Mutual fund investors mainly invest through the SIP route. However, there are times when you have surplus funds and want to invest in a lump sum. According to experts, lump sum mutual fund investment is a better option for those investors who have a long term investment plan And have market knowledge. are broadly of two types mutual fund schemesActively and passively managed.
Mutual Funds: Active and Passive Funds
A straightforward way to determine whether a fund is active or passive is to examine its active share, which measures how much the portfolio diverges from the index.
“Zero active shares indicates an exact replication of the index, while 100 active shares means that there are no common holdings with the index. If a fund’s active shares are less than 60, it is not an active fund, but rather is a closet tracker or tracker, so it is best not to invest in such funds,” said Amit Gupta, MD, SAG Infotech.
It is usually easy to find a fund’s active stock, as it is often available on the fact sheet. If this is not readily available, reviewing the top 10 holdings may provide information. If you recognize all the companies, it might be better to move on.
Pankaj Mathpal, MD & CEO, Optima Money Managers lists ways to invest in active mutual funds
1) Invest in different ways through SIP and STP
2) Invest in diversified funds
3) Diversify the portfolio in growth and value investing style funds.
4) Invest in schemes of multiple fund houses to get the benefit of different fund management styles of different fund managers. Do not invest in multiple funds and multiple funds from the same fund house.
Jitendra Solanki, registered tax and investment expert with SEBI, said that active funds are a good option for large cap category like large and mid cap. These funds with mid-cap flavor can give good returns.
Other than this flexi cap fund And multi-asset funds may also be a good choice among active funds, he added.
However, active share (AS) is not a true measure of a fund’s merits, as managers of less active share funds often point out. “For example, a fund with only five shares There may be a high active portion but there may also be a risk of overdose. Also, 100% active share can be achieved by benchmarking against one index and passively tracking the other,” said Amit Gupta.
Despite this, the AS is still an excellent and straightforward starting point for determining a fund’s active management style, Gupta said.
Disclaimer: The views and recommendations given above are those of individual analysts and not Mint’s. We advise investors to do due diligence with certified experts before making any investment decision.
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