Fund Evaluation Basics

Ratin DSIJ / 06 Aug 2026 / Categories: DSIJ_Magazine_Web, DSIJMagazine_App, Letters to Editor, MF - Letter to Editor, Mutual Fund

A good mutual fund should be evaluated on more than just its past returns.

I invest in Mutual Funds via SIPs, but I want to learn how to evaluate them better. What are the most important parameters I should look at before choosing a fund? - Kaveri J.[EasyDNNnews:PaidContentStart]

Editor Responds : A good mutual fund should be evaluated on more than just its past returns. Start by checking consistency of performance over three, five and 10 years instead of focusing only on recent gains. Compare the fund with its benchmark and category average to understand whether it has consistently outperformed peers. Look at risk-adjusted measures such as the Sharpe Ratio and Standard Deviation to see how much return the fund has generated for the level of risk taken. Also review the expense ratio, as lower costs can improve long-term returns.

Check the portfolio composition, sector allocation and top holdings to ensure they match your investment objectives. Consider the fund manager's experience and track record, as consistent management often matters. Finally, assess the fund house's reputation, the size of the fund, and whether the scheme has remained true to its investment style across market cycles.

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