutual funds online on the AMC’s website to choose one offering consistently good returns.

Check out Mutual Fund Tools

The AMC you choose must offer smart mutual fund online tools to optimise your journey of investments. These may include but not be limited to:

  • A risk analyser to assess your risk appetite before investing in a fund
  • An online SIP calculator to calculate the roughly estimated returns from your SIP investments
  • An SIP with annual increase calculator to figure out by how much you should ideally step up your SIP investments annually
  • Become Crorepati Calculator to estimate how much investment you should make to accumulate enough savings to become a millionaire (crorepati)

Go through the Reviews

It’s a good idea to see if the past performance of a fund house has been consistent and whether there are too many complaints against it.

Consider the above factors to choose a good AMC to start your mutual fund investments.

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