Identifying what not to do while investing in mutual funds is more important than knowing what to do.
That’s the word from independent financial advisor Harsh Roongta.
There’s a huge emphasis on selecting the right fund. But an investor should focus on selecting the right ‘type’ of fund, he said on BloombergQuint’s weekly series The Mutual Fund Show. “The correct asset allocation will ultimately play a larger role.”
Amol Joshi, founder of PlanRupee Investment Services, agreed. “Red flags are equally important while selecting a mutual fund scheme.” This, Joshi said, will enable an investor to accomplish the goal.
- Stay away from a scheme with dividend option as dividend is simply the investors’ money coming back to them.
- Watch out for regular changes in the fund management team.
- Asset management companies which have been scrutinised by a regulatory body should be a good learning for the fund house, investors and advisors.
- Watching out for frequent and extraordinary changes in expense ratio.