Over 1,500 mutual fund schemes exist in India. Picking one feels paralyzing. Here's the exact 7-point checklist we use at Myfolios — no jargon, no fluff.
1. Match the Fund to Your Goal Horizon
- < 1 year: Liquid funds or Ultra-Short duration
- 1-3 years: Short-duration debt or Conservative Hybrid
- 3-5 years: Aggressive Hybrid or Large-Cap equity
- 5+ years: Flexi-cap / Mid-cap / Small-cap
2. Check Rolling Returns, Not Point-to-Point
A fund that returned 25% "last year" might have been -10% the year before. Always check 3-year and 5-year rolling returns — consistency beats flashes.
3. Expense Ratio < Category Average
Direct plan expense ratio should ideally be under:
- Large-cap: 1.0%
- Flexi/Multi-cap: 1.25%
- Mid-cap: 1.5%
- Small-cap: 1.75%
Every 0.5% extra in expense ratio = ~10% less wealth over 20 years.
4. Look at Risk Ratios
- Sharpe Ratio > 1: good risk-adjusted returns
- Standard Deviation: lower = less volatile
- Beta < 1: less volatile than benchmark
5. Fund Manager Tenure > 5 Years
Past performance belongs to the manager. If a fund's star manager just left, that track record is history.
6. AUM Sweet Spot
- Too small (<₹500 Cr): limited research depth, higher expense
- Too large (esp. small-cap >₹15,000 Cr): can't move nimbly
7. Red Flags to Run From
- Fund has changed category/mandate in last 3 years
- Top 10 stocks > 60% of portfolio (over-concentration)
- High portfolio turnover (>150%) — excessive churning
- Consistent bottom-quartile ranking over 5 years
Tools to Help You Decide
Use our Compare Mutual Funds tool to check these ratios side-by-side, or our Fund Analysis for a deep dive on any single scheme.
