How to Check Mutual Fund Performance: A Beginner’s Guide

 

How to Check Mutual Fund Performance

Introduction to Mutual Funds

Mutual funds are one of the simplest and most popular ways to grow wealth. They pool money from investors and invest in a mix of stocks, bonds, or other securities. But just like you check your phone’s battery or car’s mileage, you need to regularly track how your mutual fund is doing.

Why Checking Fund Performance is Important

Would you drive a car without a fuel gauge? Probably not. The same logic applies to your investments. Regularly checking a fund’s performance ensures your money is growing in the right direction and helps you decide whether to hold, switch, or exit.

Key Metrics to Track Mutual Fund Performance

Net Asset Value (NAV)

The NAV represents the per-unit price of a mutual fund. It changes daily based on market movements and reflects the fund’s current market value. But NAV alone doesn’t indicate performance — it should be compared with past NAVs or benchmarks.

Historical Returns (1-Year, 3-Year, 5-Year)

Look at how the fund performed over different time frames:

  • 1-year return shows short-term trends.

  • 3-year and 5-year returns reflect long-term consistency.

Expense Ratio

This is the fee charged by fund managers, expressed as a percentage. Lower expense ratios mean you keep more of your returns.

Risk Ratios

  • Sharpe Ratio: Higher is better, showing better risk-adjusted returns.

  • Standard Deviation: Indicates volatility. Lower is more stable.

  • Beta: Measures fund movement compared to the market. A beta of 1 means it moves in line with the market.

Alpha and Benchmark Comparison

Alpha shows a fund’s performance compared to its benchmark. A positive alpha means the fund outperformed its benchmark.

Tools and Platforms to Check Mutual Fund Performance

AMFI (Association of Mutual Funds in India)

Visit amfiindia.com for official mutual fund data, NAV updates, and performance charts.

Fund House Websites

Every mutual fund company publishes detailed performance reports and factsheets on their official sites.

Mobile Apps

Apps like Groww, Kuvera, and Paytm Money provide instant fund performance tracking, SIP returns, and portfolio analysis.

Financial News Websites

Sites like Moneycontrol, Value Research, and ET Money offer fund ratings, comparison tools, and insights.

How to Analyze SIP Performance

Tracking SIP returns is slightly different:

  • Check CAGR (Compounded Annual Growth Rate) for overall performance.

  • Use SIP calculators available on most apps and websites.

  • Compare SIP returns with lump sum returns for better insights.

Understand Portfolio Holdings and Sector Allocation

See where your money is invested — sectors, stocks, or bonds. Funds heavily concentrated in one sector can be riskier.

Interpreting Risk-Return Trade-Off

High returns often come with high risk. A balanced risk-return ratio is ideal for steady wealth creation.

How to Compare Similar Category Funds

Never compare a small-cap fund with a large-cap fund. Always compare funds within the same category (e.g., large-cap funds) using:

  • Returns over the same period

  • Risk ratios

  • Expense ratios

Red Flags to Watch in a Mutual Fund’s Performance

  • Consistent underperformance against benchmarks and category peers

  • High expense ratio

  • Sudden changes in fund management

  • Low asset size (AUM) for equity funds

Should You Exit if a Fund is Underperforming?

Not always. Analyze if it’s a short-term market phase or a genuine fund issue. Stay invested if the fundamentals are strong.

Common Mistakes in Tracking Fund Performance

  • Looking only at recent returns

  • Ignoring expense ratio

  • Not comparing against the right benchmark

  • Panic selling during market corrections

Tips for Long-Term Mutual Fund Tracking

  • Check performance quarterly or bi-annually

  • Focus on consistency, not just returns

  • Review SIPs annually

  • Monitor changes in fund objectives or management

Real-Life Example: How Tracking Saved an Investor from Losses

Amit invested ₹2 lakhs in an equity fund that performed well initially but started lagging behind its category and benchmark for 18 months. Regularly tracking his fund’s return and risk metrics, he switched to a better-performing fund, saving himself from an eventual 15% dip.

Final Thoughts

Regularly tracking your mutual fund performance ensures your financial goals stay on course. Use a mix of official sites, apps, and financial news platforms to stay updated. Always remember — patience is key, but blind patience can be costly. Stay informed, stay invested.

FAQs

Q1: How often should I check my mutual fund performance?
 Once every 3-6 months is ideal, unless market conditions or personal financial goals demand sooner.

Q2: Is NAV enough to judge a mutual fund?
 No, NAV alone isn’t enough. Compare historical returns, risk ratios, and benchmarks.

Q3: Which tools are best for tracking mutual fund performance?
 AMFI, Moneycontrol, Groww, and Value Research are among the best.

Q4: What does a high Sharpe Ratio mean?
 It means better risk-adjusted returns — a good sign for a mutual fund.

Q5: Can I switch mutual funds if it underperforms?
 Yes, but only after reviewing the reasons for underperformance and assessing alternative options.

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