Tel: +91-11-25822095 | Mail: [email protected]

  • Home
  • About Us
  • The Team
  • Digital Magazine
  • Contact Us

For Online Subscriptions, Click Here img

DIGITAL EDITION AVAILABLE ON

  • Service Industry
    • Services
    • Company/Service Profiling
    • Trends in Service Sector
  • Marketing
    • Social Media
    • Rural Marketing
    • Analytics
  • Human Capital
    • Human Resource Planning
    • Training
    • E-Learning
    • Education
    • Management Trends
    • Skill Development
  • Industry in Focus
    • Pharma
    • Auto
    • Chemicals
    • Metals
    • Food Processing
    • IT
    • Oil & Gas
    • Textiles
    • Healthcare
    • Agriculture
    • Banking
    • Real Estate
  • Technology
    • Software
    • Big Data
    • Antivirus
    • Cloud Technology
  • All Things Legal
    • Policy
    • Government
    • Statutory Changes
    • Laws & Changes
  • Health is Wealth
    • Fitness
    • Healthy Eating
    • Yoga
    • Pilates
    • Exercises
    • Ayurved



Checklist for Investing in Small Cap Mutual Funds
Rachit Chawla
June, 2021


Over the past few years, the small cap funds have outperformed large cap funds by a significant margin, which makes them worth considering for investment. However, given that the market is flooded with a plethora of small cap funds, you need a checklist that you can work through as an amateur to avoid taking any losses when you're investing for the first time. Given below is a checklist that would help you identify funds that suit your needs. It may seem trivial, but it is a crucial part of the investment process.

1) Thoroughly read the prospectus

The first thing that you should do with any mutual fund is to go through the prospectus with a fine-toothed comb. Every mutual fund has a prospectus and it contains information regarding the fund's management objective, fees, and past performance. While the fund managers are required to send you the prospected after you've invested, but it's too late by then. You need to go through the prospectus beforehand. Usually, you can find it on the mutual fund's website.

2) Take loads and fees into consideration

Every mutual fund charges a certain amount of money as a fee for providing its services. While some funds charge the fees upfront, others ask you for it when you sell your shares. The management fee is also an integral component of the cost of mutual funds and it is utilized for handling operational expenses. This information too is contained in the prospectus – which makes reading the prospectus carefully even more important.

3) Don't forget the past

Although there are no guarantees in the mutual fund market, consistent past performance does indicate that the fund is meeting its objectives and may continue to do so in the future as well. Doing so is quite simple as well. Visit Google Finance, enter the abbreviation for your fund's name and click on “Get Quote”. The following page will show a summary of the fund's performance over the last decade. However, you shouldn't bank on the past performance alone and consider other factors as well.

4) Make sure the fund's objective aligns with your own

Different funds have different objectives. Unless you pick the one whose objectives align with your own, you will have a difficult time.

5) Look into the fund manager's tenure and history

The fund manager is the person who will be making the buying and selling decisions for the fund. Unless that person is competent and consistent, the fund will not generate good returns. A manager with a longer tenure tends to be more stable and reliant. Also, fund managers are all about profit. Unless a fund is generating results, they won't stick around. If a manager has stuck with a fund for a long time, it generally means that the fund has been performing well in the market.

6) Don't let emotions ruin the game

Letting your emotion mingle with your decision-making process is the fastest way to crashing and burning in the mutual funds market. Whether it is fear, greed, hesitation, anger, or any other emotion, you need to keep it at bay. Keep a cool head and make logical decisions. If you are new to the market, consult with a veteran before taking high-stakes calls.

7) Compare before you invest

Let's say you liked a fund, though it was good, and invested without checking any other fund. Imagine your disappointment when you realize you could have found a better fund if you had cared to compare. Therefore, make sure you compare fund performance, expense ratio, AUM before arriving at any decision.

8) Convert advice into a lesson

Don't just act upon someone's advice simply because they've been doing it longer than you. Ask your advisor or distributor for the reasoning behind it. It would help you understand the market better and make you self-reliant in the long run.

11) Trading mutual funds is not a great idea

Do not buy mutual funds for trading. Many people tend to trade when the markets are running. However, it may not be a great idea – especially for retail investors. Benefitting from such situations is usually difficult, especially now when the markets have become unpredictable.

12) Have a goal

Invest in mutual funds with a goal or purpose. If you are investing in equity funds, invest for the long term.

As painstaking as the task may seem, make it a habit to use the checklist every time you're investing in a new fund. It will help you best analyze the viability of your fund and assist in decision-making.

--------------------------------------------------------------------------------------------------------

About Rachit Chawla, CEO, Finway FSC

Always focused, committed, and ambitious Rachit Chawla is keen to humanize the lending process in India. The smart and studious steward is planning to make Finway a Rs. 5000+ crores company by 2030. The graduate in Business & Management from Aston University, Birmingham, U.K., has a cumulative experience of more than 10 years in the finance industry, including stock broking, lending, wealth management, andinvestment advisory. Prior to kick-start his entrepreneurship journey, he was employed with Intel Corporation at EMEA Headquarters based in Swindon (United Kingdom) as Pricing Analyst. But, the charm of corporate life couldn't supersede his businessman spirit and he returned to the home country to shape his dreams. 

In 2008, Rachit started CHC Logistics Pvt. Ltd., an integrated third-party logistics company having 20+ branches across India specializing in the field of Warehousing and Trucking. He has successfully founded and achieved a turnover of INR 200 million in his logistics venture in a span of few years. Presently he serves CHC Logistics as Managing Director. In addition to his logistics business, he is a sophisticated high net worth investor and has been successfully managing his family's investments portfolio since 2008.

Besides being SEBI registered investment advisor, Rachit is also a certified Investment Advisor from National Institute of Securities Markets and also a holder of Insurance Regulatory and Development Authority (IRDA) license. At Finway FSC, Rachit's responsibilities revolve around to envision organisational goals and create plans and strategies that help to achieve these goals. He is the inspirational force to all team members for achieving individual's and group's targets. He wants to establish Finway a system-driven organisation rather than only person-driven by the optimum deployment of the latest technologies. In addition, Rachit has made commendable efforts in harvesting a congenial atmosphere which helps in evolving right work culture in the organisation. He plays the role of MENTOR for the organisation so that overall growth could be

Comment
Name :
 
Email Address :
 
Comment :
 
Enter the code :*
 
Retype the words of the above image here

0 Comments >>

News »

  • 9th World Water Forum : IWF to Head for Dakar

Top Stories »

  • In Pandemic he saw opportunities and went on to
  • How women are Coping with the Changing World of
  • 10 Must-have Digital Marketing Strategies for
  • Catch Them Young : How Schools can Cultivate a S
  • Digital Solutions for MSMEs : Contract Execution

Interviews »

  • Entrepreneurship is Exciting and Great Learning
  • Bringing Eyecare to the Underserved Population
  • Premium Consumer Electronic Products : ZOOOK on
  • Next Level Retail & Marketing : Grow Communities
  • Dr Rupani Captures Life with Precision Eye : Te

Features »

  • Women Over 40 Rejoice ! You are 'Not Just Aunti
  • Relief Measures to Offset Looming Burden of MSM
  • Entrepreneurs' Moment in Specialty Chemicals
  • How 2020 Changed Public Relations for Good
  • Scientific Agriculture Practices can Drive Glo

Digital Magazine»

  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021

NewsLetter Sign Up !

Please enter your Email and Name to join.

Digital Newsletter

Copyright © 2013 - All Rights Reserved - SME World|| Admin

Powered by GWS