June 15, 2024

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How can one track a mutual fund’s performance?

mutual fund investment

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It is critical to regularly track the performance of any of your investments to see if they are meeting your investment goals. This is easier for investments like stocks where the stock price movement itself reflects the profit or loss. But for mutual fund investments, analysing the net assets value or NAV, which is the unit price of the mutual fund, might not be sufficient to effectively analyse your fund’s performance. Let’s see how you can effectively track your mutual fund investment’s performance through this article.

Net asset value or NAV

As said above, NAV or net asset value is the most obvious and first place to look at. It is the unit price of a mutual fund and it reflects how much the fund has grown. Unlike stocks, mutual funds’ unit price reflects the total assets and the total liabilities. Assets are the sum total of all the investments of the fund, cash and cash equivalents, receivables, dividends and interest payments. This is calculated on a daily basis and updated on the NAV.

At the same time, liabilities are the amount of money the fund owes. Liabilities are also updated and adjusted in NAV at the end of the day.

Is your fund meeting your investment goals?

Most of us join a mutual fund with a financial goal that we would like to meet. Unless the market conditions are bad, there is no reason to compromise on this. Hence, it is extremely important to make sure your fund meets your investment goals in regular intervals. If you have invested in a fund that requires long term growth, you could make this analysis a little later. As time passes by and the magic of compounding kicks in,your fund should start to go in a trajectory that you like, and you should regularly analyse to check on that.

How is your fund performing compared to its peers?

Comparing to similar mutual funds is one way to ensure that you are getting the best out of the theme that you have decided to invest in. For example, if you are invested in a mutual fund that majorly invests in metal companies, you could compare the portfolio and growth of other funds with a similar theme and see how well your fund is performing comparatively. If your fund has lower performance than its peers, you could even consider switching to a better-managed fund.

How is your fund performing compared to its history?

One of the main factors that influences us all while choosing a fund is how it has performed in the past. While we all know that past performance might not be always indicative of the future, it still serves as a tool to gauge the fund’s potential. You could analyse the fund’s past performance in similar economic conditions and see if it has improved. During difficult economic periods, you could analyse how well the fund is coping with the current economic situations compared to previous times of difficulty.

Conclusion

Proper tracking of your mutual fund investment is important in making sure you get the best out of your investments. All details of mutual funds in India are available through fund and broker websites. You can also analyseMF online using resources from the Association of Mutual Funds in India (AMFI) website. Happy investing!