It is necessary for every mutual fund investor to regularly check out the performance of mutual funds they invested in.
OBJECTIVE PARAMETERS
The NAV of the scheme will reflect the performance of the scheme. The fund will also give you returns for various periods such as one month, three months, six months, one year, three years, since inception, etc. This will give you an idea about the performance of the fund. Funds also provide comparison with relevant benchmarks. This should tell you whether the fund manager has performed better than the benchmark. However, financial experts believe that these returns do not give the complete picture. They believe that the return should be risk-adjusted. Various publications and Internet sites provide such returns. The computation is complicated and they use various formulas for this purpose.
SUBJECTIVE PARAMETERS
The performance alone does not make a fund house a winner. Equally important is the service standards and transparency in actions. It is also essential that the fund offer speedy solutions to grievances of investors. The reputation of the fund house among its investors and public at large indicates how well the fund scores on this front.
INFORMATION SOURCES
Every financial daily offers daily NAV of all mutual fund schemes. Magazines also come out with annual survey of mutual funds. There are even magazines dedicated entirely towards mutual fund industry. Internet is also a great place for information. There are dedicated sites as well as financial sites, which offer information on mutual funds. Association of Mutual Funds of India (AMFI) home page is also a great place for information.
RESOLVING GRIEVANCES
Mutual funds are regulated by SEBI (mutual fund) regulation 1996. Therefore, an investor always has the recourse to approach the watchdog. Various investor forums also take up the case of individual investors. You can also turn to judiciary as a last resort.
GLOSSARY
NAV : NAV is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units.
Sale price : The price you pay when you invest in a scheme. It is also called offer price.
Repurchase price : The price at which a close-ended scheme repurchases its units. It is also called bid price.
Redemption price : The price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. This price is NAV related.
Entry load : The extra amount you pay when you invest in a scheme. It is also called front-end load or sales load.
Exit load : Amount collected when you are selling or redeeming units.
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