Choosing the right fund for SIP

If you are planning to start SIP of a mutual fund scheme, you need to be sure that you pick the right fund that will deliver decent returns and help you to achieve your financial goals. Here are a few tips that will help you to choose s suitable fund.

Track record of the fund house: You need to choose a fund house with an impeccable track record and lineage. This will not only ensure safety of your capital, but also deliver decent returns over your investment horizon

Fund performance: The mutual fund scheme should have delivered sound returns over various time periods and during different market cycles. If the scheme fails on this count, you should better look for another scheme.

Fund size: The corpus of the fund should be reasonable high so that the fund manager has the leeway to spread the investments across different industries, sectors, market caps and asset classes. This provides the benefits of diversification and ensures steady returns over the long term.

Expense ratio: Choose a fund that has lower expense ratio because lower expense ratio can mean higher returns. Hence, a fund with an expense ratio of 1.5% will be preferable to a fund with an expense ratio of 2%