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Ramalingam

Ramalingam Kalirajan  |6999 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 04, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Jan 25, 2024Hindi
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How should I choose a mutual fund ( 5 year time frame)? My aim is to get return beating the benchmark. Also, please advise which signals may alert to exit a mutual fund.

Ans: To choose a mutual fund for a 5-year time frame, focus on these factors:

Performance: Look for consistent long-term performance beating the benchmark index.

Fund Manager: Assess the experience and track record of the fund manager.

Expense Ratio: Opt for funds with low expense ratios to maximize returns.

Investment Strategy: Understand the fund's investment approach and ensure it aligns with your risk tolerance and goals.

To know when to exit a mutual fund, consider these signals:

Persistent Underperformance: If the fund consistently lags behind its benchmark over an extended period.

Change in Fund Manager: A change in fund management or strategy that doesn't align with your objectives.

High Expenses: If the expense ratio increases significantly without a corresponding improvement in performance.

Market Conditions: Significant changes in market conditions or economic outlook that may impact the fund's performance.

Regularly review your investments and consult with a financial advisor for personalized guidance.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

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Mutual Funds, Financial Planning Expert - Answered on Apr 10, 2024

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How to compare and evaluate the appropriate mutual funds for an moderately aggressive investor want to be investing for 5 years from now.
Ans: When evaluating mutual funds for a moderately aggressive investor with a 5-year investment horizon, consider the following factors:

Investment Objective: Look for funds aligned with your risk appetite and investment goals. For a moderately aggressive investor, consider a mix of equity and balanced funds.

Performance: Analyze the historical performance of the funds over various timeframes. Look for consistent returns compared to their benchmark and peers.

Risk Metrics: Assess the volatility and downside risk of the funds using metrics like standard deviation and Sharpe ratio. Ensure the risk level matches your risk tolerance.

Fund Manager Expertise: Research the track record and experience of the fund manager. A skilled and experienced manager can navigate market cycles effectively.

Expense Ratio: Consider the expense ratio as lower fees can enhance your returns over the long term.

Portfolio Composition: Evaluate the fund's portfolio holdings, sector allocation, and diversification strategy. Ensure the fund's holdings align with your investment objectives and risk profile.

Fund Size and Liquidity: Opt for funds with adequate assets under management (AUM) and liquidity to handle redemptions efficiently.

Past Performance vs. Benchmark: Compare the fund's performance with its benchmark index to assess its ability to generate alpha.

Independent Ratings: Consider ratings from reputable agencies or financial advisors to gain insights into a fund's quality and performance consistency.

Qualitative Factors: Consider qualitative aspects like the fund house's reputation, investment philosophy, and transparency.

By considering these factors comprehensively, you can identify mutual funds that are suitable for your moderately aggressive investment strategy over a 5-year horizon. Additionally, regularly review your investments to ensure they remain aligned with your financial goals and risk tolerance.

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Ramalingam

Ramalingam Kalirajan  |6999 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 04, 2024

Asked by Anonymous - Jan 25, 2024Hindi
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When to exit a mutual fund?
Ans: Deciding when to exit a mutual fund depends on several factors, including your investment goals, the fund's performance, changes in your financial situation, and market conditions. Here are some situations when it might be appropriate to consider exiting a mutual fund:

Achievement of Financial Goals: If you've achieved your investment objectives or reached a milestone, such as funding a specific goal like buying a house or funding education, it may be a good time to exit the fund.

Poor Performance: If the mutual fund consistently underperforms its benchmark or peers over an extended period, it could be a sign to reconsider your investment and exit the fund.

Fund Manager Changes: A change in the fund manager or significant changes to the fund's investment strategy or objectives may warrant a review of your investment. If you're uncomfortable with the new management or strategy, exiting the fund might be appropriate.

Rebalancing: Periodically rebalancing your investment portfolio to maintain your desired asset allocation is essential. If the mutual fund's performance has skewed your asset allocation, consider selling some holdings to rebalance your portfolio.

Life Changes: Changes in your life circumstances, such as job changes, marriage, divorce, or retirement, may necessitate a review of your investments. You may need to adjust your investment strategy to align with your new goals and risk tolerance.

Fund Expenses: If the mutual fund's expenses increase significantly without a corresponding improvement in performance, it may erode your returns over time. In such cases, consider exiting the fund in favor of lower-cost alternatives.

Market Conditions: During extreme market volatility or significant changes in economic conditions, it's essential to reassess your investments. If the market outlook or risk factors have changed substantially, it may be prudent to exit or reallocate your investments accordingly.

Remember, it's essential to evaluate your investment decisions carefully and consider consulting with a financial advisor before making any significant changes to your portfolio. Exiting a mutual fund should align with your long-term financial goals and be part of a well-thought-out investment strategy.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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