Choosing a Good Growth Fund
Growth funds are mutual funds that are aimed at high capital appreciation and profitability through investment in shares and stocks, mostly of blue-chip and high net-worth companies. When it comes to risk appetite, then growth funds are second to sectoral funds, with very high volatility. This means there are chances of high losses as well as high gains depending on the market conditions.Growth Funds are mutual funds aimed at development of capital through investments in shares and stocks. Growth funds are volatile in nature with chances of high gains and high losses. In the past 20 years, the Indian mutual fund industry has grown phenomenally; it is now a Rs. 781,000 crore industry. Compared to just one player in 1990, there are 40 plus mutual fund companies. There are 30 companies as of now that are very active in the mutual fund scenario and most of them are focused towards the growth sector. With increasing competition, there should be a radical thrust towards consumer-centric products and customized products that will attract more business. However, there is always a problem of the investor feeling lost in the deafening world of advertisers where every financial product tends to sugarcoat its marketing strategy in order to get more business. . So how do you choose a growth fund among so many mutual funds that vie for your investment?
Here are some ways in which you can find a good growth fund to invest in:
- Find out the track record of the fund in the past 3 years: It is very easy for some mutual funds to advertise that they have been getting a 120 per cent profit in the last year. But the true test of a fund.s performance lies if it is .consistent. enough over a period of time. If it is able to brave the bearish lows of the market and still holds it neck high, you can say it is a good fund. So it is advisable to go for a growth fund that has shown remarkable consistency even in the low periods rather than a new fund which does not have much of an experience to talk about. There is nothing wrong going with a fund that is new in the market, but it is better if you have a track record of the past few years to make a better decision.
- The Asset Fund Manager: The record of the asset fund manager also matters to an extent. If a particular fund is being headed by an asset fund manager who has a lot of reputation in the market, a lot of investors may repose trust in him.
- Customer service: The customer service of the mutual fund house also matters. For instance, things like statement delivery on time, a good auto debit facility, the hassle-free system of redemption are some of the factors that you should look for.
- Reviews: R ead reviews about mutual funds in various financial sites or mutual fund specific websites; read blogs and forum sites to know how a fund is performing.